Interview on ABC Radio National Breakfast with Fran Kelly
Thousands of families hitting the child care rebate cap; Making child care more affordable, accessible and flexible; Fixing Australia’s debt and deficit; Future schools funding arrangements

Fran Kelly: Well the Federal Government is warning that thousands of families will soon fall off a, quote, financial cliff unless the Senate passes the omnibus savings bill. The legislation was torpedoed this week, you’ll remember, by a key crossbencher, Nick Xenophon and his team, but the Government says without it, households are going to miss out on extra support for child care. And the new figures show that by next month, 36,000 households with kids in child care will hit the annual $7500 rebate cap. That means those families will be slugged the full cost of child care for the rest of the financial year, which is a lot of money. 

Simon Birmingham is the Education and Training Minister. He’s also responsible for child care. Minister, welcome to Breakfast.

Simon Birmingham: Good morning, Fran, great to be back with you.

Fran Kelly: According to your figures, 3600 families have already used up the current rebate of 7500 and that figure will swell to 36,000 by next month. So what does that mean for households?

Simon Birmingham: Well what it means is that mums or dads choose to either work fewer hours or fewer days to avoid hitting this cap or to avoid paying more child care fees, or they end up going to work essentially for the last couple of the financial year just to pay the child care bills and it’s something I hear time and time again. My children are aged four and six. We’ve been in the child care system for five years and so much personal experience in talking to other families about their circumstances but also getting around the nation. And that’s why the Turnbull Government really wants to fix this broken child care model to eliminate this cap for all families earning less than $185,000 a year. So every …

Fran Kelly: [Interrupts] With respect, with respect Minister, if the Government really wants to fix it, why doesn’t it – why has it tied it to the passage of the whole omnibus savings bill? Because I have to say this child care wasn’t mentioned much by the Federal Government in the last election campaign. How much of a priority is it for your government?

Simon Birmingham: This is a priority and we’re going to continue talking and negotiating and what we’d really love is for Bill Shorten and the Labor Party to actually come to the table with a constructive approach to getting this done.

But of course why is it tied to savings to pay for it? Because we don’t want to see the debt go up any further. We don’t want to see the very children who are in child care today lumbered with higher levels of government debt in the future than is already the case of what we’re grappling with. We don’t want to see higher levels of tax that will hurt job opportunities for those children coming through our education system today. 

We want to make sure that we prioritise government expenditure to be able to pay for the things that matter most. And we think that helping hardworking Australian families, low and middle income families to be able to choose the hours of work, the days of work that suit them best is a priority. And really if you look at the detail of this, take a family earning about $80,000 a year, two parents working, two children in child care for three days a week, that family, net of the Family Tax Benefit changes will be around $3000 a year better off. So you’ve got real benefits there to low income earning families out of this package because we are really prioritising the hardest working, lowest earning families through these reforms.

Fran Kelly: Yes and while there’s a lot of support for the reforms, I mean the Government thought has had it on the table for a couple of years now and it has tied it, as I’ve said, to these other changes, to family payments and welfare. So it still languishes in the Senate, whereas spending on submarines or corporate tax cuts, they’re not left in that position. They’re not tied to something else. Why is child care reform?

Simon Birmingham: Well Fran, because child care reform is additional spending and it’s additional spending …

Fran Kelly: [Talks over] Well so is the submarines.

Simon Birmingham: … that we want to see – we want to see paid for elsewhere. Now, the submarines are budgeted for into the future and they will of course be appropriately funded and we’ll make sure that the funding is there for them. But this is about, in part, reprioritising areas of investment and support for families. 

So we are taking some funding from high income families, in terms of their child care support and directing it to lower and middle income families. We’re reallocating some of the Family Tax Benefit savings into child care support. Now we’re doing that in a way that really for many families will see the support they get brought forward to the earliest years of their child’s life so that they get more support to meet their child care bills during those years when it’s most expensive for them to be participating in the workforce. So there’s real benefits there for those most vulnerable families who actually will get the greatest reward. 

If I give another example, a single parent on $50,000 income with one child in child care will net of those Family Tax Benefit changes, so even if they lose a bit in FTB, will be about $2500 a year better off as a result of these child care reforms. So even with the overall package with the savings applied, those hardworking families will be receiving more support because we’re better targeting the child care support, increasing the level of subsidy for families earning less than $65,000 from about 72 per cent as it currently applies up to 85 per cent. So not only does the cap go, they get more support.

