LABOR SENATORS’ DISSENTING REPORT
Introduction
1.1
On reference by the Senate on the 5th of December 2013 for inquiry
into schedules 6 and 9 of the Social Services and Other Legislation Amendment
Bill, Labor Senators;
- Oppose amendment to Schedule 6 in its entirety, and;
- Oppose
amendment to Schedule 9, with reference to the continuation of the freezing on
the indexation on the annual Child Care rebate limit of $7500 to 30 June 2017
Opposition to Schedule 6
1.2
The passage
of Schedule 6 will abolish existing Student Start-up Scholarships (two grants
$1,025 per year) and replace them with student start-up loans of an equal
amount to be repaid under similar arrangements to Higher Education Loan Program
(HELP) debts.
1.3
In April
2013, the former Labor Government announced similar amendments as saving
measures to ensure vital school reforms could be funded under the Better
Schools Plan.
1.4
The $2.3
billion package of savings measures introduced by Labor were put forward to
help fund $11.5 billion of once in a lifetime changes to our school system that
are now no longer going ahead under the Coalition government and the 44th
Parliament.
1.5
The Bradley
Review, which developed the proposal had been instructed that the changes had
to be budget neutral. This amendment creates a budget saving that is not offset
with education investment and instead contributes to the Government’s bottom
line.
1.6
Evidence was
presented by the National Union of Students (NUS) and the Council of Australian
Postgraduate Associations (CAPA), in submission, and also in hearings attended by CAPA held
on the 9th December 2013 at Parliament House, Canberra,
demonstrating the correlation between HECS policy changes that result in an
increase in the cost of higher education and a reduced participation in higher
education, especially by low socio-economic groups and first in family
participants.
1.7
The NUS in
particular submitted copious evidence that risk aversion to debt affects
student’s willingness to enter into and continue in tertiary education:
NUS’s core critique of the impact of HECS on equity has
focussed on the concept of study debt aversion. The study debt aversion
hypothesis is that different social groups may tend to respond differently to
the idea of taking on large amounts of debt – even if it is supported by a
progressive income contingent repayment option. While an upper-middle class
school leaver may not be put off by a large study debt, a low income mature-age
rural students might well be.[1]
1.8
CAPA also
presented evidence in hearings suggesting that abolishing start-up scholarships
in favour of a loan scheme would discourage students from a lower socioeconomic
background from entering postgraduate studies,[2]
and evidence that students from rural and regional areas in particular rely on
the start-up scholarships to establish their entrance into undergraduate
studies. [3]
1.9
Similarly,
CAPA presented evidence suggesting that abolishing scholarships in favour of
loans arrangements to Higher Education Loan Program (HELP) debts affects
students’ decisions of when they choose to exit university and enter the
workforce:
Mr Maheswaran: ... But, in terms of the quantitative
impact on students, we can say that it affects their decisions in terms of when
they want to enter the workforce—that is, the length of the degree and how long
they want to spend within the university sector—as well as their career choices
once they do enter the market. [4]
1.10
Finally,
Departmental representatives presented evidence in hearings that the Coalition
Government is failing to rely on any models that investigate effects on low
socioeconomic students.[5]
Opposition to Schedule 9
1.11
Schedule 9
proposes amendments to continue a freeze on the indexation on the Family Tax
Benefit Part B (FTB-B) primary earner income limit, the Parental Leave Pay
(PLP) and Dad and Partner Pay (DAPP) individual income limit, the higher income
free area for Family Tax Benefit Part A (FTB-A), the FTB-A and FTB-B
end-of-year supplement amounts and the annual Child Care Rebate limit of $7500,
until 30 June 2017.
- Labor
Senators do not oppose proposed amendments to continue a freeze on the
indexation on the Family Tax Benefit Part B (FTB-B) primary earner income
limit, the Parental Leave Pay (PLP) and Dad and Partner Pay (DAPP) individual
income limit, the higher income free area for Family Tax Benefit Part A
(FTB-A), the FTB-A and FTB-B end-of-year supplement amounts.
- Labor
Senators strongly oppose proposed amendments to continue a freeze on the annual
Child Care Rebate limit of $7500, until 30 June 2017.
1.12
The rationale
for the temporary freeze under the former ALP Government was to support the
implementation of the Early Years Quality Fund, recognised as an important
reform in the industry, which would see an increase in professional wages of
early childhood educators. However, with that fund now scrapped, a further
pause on indexation unnecessarily impacts the sector and families who utilise
childcare without redirecting the budget savings back into the sector.
Amendment to Child Care Rebate limit
(Specifically)
No support from Peak Bodies
1.13
The amendment
to this section of Schedule 9 has received no support from the two peak bodies
in Australian childcare, Early Childhood Australia and the Australian Childcare
Alliance, who both submitted evidence to the committee and presented further
evidence at hearings.
