Interview on 4BC Drive with Ben Davis
Topics: Transitioning to the new child care package

Ben Davis: What’s changing? How much difference will we see? Well, let’s find out. Senator Simon Birmingham, good afternoon.

Simon Birmingham: G’day Ben, great to be with you.

Ben Davis: What brings you to Brissy today?

Simon Birmingham: Well look, up here as Education Minister I’ve been meeting with literally dozens of principals from primary and secondary schools across the government, catholic independent school sectors today. Spent some time this morning with particularly some of my MP colleagues; Ross Vasta and Burt van Manen and Andrew Laming brought together the principals across their electorates for a big roundtable discussion with them, which was great to hear some of their views around teacher training, around curriculum resources in schools and ultimately to talk about how we get the best outcomes for our children.

Ben Davis: Alright. What was the biggest thing you heard? What were they telling you?

Simon Birmingham: I probably spent the greatest amount of time talking about issues of teacher training and then how we make sure we retain some of the best and greatest quality teachers in our schools. As a Government, we’ve instituted a number of changes to the way universities train graduates in education programs so that people who leave uni and go on to be teachers will in the future now have to meet minimum literacy and numeracy standards themselves, demonstrate their own competency in being in the top 30 per cent of all Australians for literacy and numeracy skills. We’re also putting in place arrangements where future graduates in primary education programs will have to undertake a subject specialisation. So, we’ll get more maths specialists or English specialists into our primary schools.

Ben Davis: In primary schools? Okay. And this is good. When we see that kick in?

Simon Birmingham: So those changes in terms of the re-accreditation of uni courses are all happening now…

Ben Davis: I mean sorry, graduates.

Simon Birmingham: So, graduates actually exiting universities and hitting schools will still be a few years away in that sense.

Ben Davis: Alright. Well, that’s good, that’s something that the schools and the principals are talking to you about it. Before we get to school, we’ve got childcare. We’ve got these changes coming in. It’s in 12 weeks’ time, July 2. But I think it’s important to talk about it now because people have to sit down and work out their budgets. Speaking of budgets, how much of a saving are these changes going to make on the Budget bottom line?

Simon Birmingham: Well, they’re not actually making a saving. We’re in fact investing an extra $2.5 billion dollars over the next four years in terms of additional support for childcare. We’re also redirecting a lot of money within that. So, this is about supporting people in accessing early childhood education services, but importantly in really ensuring that families can manage to choose to work the hours that suit them and the days that suit them and know that childcare costs won’t be an impediment to people actually participating in the workforce and fulfilling their jobs and juggling their work-family life.

Ben Davis: Alright, I’m glad you explained that, because it was part of an omnibus bill that went through that was I think about $4 billion dollars worth of savings in welfare changes.

Simon Birmingham: And like everything else our government has done we’ve absolutely made sure we paid for these changes by, yes, there are some savings in Family Tax Benefit payments and other areas. So we’ve said, okay, we think that if we’re going to be paying taxpayers’ money to support families with their costs and their bills, better to pay people to make it easier for them to work and work the hours they need to, rather than simply paying people for it no particular cause at all. That’s the way some of those payment structures work.

Ben Davis: See, I’m happy with that because it means it’s going into the right areas. It means there’s no wastage or perhaps even rorting of the system. Okay. Gone the childcare benefit and my pet hate, the childcare rebate. That’s that $7500 that you’re able to get if you have childcare and there’s this doesn’t- it doesn’t matter if you earn $60,000 a year or $600,000 a year, you’re still eligible for that and it also means that parents basically can just put their kids into day care and also get, in a way, rewarded for it. So that’s gone which is great. That’s going to be replaced by one means tested payment?

Simon Birmingham: One new childcare subsidy. So, indeed, the complexity of their being a childcare benefit over here and a childcare rebate over there and many families claiming both will be gone in favour of a single new childcare subsidy. That’s going to be paid on a couple of grounds. One is activity: are you working, studying or volunteering?

Ben Davis: Excellent.

Simon Birmingham: Now, if you are, how much? As long as it’s four hours a week, well, that will qualify for one level of childcare support. If it’s more than that, you can ultimately qualify you for up to 100 hours a week of childcare-100 hours a fortnight of childcare support. So, you can get a lot of support or a little support depending on how much activity you’re participating in; working, studying, volunteering.

