Interview on Kinderling Kids Radio with Shevonne Hunt
Topics: Reforms to child care and early learning; Activity test; Access to preschool; Family Tax Benefits
Shevonne Hunt: The child care package has now officially passed into legislation. You may still be confused about what it all means to you, so today we’re joined by the Minister of Education Simon Birmingham, who will hopefully shed some light on some of the areas that are still a little bit confusing. Minister, welcome to Kinderling Conversation.
Simon Birmingham: Thanks Shevonne. It’s wonderful to be with you.
Shevonne Hunt: One of the things that we’ve all heard about is how this package will simplify the current child care support into one system. So there’s the child care rebate, and there’s the child care benefit. I’ve been using it for years and I still don’t understand the difference.
And I think many parents do that. You know, we apply yearly or when we change centres, and then we’re like, oh, how does this work again? So what will it look like when it all changes in July 2018?
Simon Birmingham: So we’re going to change to one simple single payment, a new child care subsidy. The child care subsidy is means-tested, so the less somebody earns, the greater the level of subsidy they will receive. So for low income families, that means really the rate of support they receive compared with the current combined arrangements of the child care rebate and child care benefit will go up from about 72 cents in the dollar to 85 cents in the dollar of support. For all families earning less than $185,000, the cap that’s in place on the amount of child care rebate that people can receive will be abolished, gone. So that $7500 cliff that people fall over during the middle of the financial year will be taken away. For people on higher incomes, that will be lifted from $7500 to $10,000. So it really is trying to put in place a much fairer package that doesn’t involve people trying to understand different systems, but essentially is one that is a means-tested, new child care subsidy that ensures the more hours you work or study or volunteer, the greater the level of support you’ll get for subsidised child care and early education services. The less you earn, the greater the rate of subsidy that you’ll receive as a family.
Shevonne Hunt: Okay. So, that sounds great. Does it mean that we’ll be doing this online? And that’s just one stop shop at the beginning of the working year, or?
Simon Birmingham: We are building a whole new IT system that will hopefully make it much simpler for families and service providers and mean that rather than, as I’ve done and my wife has done for many years with our little ones, signing them in and out on the scrap of paper in the early learning centre, you’ll actually be able to now go through a more automated process which will save the educators and operators of centres from having to transcribe all those scraps of paper into reports, back to the government and so on.
Shevonne Hunt: God, I didn’t think they’d have to do that [laughs].
Simon Birmingham: It’s a very messy, cumbersome process at present, and so they’ll be saved from doing that, which means they can spend more time doing the things that matter, spending the time with the kids and on developmental activities and all the things we want them to do. For parents, that part will be simpler, but in terms of actually the engagement with the system, yes, people will just need to make sure they go through a usual Centrelink type of process, as is currently the place, but hopefully with a much simpler, more streamlined model that we’ll have developed for families who have a relatively stable level of income and stable work pattern. They’ll just be able to put in that data, understand where they’re at and it’ll all be straightforward. For families who might have some fluctuation in their income during the course of the financial year or some variation in terms of the hours they work, then there will be periodical updates that they’d need to do, just the same as for any other payment.
Shevonne Hunt: Okay. So that’s probably the point that I want to get clarified, because I think there’s a lot of confusion around the activity test. So for example, there’s lots of contractors or freelancers, and speaking personally, my husband’s a photographer, and there are often times when he might go a fortnight without work, and our son is in day care three days a week. My daughter’s now at school. But I just don’t understand how it works. If he has such sporadic work, does it mean that one week I’ll be paying 450 for that fortnight, and then the next week 900? Like …
Simon Birmingham: Nope. Not at all. The activity test approach is based on a capacity for people to be able to average over a period of three months. So in those sorts of instances, people can take an average of their work pattern and apply that across a period of time so you don’t get that sort of disruption either to the bills that families face or to the access that children have to early education. It’s also, of course, a really light touch activity test. To get on the first step of support under the activity test is only four hours of work or training or volunteering. Going in and sitting down and reading to the kids, either at the preschool or child care centre, or at your older child’s school will qualify as an eligible activity. So we’re really trying to encourage that type of parental engagement that even if you’re not necessarily in the workforce or ticking the box of the activity test in those ways, there are ways you can do so that will value-add in terms of the benefit you get as parent, and as well the benefit that your child gets in terms of engagement in that school or preschool or child care setting.
