Interview on ABC AM with Sabra Lane

Topics: Changes to child care subsidies




Sabra Lane:                 The Federal Government’s new child care subsidy comes into effect in three weeks’ time, but on latest estimates, about 350,000 families who are eligible to receive some form of payment won’t receive a cent. Why? Because they’re yet to fill in the necessary online forms. The new child care subsidy replaces two existing payments and the new subsidy will be subject to a means test and an activity test, which means parents will now either have to be working, volunteering, studying or looking for work in order to be eligible for the payment. To discuss it, I was joined by Simon Birmingham, the Federal Education Minister, earlier.




Simon Birmingham, thanks for joining AM.


Simon Birmingham:    Good morning.


Sabra Lane:                 Three hundred and fifty thousand families are yet to fill in the necessary online forms to gain the new payment. Why haven’t they?


Simon Birmingham:    Sabra, more than 800,000 Australian families have made the switch to the new child care subsidy. Our estimates are that there are around 1.16 million people over the last 12 months who have accessed some form of subsidy. Three weeks to go and we’re seeing very significant day on day take up.


Sabra Lane:                 This package passed parliament in 2016 and we’re now three weeks away from the new payments starting, and nearly one in three eligible families hasn’t signed up. Is that a failure in the government’s communications strategy that they haven’t?


Simon Birmingham:    No, Sabra. Our research shows that many people anticipate they will leave it until closer to 2 July. Now, we’re urging people to get the job done. There’s more support available for more families of those who have switched so far. They are on average around $1300 per child, per annum, better off under these reforms.


Sabra Lane:                 Now, that figure that you just mentioned, you said $1333 better off, is there a chance that that figure might not be the entire picture, given that it’s likely that many vulnerable families, including those from non-English speaking backgrounds, are yet to register yet?


Simon Birmingham:    Well, Sabra, that figure may vary. It is based on those who have switched over to date. But of course, we’ve done prior analysis which underpins our belief that around 1 million families will be better off. That is, of course, because what we are doing is targeting child care payments to give the greatest number of hours of subsidised care to those working, studying, volunteering the longest hours, and the greatest rates of subsidy to many families who have hit the awful $7500 cap on the child care rebate. They’re going to see that cap abolished if they’re a family earning less than around $186,000. So it really is going to make a big difference where families won’t run out of support mid-year and for many that is going to enable them to work more hours or days without child care costs being a prohibitor in doing so.


Sabra Lane:                 For those families who haven’t signed up, you’re giving them a three-month period of grace. What if by October there’s still a significant number of families who are yet to sign up?


Simon Birmingham:    Well, Sabra, we don’t envisage that being a problem. We are confident that, given more than 800,000 people have made the switch already, and in an appeal to your listeners visit education.gov.au/child care if you’ve not done so yet. I’ve done it personally. It’s a very straightforward process. It only took about 10 minutes sitting on the couch to do so. There’s more support available for the vast majority of families. We’re investing an extra $2.5 billion to better target support and we hope and trust that every eligible Australian family will make the switch to ensure that their family receives the assistance they deserve.


Sabra Lane:                 Critics point out that 230,000 families will be worse off under the scheme. What’s your message to them?


Simon Birmingham:    Well those models and assumptions don’t assume any behavioural change. So if we are correct that more people choose to participate and increase their participation in the workforce, then there will be even more families who benefit. We make no apologies for structuring these reforms to give the greatest support to families working the longest hours, in terms of the hours of subsidised child care they’ll now be able to access, and indeed giving the greatest level of financial subsidy to families earning the least amount. This is about a fairer and better child care system. We support, of course, a strong social safety net and that’s built into this model, as well as our more than $800 million in support to guarantee universal access to preschool as a critical part of early childhood education.


Sabra Lane:                 What effect is this policy going to have on workforce participation?


Simon Birmingham:    Well, workforce participation is already at a high and the Turnbull Government is incredibly proud…


Sabra Lane:                [Interrupts] Sorry, the specific question is about this new policy and what effect it will have on workplace participation.


Simon Birmingham:    We anticipate this will add to what is already a record level of female workforce participation, Sabra. As I said…


Sabra Lane:                 [Interrupts] And what are the numbers? When you say add, what are the numbers?


Simon Birmingham:    Well, our modelling shows that around 230,000 people will increase their participation in the workforce. Now, for some that will be choosing to work more hours or more days. For others, that will be choosing to go back to work for the first time ever. So, this is well and truly about helping families to make the decisions that suit and empower them, rather than a family deciding they can’t go back to work or can’t work that extra day because the cost of child care is prohibitive. This will actually enable a family who might earn a low or modest income to be able to decide to work that extra day that suits them knowing they’ll get support for the child care that they deserve.


Sabra Lane:                 Minister, thanks for joining AM this morning.


Simon Birmingham:    My pleasure, Sabra.


[End of excerpt]


Sabra Lane:                 The Federal Education Minister, Simon Birmingham.