Ben Davis: If there’s no activity, no payment?

Simon Birmingham: That’s right. If there’s no activity, if you’re not working, if you’re not studying, if you’re not looking for work, if you’re not volunteering in your kid’s school, well then, there’s an expectation that you will be engaged in caring for your children yourself. Of course, there’s pathways to make sure that those children still get help.

Ben Davis: It’s called parenting.

Simon Birmingham: It’s called parenting. That’s right, yeah. You do it, I do it, and most Australians do it. Of course, you want to make sure that children don’t miss out on early childhood education, so we support universal access to pre-school and that there are safety nets there for kids in vulnerable circumstances to still access childcare and early education services. But that’s right, the activity test allows us to take some of the billions of dollars invested in childcare subsidy and redirect it to the people who are working the longest hours, but often earning the least amount of money. And so yes, the other half of this is you meet the activity test, then the amount of support you’ll get for your childcare subsidy is means tested. The more hours you work but the less you earn, the more we’ll help you pick up the tab with good childcare fees. If you’re working long hours but also earning lots of money, well, the less support you get in terms of picking up the cost of those fees.

Ben Davis: It sounds fair. There’s no cap on the payments if, collectively as a household you’re bringing in $185,000. After that, though, it is a sliding scale, that’s when the means test kicks in and that goes all the way up to $350,000. Why that figure?

Simon Birmingham: So, it’s not where you would usually set a welfare cap – it’s well above any type of welfare rate, but it is a recognition that, particularly for mums going back to work – and let’s be honest, we’re usually talking about the mums here – particularly the mums going back to work, they may well be the second income earner, earning a lower salary level and so a recognition there that in those circumstances, you don’t want childcare fees to be an impediment to those mums returning to the workforce, which ultimately childcare fees still could be. You don’t want people going out in any circumstances where it’s avoidable and ultimately paying more in fees than they’re taking home in wages. Although, once you get to a very high family income, the Senate and the Government have said, yeah, at that point surely you can work it out yourselves.

Ben Davis: Yeah, 350. I mean, if you look at the benchmark of, say, 250 – a quarter of a million dollars a year coming in – surely that’s enough that you don’t have to be getting some sort of subsidy.

Simon Birmingham: Under the current complicated dual different rebate system, you could be a family theoretically earning a million bucks a year…

Ben Davis: Yeah, no, it’s better.

Simon Birmingham: … with a parent who’s not working and take home $7500 in childcare support. So, yeah, we’ve cleaned up a lot of that to make sure that it’s much, much better targeted, ultimately so those families on 350 would still be worse off relative to the current arrangements, because currently they can take home seven and a half. Under the new model, they’ll only be able to claim 20 per cent or thereabouts of the childcare subsidy. So, actually that that won’t come anywhere near what is currently being paid.

Ben Davis: 131873 is the open line. If you’ve got any questions about childcare, what it looks like- I’m just going to ask that of the Senator in just a moment. Just a quick one, though, on the subsidy. And this is a beef, I guess, subsidies in general. If you subsidise something – and especially if the Government- it always seems to jack up the price, because the Government’s going to cover it. When you have a look at the first home buyers grant, well, guess what? The homes went up by 10 grand because you can afford it. You’ve got that. Again with that $350,000 cap, even if was at 250, if there’s a subsidy there, it means higher prices when it comes to parents paying for childcare. Is there a thought that there may be no subsidies or maybe the subsidy gets paid to the actual child care centre rather than the parents?

Simon Birmingham: So, the payments will be made straight through the centres.

Ben Davis: Okay, so that changed.

Simon Birmingham: So, that changes in terms of making it simpler and that just comes off of the bill, then, that parents will pay. And so if you are a very low income family, you may well find that your support is paying for 80-85 per cent of your childcare bills. If you’re, however, a higher income family it might only be 20 per cent of those childcare bills. So, that’s the way the means testing is working to ensure that we actually are targeting the greatest support to lowest income families. But it will also only be paid against an efficient price.
So, we’ve said that childcare centres can charge up to a certain price – it’s indexed each year and it’s set looking at current averages of prices – and we’ll pay 85 per cent of that efficient price. If they’re going to pay more, well then, parents will have to pick up the difference. That’s really to create an incentive and a pressure point and a benchmark to keep those prices down and to stop that type of fee growth you were talking about.

