Subject: Child Care Reform
James Carleton: The Turnbull Government will use the final sitting week of the year to legislate its $3.5 billion revamp of the child care sector. Under the Jobs for Families package the existing child care rebate and child care benefit will be replaced by a single payment from July 2017, which the Government says will leave the majority of households $30 a week better off. But a new activity test means parents will have to work more hours to qualify for assistance. The Opposition is yet to be convinced; pointing out that one in four families will lose out under the changes.
Kate Ellis: The inconvenient truth remains that this is a government who is spending billions of dollars to make families go backwards when it comes to accessing affordable child care. There is one question that the Government needs to answer today; who is going to be worse off as a result of these child care changes, and how much worse off are they going to be?
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James Carleton: Labor child care spokesperson Kate Ellis. The Education Minister is Simon Birmingham; he spoke a short time ago to Political Editor Alison Carabine.
Alison Carabine: Simon Birmingham good morning.
Simon Birmingham: Good morning Alison and good morning to your listeners.
Alison Carabine: If we could have a look first at the top end of the scale, under this new system families would only start losing child care support once their income reaches $230,000. At first blush that seems very generous, why should families earning well above the average wage have their child care cost subsidised.
Simon Birmingham: What the Productivity Commission found was that it was important to send the right signal of support to ensure all families have some type of assistance for child care so that they’re able to participate in the work force to really encourage those families for work force participation. And that’s why we have a floor in relation to the child care subsidies, but that floor is being shifted from 50 per cent which was proposed at the time of the budget, to now 20 per cent which will apply to families earning more than $340,000. So…
Alison Carabine: But Minister why do families on $340,000 a year need subsidies or incentives to stay in the work force?
Simon Birmingham: Because indeed it can still be the marginal difference for the second income earner actually participating in the work force. This is one of the challenges in structuring child care subsidies, that of course it’s really far more about whether or not that facilitates the lower and second income earner participating, and work force participation is a benefit for all of the economy and all of society when we get extra people into the work force, regardless of whether they are from a high income or a low income family. And so we’re wanting to make sure we provide that support, which does of course mean that while it continues for all families, as indeed does the current child care rebate, but it will be less generous for those high income families, and our support really is more skewed towards supporting those who need it most.
Alison Carabine: And at the other end of the income scale families earning under $65,000 will have about 85 per cent of their cost covered by the Government, but that extra funding comes with a new activity test attached; a minimum of 8 hours a fortnight of work, study, or volunteering. You’ve described that as a light touch, but what about dysfunctional families where the parents would have trouble meeting this activity threshold, is it fair that vulnerable children for these types of households could miss out on their time in child care?
Simon Birmingham: In relation to the early learning aspect we have a number of safety nets built into this program as well. First and foremost that for every single preschool child in Australia they’re eligible to 15 hours of preschool support per week in the year before they start school, regardless of their family circumstance. So it’s a strong commitment to early learning.
Alison Carabine: So no child- no child will miss out on child care?
Simon Birmingham: No child will miss out on preschool, and so that year before school every single child, regardless of family circumstances, is entitled to 15 hours per week of preschool. On top of that for low income families under $65,000 income they are exempt for the activity test for up to 12 hours per week of care, so there’s an additional opportunity for early learning experiences for those children in more vulnerable families, and on top of that there’s a very generous safety net in place that will ensure that for any child who is deemed to be at risk or in vulnerable circumstancea authorities will be able to provide them with, if necessary, unlimited care and learning support.
Alison Carabine: But the Opposition is saying that one in four families will be worse off and they have some NATSEM modelling to back up their claim; 270,000 families be worse off by almost $1900 a year on average. How many losers will there be if you do manage to legislate this package?
Simon Birmingham: Well Alison, all of the details will be there for all to see when the legislation is introduced into Parliament this week but I do reject those types of hysterical claims. We are putting in place a system that ensures for families earning between $65,000 and $170,000 per annum. They will on average be $30 per week better off or $1500 per annum better off. These are families who are working the most, earning the least from their work at times and therefore will get the greatest support under this new child care subsidy. Yes we have in place the activity test that will limit in some instances the access to care for certain families who may not meet that activity test but it is designed to ensure that child care services and subsidies are most available to those who need it, who are working the most and to encourage increased workforce participation and our modelling does show that there will be a lift in workforce participation as a result of these reforms.
Alison Carabine: And will you release that modelling when you unveil the legislation this week?
Simon Birmingham: With the legislation out there I’ll be happy to make sure that all relevant questions are answered because we think this is a very generous package. It’s a package that does ensure child care is more affordable to those who most rely on it. It’s simpler to navigate because we will go from having more than three different types of payments to just one payment that is determined on a mixture of workplace activity and family income which is a much fairer way to do it.
Alison Carabine: Well Minister, the price tag is $3 billion plus. You’ve linked the policy to the cut to family tax benefits. How are you going to pay for expanded child care if you can’t get the FTB cutbacks through the Senate where they’ve been stalled for quite some time now?
Simon Birmingham: Well how we’re going to pay is a good question because even Labor’s shadow family spokesperson Jenny Macklin acknowledged that you have to pay for a measure like this somehow. We will continue to work and talk with the crossbenchers, the Labor Party, the Greens and to try to make sure we can get savings measures through.
Alison Carabine: But where are you going to get the cotes in the Senate? Labor and the Greens are lined up against your family tax benefit cutbacks. They point out that while you’re giving more with one hand re: child care, you’re taking with another the family tax benefit cuts. Was it wrong to link the two in the first place?
Simon Birmingham: Well it’s very important that when you’re announcing new spending measures, you also have ways to pay for those new spending measures and what of course we’ve done over a period of time is we’ve made some changes to the family tax benefit proposals to make them fairer. We’ve equally now made some changes to child care proposal to reduce some of the rate of support for high income families which makes it more affordable. So we’re responding to some of the feedback that’s there and we’re very eager to make sure that we do in fact get the savings through that can allow this much more generous and much fairer and simpler and more accessible child care package to equally pass the Senate.
Alison Carabine: Simon Birmingham thanks for joining Breakfast.
Simon Birmingham: Always a pleasure Alison.
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James Carleton: He’s the Education Minister and our political editor Alison Carabine.
Senator Birmingham’s media contact: James Murphy 0447 644 957
Department Media: email@example.com