Increasingly early exhaustion of benefit
1.14
There exists
extensive evidence to show that as prices for formal child care have increased
beyond CPI, families who would have previously benefited from 12 months of this
rebate are exhausting their limit much prior to this date:
Families who originally would have been able to go through
the whole year and use the 50 per cent of the childcare rebate were finding,
two years ago, that their childcare rebate was running out around April. So in April,
May and June parents were paying full fees.[6]
It is going to make it extremely tough on families. We are
finding that families are working out how many days a week they can work to
make that childcare rebate extend past the second quarter of the financial
year. Many centres around Australia have Mondays and Fridays free because
families are cutting those workforce days. [7]
1.15
It is worth
noting here that the Government has no control over the cost of care, nor the
size of increases applied by the market.
1.16
This evidence
is similarly supported by Ms Jackie Wilson, Deputy Secretary, Early Childhood
Education and Care, Department of Education, who gave evidence in the hearings
as follows:
Senator
LINES: And, in terms of impact on families, what research have you
done? In terms of which income level of families will hit the cap first? What
will that impact be—what research have you done?
Ms
Wilson:
I assume you are continuing the discussion you had with people at the table
earlier. I think approximately 100,000 families are estimated to reach the
childcare rebate annual limit in 2014-15.
Senator
LINES: So when will they reach that limit?
Ms
Wilson:
Over the course of that financial year.
Senator
LINES: But when? Which month? If they are receiving a rebate, when
will that rebate run out?
Ms
Wilson:
I think our modelling suggests probably March to April in the 2015 financial
year.[8]
1.17
Evidence was
also presented by Ms Wilson of the Department of Education demonstrating the
drastic increase in forward estimates of families who would reach this cap:
Ms
Wilson:
I think our modelling suggests probably March to April in the 2015 financial
year.
Senator
HANSON-YOUNG: The families who will hit the cap and the number
of families who will hit the $7,500 cap and therefore will not be able to claim
the rebate after, say, March-April.
Ms
Wilson:
That would be 147,000 in 2016-17.
Senator
HANSON-YOUNG: And what about the next financial year?
Ms
Wilson:
It finishes on 30 June. I can give you 2014-15, 2015-16—
Senator
HANSON-YOUNG: Do that for me, please.
Ms
Wilson:
About 100,000 families in 2014-15, approximately 120,000 in 2015-16, and
147,000 in 2016-17. [9]
The
Government and majority report relies on inaccurate figures to justify the
continuation of the freeze
1.18
Evidence was
presented in hearings demonstrating that the Government has relied upon
inaccurate figures to draw the conclusion that the freeze on the annual Child
Care Rebate limit would inflict minimal impact on families, both on daily costs
of childcare, the number of families affected, and the impact of the cap on
families who predict they will exceed the limits, rather than families who
actually exceed these limits, as follows:
1.1 On
the daily cost of childcare:
Mrs Bridge: To be able to get the full rebate now,
families would need to pay about $57 a day for childcare for five-days-a-week
care. There is no place in Australia where childcare in long-day care is $57 a
day. The previous federal government said average fees were about $72 a day,
and ACA believe that it is more likely $80 a day. Families are finding now that
with fees of $100 a day, five days a week, they are running out of childcare
rebate very early in the second half of the financial year. This
is having a huge impact, as many of them are paying up to $18,500 per annum for
their additional fees. [10]
On
the number of families affected:
Senator
HANSON-YOUNG: What do you say to the government when it says,
'This will only affect 100,000 families.'?
Mrs
Bridge:
I think the figures I found the other day were that it could go to 150,000
families.[11]
Senator
HANSON-YOUNG: The figures from the government suggest that
upwards of 80 to 90 per cent of people are actually well and truly okay and
within the capped level. You are suggesting that that is not necessarily
representative of families' needs?
Mrs
Bridge:
It is not, because there are many things impacting as well as this. This is
just the icing on the cake, shall we say, because this is the one that is also
causing the families to find it difficult because of the increased costs.[12]
On
families who decrease care to avoid reaching limits:
Senator
HANSON-YOUNG: So you have been able to pull data together that
says about 15.5 per cent of families are going to be directly impacted by this.
I take on board your point in relation to the fact that other people may be
keeping themselves out of that capped level by virtue of not being able to
afford it anyway.
Ms Page: That is right. That is the forward
estimates in relation to how many people will hit the cap in 2016-17. However,
as you point out, there might be lots more families who would, if they could
use the amount of child care that they need, be hitting that cap but have
pulled back from that because they are concerned about cost.[13]
1.19
Further
to this, the evidence base the government is drawing from is inaccurate, due to
patchwork care arrangements (i.e. Families relying on grandparents or friends
to undertake child care), and families who, in fear of exceeding the cap, rely
on cheaper, unregulated care. This was supported by both major peak bodies in
hearings as follows;
ACTING CHAIR: Do you have concerns that
families might be using unregulated care?