Fran Kelly: [Talks over] And most of the – most of the families in the country probably agree with you and most of the senators and other parties on the crossbench agree with you too. They like the extra $1.6 billion for child care but they don’t like how you want to pay for it.

Simon Birmingham: But Fran, I’ve just outlined there Fran, that even net of those Family Tax Benefit changes, these families are better off. Not just to the tune of a couple of dollars, but a couple of thousand dollars a year for some …

Fran Kelly: [Interrupts] Okay but how are you going to pay for this? If you can’t get the omnibus bill through, will the Government now negotiate that bill measure by measure, so people will be able to negotiate just on the child care bill?

Simon Birmingham: Christian Porter and I are very happy to talk about every single detail in it and that’s exactly what we will do if that’s what it takes to get these reforms through. We are certainly not giving up. We have both had further discussions with Nick Xenophon, we’ll both keep talking with the rest of the Senate crossbench. But, of course, what we would dearly love is for Bill Shorten and the Labor Party, who have no policies or plans in relation to child care, to stop checking themselves out of this debate and actually check in and sit down with us and help us come up with a solution that stops this running around through the crossbench and actually shows that we can get it done for the families who need it most.

Fran Kelly: The Treasurer Scott Morrison has suggested that if the Government can’t get a savings bill, its omnibus bill, through the Senate then it’s going to have to look at other measures to pay for things like tax increases. Will changes to capital gains tax be one of those options?

Simon Birmingham: Well I’m not the Treasurer, I’m the Education Minister and we’re still months away from the Budget. But our government doesn’t want to see tax have to go up. Our view is that we should be able to prioritise spending in Australia where we need it; we should be able to make sure that we pay for the National Disability Insurance Scheme, pay for a new child care model. Deliver all of those things without having to resort to higher debt or higher taxes, but by better prioritising the expenditure we currently have. And that’s our first approach, that’s our first ambition and that’s the thing we are sticking to for now.

Fran Kelly: You are around the Cabinet table though. Is the Government looking at capital gains tax after being so critical of Labor’s proposed changes to negative gearing and capital gains?

Simon Birmingham: Well, Fran, from what I’m aware, we’re certainly not looking at tax increases at present. What we want to do is prioritise spending and put those investments into ensuring that we deliver the NDIS without needing to resort to higher taxes or higher debt, that we deliver our child care reforms, that we have priority investments such as building our defence capability in Australia. That we do all of those things without putting greater burden on people because higher debt will only mean that future generations of Australians will have to confront those problems. Higher taxes will only make us less attractive as an investment destination. I mean, Bill Shorten yesterday …

Fran Kelly: Okay.

Simon Birmingham: … when he was asked about a range of different things kept resorting back to company taxes as the only solution. Now firstly, you can’t keep spending that money over and over and over again as he proposes. But secondly, Australia must also be competitive as an investment destination if we want people to have jobs, to be paying taxes, to pay for the services that we want to see delivered.

Fran Kelly: Talking about competitiveness, let’s talk about Gonski funding because you’ve acknowledged that some schools are overfunded. Bill Shorten now is offering to work with the Government to reverse some of those locked in funding increases for wealthy schools. Will you take up that offer?

Simon Birmingham: Oh well look I’m pleased if Mr Shorten yesterday changed position. Tanya Plibersek for months had been basically saying that we should keep throwing as much money into the school system as Labor had promised in the past even if there was evidence that there were fairer, more efficient ways to do that.

Fran Kelly: [Interrupts] Well if they’ll work with you, will you now cut some of the money flowing to schools that are in excess of the resourcing standard and redistribute it to the other schools?

Simon Birmingham: Well I’ve said before that I want to ensure that funding from the Federal Government is applied fairly and equitably according to need across the country and I’ve acknowledged before that, yes, there are some schools in the non-government system who are receiving above the resource standard at present, just as there are many who are receiving below it at present. And, of course, if we’re going to work towards some type of resource standard then we should work towards it in a manner that sees everybody moving towards that point over time.

Fran Kelly: [Interrupts] So when are you going to do this?

Simon Birmingham: We’ve committed that we will have discussions that will reach conclusion with COAG in the first half of this year and that’s still the timeline.

Fran Kelly: Simon Birmingham, thank you very much for joining us.

Simon Birmingham: Thank you, Fran.

Fran Kelly: Simon Birmingham is the Minister for Education, Training and Child Care. It’s 7.47 on Breakfast.