Interview on Channel 10 The Project with Waleed Aly, Carrie Bickmore and Gretel Killeen
Turnbull Government’s plan to make early childhood education and care more affordable, accessible and fairer; Repairing the Budget

Waleed Aly: So, Education Minister Simon Birmingham is here to explain how this is going to work. Minister, thank you very much for joining us. I think everyone’s agreed over the journey that the policy generally is a good idea to make child care affordable- more affordable for lots of people, great idea. The question is whether or not it’s being paid for in the right way. Where do these savings this time come from? Are they any different to the ones that people didn’t like last time?

Simon Birmingham: Well, the savings will now come in part through a pause on indexation of some family payments, so there are savings through there. A number of other quite minor matters that do add up collectively to provide the savings that are required to see the child care reforms implemented. So we’re very pleased to see that happen, because it does mean that hopefully over the next couple of days we can get the legislation through, and we can give certainty to Australian families that help is finally definitely on the way in terms of fixing the broken child care model that hurts and gets in the way of so many people working the hours they choose to, or juggling their family-work arrangements as they need to.

Carrie Bickmore: So is one of those minor matters extending the waiting periods for parents and young people who are seeking welfare?

Simon Birmingham: No, there’s- look, there’s- I think there’s a seven-day period worked in there, so we’re not talking about types that have been proposed previously of six months or many months or number of weeks in that regard. There are some certain administrative matters there in relation to some of those payments, but ultimately, this is something that will see the vast majority of low and middle income Australian families significantly better off, and significantly better off in many instances to the tune of thousands of dollars a year.

Waleed Aly: Sorry, so the problem last time was the cutting of Family Tax Benefits, which were not popular, and the delaying of access to welfare, which was also not popular. It sounds like you’ve just told us that both those things still is how you’re going to pay for this. It’s just that they’re slightly reduced. Have I got that wrong? 

Simon Birmingham: There are very modest measures now applied in terms of pausing of indexation which the Labor Party has done previously in terms of family payments. And ultimately this is of course a decision of prioritization, and when the budget is- it’s a $1.6 billion extra investment in child care, Waleed. 

Waleed Aly: [Talks over] Right, no, I understand that. And they’re modest? You say they’re modest, but they’re the same, aren’t they? They’re the same as what they were.

Simon Birmingham: They’re not the same.

Waleed Aly: They’re just more modest. Is that right?

Simon Birmingham: Well, they are modest changes in pausing indexation, nobody goes backwards when you pause indexation. It’s a pause on indexation, it just means the payments don’t keep going up. But ultimately they are being re-invested, these savings, into helping people meet what are for many families crippling child care costs. 

Waleed Aly: Okay.

Simon Birmingham: And those costs, it will be for low income families significantly reduced, to the tune of $3000 and $4000 a year in many circumstances. 

Waleed Aly: Okay, Minister, yeah, yeah, we’ve acknowledged the benefits of that. I guess what I’m saying is …

Simon Birmingham: [Interrupts] Well, let’s not sweep them away because they’re very big benefits. They’re very important benefits to those families.

Waleed Aly: I am not sweeping them away at all. I acknowledge them up front. I’m just saying that it sounds like the places you’re going to still, to try to pay for this, are to do with access to welfare and people’s Family Tax Benefits, rather than, for example, the very expensive tax cut you are prepared to give to companies.

Simon Birmingham: Well the government does think Australia should be a competitive place to invest in and that we want to actually get more investment that creates more jobs and that is what the Enterprise Tax Plan is about. We also think families should be able to choose to work the hours that suit them, which is why we want to increase investment in child care. And that’s exactly what we’re doing, to the tune of $1.6 billion for a fairer arrangement. We know, though, that if you’re going to spend $1.6 billion more, you have to pay for it somewhere. And we believe it should be paid for not by increasing the total level of government spending, which sounds like what you’re proposing but by reprioritising your areas of government spending, which is what we are now doing and passing through the Parliament.

Gretel Killeen: Child care is in itself very expensive in our society. The Coalition has said very proudly that they are bringing down child care price increases from 14 per cent to just 6 per cent. But is that really reasonable when the CPI has been at 2 per cent? Why should taxpayers have to help subsidise the cost? Shouldn't we be putting pressure on the industry to reduce those increases themselves?

Simon Birmingham: Absolutely and that’s exactly what a core part of this legislation does. So there are the elements that get rid of the $7,500 cap that many parents hit or that increase the rate of subsidy for many families but a key part of this as well is we are putting in place an hourly rate cap in terms of the fees that services provide and what the rebate will be paid against. And that sends a very clear price signal to the market about what acceptable fees are and what acceptable indexation of that is in the future, which will be tied to CPI.  And the Productivity Commission recommended this when they looked at the child care system because they believe that will help to put a real restraint on fee growth in the future. And it is a key, perhaps less recognised, part of these reforms because it doesn't immediately put more money into people’s pockets like the increased child care subsidy will or the elimination of the $7500 cap does, but over the long term it will make a big, big difference.

Waleed Aly: Well Minister, I know you are in the Senate, looks like you’ll be there until about midnight. I hope you have got good catering. All the best with it and thank you very much for joining us.

Simon Birmingham: Thank so much guys, all the best.