Mrs Bridge: There is a concern. In our 2013 survey
26 per cent, or 248 families, said they would consider using unregulated care.[14]
Senator HANSON-YOUNG: Please correct
me if I am wrong about what you are saying, but this is what I have interpreted
from you. Are you saying that it is a reality to see people, families, choosing
other options rather than professional care for their children, if indeed they
start hitting this cap much earlier in the financial year?
Mrs Bridge: We have only got from the survey that
26 per cent said they would choose an informal option, but we also see a lot of
grandparents that are really struggling under the pressure these days of
looking after children, so it is probably a patchwork for families if they
choose to stay in the workforce. But we do also see a lot of families who are
just working the Tuesday, Wednesday and Thursday now and dropping off the two
days to cut back the fees.[15]
Ms Page: We would expect
that there are a whole load of families that have made decisions about their
utilisation of early childhood services anticipating that they might reach the
cap and not wanting to do that; therefore, we anticipate the impact would be
much broader than 15.5 per cent. But that is the known proportion of families
at least that are reaching that limit at the moment.[16]
The amendment will at least limit,
if not decrease, women’s participation in the workforce
1.20
The
amendment pertaining to the annual Child Care Rebate
limit also has the potential to limit, and indeed decrease, women’s contribution
to the workforce. In giving evidence, Mrs Bridge of the Australian Childcare
Alliance cited a 2001 HILDA report that said that 40.3 per cent of mothers were
back in the workforce before their child's second birthday. She noted that
after the childcare rebate was introduced in 2008, that figure rose quickly to
52 per cent who were returning to work.[17] This demonstrates the
availability and affordability of quality childcare increases the likelihood of
women returning to work.
1.21
Mrs
Bridge cited various examples from research undertaken by the ACA that
demonstrates the impact the freeze on this limit has on families’ decision to
have children, and the decisions on their working lives following the birth of
children, as follows;
Mrs Bridge: We did a 'What parents want' survey in
2010, which said that one-third of parents believed that they would have to
delay having more children and that one in three would have to reduce their
working hours or leave their job. When we did that same survey in 2013 the
figure for parents who said they would leave the workforce entirely was 60 per
cent. That was 673 families out of 1,430 who participated in the survey.[18]
Mrs
Bridge: ... Many families say that if
there is nothing coming they are going to have trouble holding on in the
workforce.[19]
Mrs
Bridge: The Australian Childcare
Alliance ... believe that, if we increase our female workforce participation, it
becomes cost positive to the government to fund a quality
early-education-in-care setting for families.[20]
Childcare centres risk becoming unviable
1.22
This amendment will see an impact on the viability of childcare
centres. With the ACA presenting evidence that already centres have decreased
patronage on Mondays and Fridays as parents (usually mothers) decrease their working
hours to decrease the hours their children require child care, Labor Senators
also note that the ACA, a peak body in childcare, gave evidence that centres
would be forced to close as a result of this freeze extension;
ACTING
CHAIR: Mrs Bridge, because this cap will remain in place until
2017 and you have made the point that services are low on their enrolment
numbers on Mondays and Fridays, could you envisage a situation where services
might close?
Mrs
Bridge:
If there is no relief for families in assisting them with their affordability
issues now till 2017, I am sure we will see a major decline in usage.[21]
Extension of the freeze further disadvantages low income families
1.23
Finally, Labor Senators note that this freeze further disadvantages low
income families, with the ACA presenting anecdotal evidence that lower income families are not
able to afford a quality early-education-in-care regulated setting, and as such
may strain family relationship by relying on patchwork care, or risk
unregulated care for their children;
Senator
HANSON-YOUNG: Have you seen the reports today suggesting that
families on as little as $35,000 a year are spending up to nine per cent of
their income on child care?
Mrs
Bridge:
No, I have not seen the report, but something we have noticed is that lower
income families are not able to afford a quality early-education-in-care
regulated setting. We are not seeing many of those families at all, because,
even with the childcare benefit—and, as I said, it has devalued through bracket
creep and not keeping up with the real costs of raising a family and having
them in an early-education centre—those families are really struggling. It
is the children with additional needs and children from lower socioeconomic
households who really do need to have an early education as well. It is not
just the high-end families that are being affected.[22]
Conclusion
1.23
Following the
enquiry into schedules 6 and 9 of the Social Services and Other Legislation
Amendment Bill, the Labor Senators of the Education and Employment Legislation
Committee;
-
Oppose
amendment to Schedule 6 in its entirety, and;
- Oppose amendment to
Schedule 9, with reference to the continuation of the freezing on the
indexation on the annual Child Care rebate limit of $7500 to 30 June 2017
Recommendation 1
1.24
Labor Senators recommend that the Senate reject amendments to
Schedule 6, and amend the amendment to Schedule 9 accordingly.
Senator
Sue Lines Senator
Mehmet Tillem
Deputy Chair
Australian Labor Party Australian
Labor Party
Senator for
Western Australia Senator
for Victoria
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