Shevonne Hunt: Which sounds great, but we all know that families can be so complex, and when I was looking at this, I was thinking about – as I’m sure has been written about in the media – I was thinking about a family where there might be a stay-at-home parent and the other parent only earns $65,000. They might have three children that are in all sorts of different care arrangements – school, early learning, all that sort of thing – and as we know that when you stay-at-home, there can be so much going on that it might be actually hard to find that eight hours. I mean, do those families actually then miss out on any support?
Simon Birmingham: Depends on the circumstances. So if we’re talking about a family earning just over the $65,000 threshold – because below that there’s a guarantee of getting 12 hours of access which should entitle people to two sessions of care – if you’re earning above that but not meeting the activity test in any other way, well then there are other things that are available in terms of the universal access to preschool that ensures every child in Australia has access before they get into school to 15 hours of pre-school care, which is a really important preparatory period.
Shevonne Hunt: [Interrupts] And that’s subsidised, regardless?
Simon Birmingham: That’s subsidised by State and Commonwealth Governments together, and is available in different states in different ways, some through dedicated kindergartens and preschools, others operating still through child care centres and long day care centre models. So parents will know in their state how that applies. But that point of access is there for everybody. But then there’s really strong safety nets, as we discussed, for children or families earning less than $65,000, as well for anybody in terms of circumstances where kids might be at risk or in circumstances of risk where the child care provider themselves can make that assessment and do that upfront, and then they step through a process with the State Government and so on to verify that after the determination has been made so that there’s no delays in that regard. But ultimately, as I say, it’s an incredibly light touch activity test. I know that any activity test can sound really difficult in a busy household …
Shevonne Hunt: [Laughs] Yes.
Simon Birmingham: .. and I get that. My kids are four and six and juggling between school and early learning and after school activities and work pressures and everything else makes it challenging, but what I’d emphasise to parents is you don’t necessarily have to do that much which can be something quite often that you might already be doing in your day to day life that should tick over that threshold and give you the opportunity to access that first step of activity under the new child care subsidy.
Shevonne Hunt: You’re listening to Kinderling Conversation, and I’m speaking with the Minister for Education Simon Birmingham, about the child care package that has now passed into legislation, so we don’t have to worry about things changing now. This is what it will be, starting from July 2018. So Kinderling Conversation, we talk a lot with the early learning sector. We’ve done a lot of stuff about the National Quality Framework, and the importance of early learning, and it seems like different governments have invested a lot in the research about why it’s important kids get that sort of education, particularly in the year before school. Now, Early Childhood Australia responded to this package, they said with disappointment, because two things in particular for them were that one, children should have access to 15 hours, not 12 and the other thing they were requesting was that the cap be not $65,000 but $100,000. Given that the sector has so much research going on – and for the benefit of children – why didn’t the Government listen to those two recommendations?
Simon Birmingham: First thing is to remind people that you’ve got that access to preschool in the year before going in to formal schooling, already. And so that’s unaffected by these changes and that’s in addition to any other access in entitlement under the child care subsidy framework. The second point there is that the arguments about 15 hours versus 12 hours are largely business arguments made by child care providers about what suits them to offer in terms of the sessions of care that they provide …
Shevonne Hunt: [Interrupts] But wouldn’t Early Childhood Australia argue that it’s about the time that children need to have that contact as opposed to …
Simon Birmingham: Well, the research is that there should be two sessions of care available a week. And two sessions of, therefore, education opportunity, advancement, development, etcetera. And 12 hours enables two six hour sessions a week. Six hours is not dissimilar to, of course, the length of a school day. When you think about three year olds, two years olds that we’re talking about here and you’re saying; they’re not here for child care because mum and dad are out working, they’re there for educational and development activities – six hours a day is a pretty long day for two and three year olds as well, in those settings. So our view is that 12 hours absolutely should entitle people in those circumstances to two sessions of care and education, each week, and that is absolutely what the advice says. The argument about 15 hours is more a case that it suits the providers to run a seven and a half hour day model – in terms of their charge out rate – even though we know that at present many kids, of course, are there, and parents and tax payers are paying for hours of care that aren’t actually used because people are dropping off and picking up well inside of the hours that they’re actually being charged for.
