Bills Digest no. 161 2009–10
Family Assistance Legislation Amendment (Child Care
Budget Measures) Bill 2010
WARNING:
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Contact officer & copyright details
Passage history
Family Assistance Legislation Amendment
(Child Care Budget Measures) Bill 2010
Date introduced: 26 May 2010
House: House
of Representatives
Portfolio: Early Childhood Education, Childcare and Youth
Commencement: The day of Royal Assent.
Links: The
links to the Bill, its Explanatory Memorandum and second
reading speech can be found on the Bills page, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
To set the maximum per child
amount of Child Care Rebate to $7 500 per annum and suspend
indexation until July 2014.
The 2010–11 Budget provides
$273.7 million to support the introduction of the National Quality
Framework (NQF) for early childhood education and child
care.[1] The NQF will involve, amongst other matters, the
progressive phase-in of improved carer-to-child ratios and higher
qualification requirements for carers from January 2012.[2]
From July 2010 a transition phase commences where services will
begin to undergo assessment against the NQF’s National
Quality Standard. The NQF will increase the costs faced by child
care services which will then, it is anticipated, pass those
increased costs on to families using child care.[3]
Claims about the extent of fee
increases vary from the Government’s view (supported by the
new operators of ABC Learning) that they will be small, to claims
from some industry groups that they may be as high as $12 to $22
per day.[4] These conflicting views are not new, but have been
given renewed attention in light of the Government’s decision
to return the cap on the amount of Child Care Rebate (CCR) that can
be claimed for each child in care to the 2008–09 level of
$7500 per annum. Indexation had taken this cap to $7778 in
2009–2010. This measure will take effect from July 2010 and
indexation will be suspended until July 2014. Savings of $86.3
million over four years are expected.
The Government views this measure as
a savings measure to offset some of the $273.7 million to be spent
implementing the NQF for early childhood education and child care.
Deputy Prime Minister Gillard points out that the change will only
affect three per cent of families receiving the rebate in
2010–11.[5] That means that about 20 700
families will be affected, losing up to about $9 a week (taking
account of the indexation of the cap that was due in July 2010). As
the indexation freeze progresses, the impact will grow due to
increases in child care fees over that time. This is reflected in
the growth in the estimated savings from $5.7 million in
2010–11 to $42 million in 2013–14. If the worst case
fee increases projected by some in the child care industry come to
pass then that would substantially increase the impact of this
change.
The Government does expect
expenditure on the CCR to increase as the NQF rolls out. Increased
expenditure on CCR over the period 2010–11 to 2013–14,
as a result of the improved child care standards, is identified in
Budget Measures: Budget Paper No. 2: 2010–11 under
the heading ‘National Quality Agenda for Early Childhood
Education and Care – national partnership
implementation’. Expected CCR outlays climb from $9.1 million
in 2010–11 to $64 million in 2013–14.[6]
However the impact of the change in
dollar terms pans out, it is clearly going to fall mainly on those
families who use a lot of the most expensive child care (usually
located in expensive accommodation in central business district
locations). It follows that these families are unlikely to be low
income families.
The Greens are reported to be opposed
to the CCR changes.[7] The Coalition response was also critical.[8]
The measures in the bill are expected to result in savings of
$86.3 million over the four years from 2010-11 to 2013-14.
Item 2 adds new
paragraphs 84F(1)(d) to (f) to the Family Assistance
Act 1999. They fix the amount of the annual child care rebate
(CCR) limit for each child for years 2010-11 to 2013-14 at $7 500.
Indexation under schedule 4 will recommence in July 2014.
Item 4 inserts new subclause
3(6A) into Schedule 4. This subclause specifies that the
CCR limit will not be indexed in the years 2010 to 2013.
Members, Senators and Parliamentary staff can obtain further
information from the Parliamentary Library on (02) 6277 2410.
Dale Daniels
2 June 2010
Bills Digest Service
Parliamentary Library
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