Ben Davis: It’s been a while since we’ve had to use the childcare system and have that rebate available, and that’s when it dawned on me, that all of a sudden- hang on, getting $7500 no questions asked just to have a child in day care – I used to run into some of the mums from day care and I was on my way to work-

Simon Birmingham: They’re off to Pilates.

Ben Davis: They’re off to Pilates, they’re off buying coffee, sitting around. It’s like, oh, I’ve got four hours to kill because Dylan’s in day care. And go, well, hang on – that’s called parenting. But when that happened, you used to be able to- you had to pay upfront, then you would get it back. So, it’s something that went to the parents. So, this is going straight to the centre now?

Simon Birmingham: And so again, that’s about trying to ease the family budget pressure. So, you think about family who might be earning around $100,000 a year, a couple of parents working really hard, a couple of kids who might be in child care a few days a week. This model will leave them potentially thousands of dollars better off over the course of a year, but also alleviate some of those fee stresses by ensuring that they don’t have to pay the money and wait for the Government to pay it back or any of those circumstances, that actually it’s a seamless process with the child care provider. And what I’d urge any listeners – and there may well be many who are sitting in traffic on their way to pick the kids up right now.

Ben Davis: Yeah.

Simon Birmingham: What I’ve be urging them to do is go onto the Government’s website – visit education.gov.au; you can follow the link there firstly to see how it will affect you – what type of subsidy you will get from July next year – but importantly, you also need to register. We need to know that you meet the activity test. You need to tell us what your estimated earning level is so that we actually can pay the right amount when the new system kicks in in July.

Ben Davis: So, that’s the big message here: you’ve got to register to make sure that you are able to qualify.

Simon Birmingham: Get active, register. It’s a simple process. Everybody who is currently receiving some sort of childcare support will receive a letter informing them what to do, but that they don’t need to wait. They can visit education.gov.au now, follow the links and take it from there.

Ben Davis: Alright. Jan’s line just dropped out, but she was going to ask about home care – I guess a nanny or au pair? I think that’s what was on her mind, but at home care – does that does that change under this new system?

Simon Birmingham: There is a new home care program that we’re putting in place. So, there was an old program that, frankly, didn’t work terribly efficiently. You saw some ridiculous prices being paid – there were hourly rates to look after children in the three figures, which just didn’t make any sense at all. It also ran alongside a nanny pilot program that had been trialled for a period of time. We’ve taken the lessons from all of those, bundled them up into a new home care support program. Again, best to go online and have a look for the information around the details of that, would be my advice. But yes, there’s ongoing support. That’ll be provided through dedicated brokers to support home care, which for listeners who wouldn’t access it and wonder why is the Government funding this – in most cases it’s support for families with particularly special circumstances, high needs circumstances for children or family members that might prevent them getting care for their children in other ways, or indeed perhaps in extreme circumstances, those working shifts who can’t access any other form of care or support for their children.

Ben Davis: This one from Nicole on emails: she says, Ben, can you ask the Minister about foster carers. We’re two professionals who foster, but pay child care out of our own pockets. Does that change? Is there anything in the…

Simon Birmingham: I’m pretty sure that foster carers, if they are the recognised carer of the children, are treated in terms of the new childcare subsidy the same as any other parent. If I’m wrong on that, we’ll flick a note through for you to advise, but my understanding is that under the new model, foster parents both working – same activity test, same test et cetera.

Ben Davis: Alright, fantastic stuff. I appreciate you coming in and explaining this because, I mean, I’ve learned stuff this afternoon because it’s been five years in the making. There’s been- it was 2013 when the Productivity Commission first spoke about this, saying, you know, what we need to scrap all these payments and just put it into one nice little package. I know you had trouble getting it through the Senate and everything – finally there and it kicks in 2 July this year, so it’s 12 weeks away and you’re spot on with the message about getting there to register, because this is going to be the change to the families as of July 2. Senator, appreciate your time. Thank you for swinging by and also enjoy the rest of your time here in Brisbane.

Simon Birmingham: Thanks very much, been an absolute pleasure.

Ben Davis: The Education and Training Minister Simon Birmingham.