Shevonne Hunt: Another thing that is separate to the child care package was the savings measures that were passed through before, to be able to afford this. And Jacqui Lambie, made a very impassioned speech about the indexation on the Family Tax Benefit A freezing and saying that it would hurt poorer families and especially single parent families because they’re still going to have to pay for things, even though they’re not getting more money but the cost of those things will go up. So, what’s your response to her basically saying that politicians don’t understand how hard it can be for single parents? Because it was very- listening to that speech, no one doubted that that was from the heart.
Simon Birmingham: Look, it was an impassioned contribution from Jacqui. And a few things there; that we made sure in the end that nobody is going backwards in that sense. There’s a pause on indexing payments. People will still receive their Family Tax Benefit payments and for many families, they’re quite significant payments that they will still continue to receive. We also think as a Government, that it’s right to invest in areas of helping families to participate and to engage and to be able to do more and choose what suits them in terms of the way they work or whether they study and how they structure their families. And so, spending more in child care and enabling families to be able to better work the hours that suit them, the days that suit them, without child care bills being impediment to that, is a way of helping people to get ahead and do what suits them best. Rather than, of course, it just going in to Family Tax Benefit payments – which are important, which will still be there and which won’t go backwards but equally, of course, don’t help people make that decision to say; well, it suits me to work more, I want to work more, I want to go back sooner, I want to juggle it in this way. Which our child care reforms empower people to do – and particularly empower mostly mums – to make those decisions about when they go back to work and how they juggle those circumstances.
So there’s a decision there as always about how do you have to pay things, where do you prioritise expenditure. We’ve prioritised it in those early years. And for many families, they’ll be thousands of dollars better off under the child care reforms, as a result of these changes, which will far outweigh any difference they might see in terms of the indexation of Family Tax Benefit changes. So the fact we’re targeting to lower income households and middle income households and that if you’ve got just one child in long day care for a few days a week, you’re going to be about $2000 a year better off as a result of the child care subsidy changes. Which is much, much more than you’d expect to receive in a couple of years of indexation of Family Tax Benefit.
Shevonne Hunt: Okay now, there’s one other area in- that isn’t associated with the child care package that at one point was all together that I think many parents are still wondering about, and that is the paid parental leave package. Where is that at? Where are we at with that? [Laughs].
Simon Birmingham: There were no changes in the end as a result of this legislation to paid parental leave. We had put on the table a proposal to give a minimum guarantee for families that would have been paid for by ensuring or seeing that families who received in excess of that minimum from their employers weren’t receiving as much by way of tax payer funded paid parental leave, in addition. Ultimately, that didn’t have support in the Senate, we haven’t progressed with those changes and anything around that will have to be …
Shevonne Hunt: [Interrupts] So it’s just going to stay as it is at the moment?
Simon Birmingham: Right now it stays as it is, unless the Parliament chooses otherwise.
Shevonne Hunt: The term has been coined as double dipping, so that’s going to stay?
Simon Birmingham: If you want to put it that way …
Shevonne Hunt: [Interrupts] I don’t, I’ve been told to put it that way [laughs].
Simon Birmingham: [Laughs] There are no changes at present, that means that the minimum entitlement doesn’t increase but yes, families where people are receiving a potentially generous employer subsidised paid parental leave, will also receive the full Government tax payer subsidised paid parental leave benefit, as well.
Shevonne Hunt: Minister, thank you so much for coming in and chatting with us.
Simon Birmingham: Thanks, an absolute pleasure.
Shevonne Hunt: That’s Education Minister, Simon Birmingham. And if you know some one who also needs some clarification around the package, you may want to share this interview with them. It will be online, later this afternoon, just head to kinderling.com.au.