LABOR SENATORS' DISSENTING REPORT
Labor supports the additional investment in child care proposed by the government,
but we are not convinced the proposal will achieve the best results for
families, children's development or workforce participation. Labor have long
argued the importance of proper attention to child development, and
affordability of quality early learning. We believe the government needs to
ensure extra investment flows to these areas, rather than to the profit margin
of providers. Despite the rhetoric of the Turnbull Government about controlling
out of pocket expenses for families, research undertaken by the ANU Centre for
Social Research and Methods reveals that one in three families will be
negatively impacted, 330 042 families will pay more for child care and 157 400
children will be impacted by the new activity test.
Labor is proud of our record in increasing the rebate to 50 per cent to
assist parents with out-of-pockets costs, ensuring the quality of care of
children through the National Quality Framework, and introducing universal
access funding for critical early childhood education. Labor will always be
driven to build on this foundation.
This Bill does not address out of pocket costs for families, only cost
to the Government. Whilst Labor Senators support the Government's proposed
additional investment in early education and care, it is essential to note that
this is funding diverted from other areas, and consider whether there are
fairer and more effective ways to direct this investment.
Labor Senators argue that this bill forms part of a wider pre-election
political quick fix, rather than allocation of appropriate funds to areas that
will best assist families and best engage children in early education.
Impact on out-of-pocket fees as a result of the Bill
Labor senators argue that the introduction of an inflexible national
subsidy rate will mean many low and middle-income families in high-cost child
care markets will face higher out-of-pocket fees.
Labor senators also voice concerns that the benchmark price funding
model will not adequately address fee growth and out of pocket costs for
parents. Over time, growth in Early Childhood Education and Care (ECEC) costs
will increasingly be borne by parents, particularly in the context of
Government's most recent data which shows 'an increase of 9.2 per cent in the
average weekly cost of child care per child from September 2013 to September
The ACTU argue that the benchmark price funding model is 'likely to
compromise the ongoing sustainability of funding for early childhood education
and care for families... Over time, this is likely to result in real decreases in
support to families'.
Labor Senators support this argument.
Further to this, the Government has failed to adequately argue the
impact that the investment in early learning has on the economy in the long
term. The Grattan Institute found that if Australia increased its female
workforce participation rate to that of Canada (which is 6% higher), our GDP
would be increased by $25 billion.
The Murdoch Children's Research Institute argued:
While it is economically sound that Australians be supported
to participate in employment, and child care helps to meet this need, a primary
focus on workforce participation misses the greater economic benefit that can
be reaped through early investment in children's development.
Goodstart Early Learning provided an example in their submission:
Experience shows it can be done: the Canadian province of
Quebec, faced with one of the lowest female participation rates in Canada in
1997 initiated a policy of subsidizing childcare to a net price of just $5 a
day. More than 70 000 mothers joined the workforce and a decade later Quebec
had the highest level of workforce participation in Canada. Economic modelling
found the reforms paid for themselves, with Government receiving $1.51 in
additional tax revenue and savings on social welfare for every $1 paid in childcare
Impact of the new activity test for determining eligibility to subsidised
ABS research on
barriers to work clearly identifies the availability and affordability of
childcare as key impediments to many women either entering the workforce or to
increasing their hours.
Submitters to the
Committee argued that the activity test could create a disincentive to mothers
entering the workforce or increasing their hours of work, thereby reducing
This Government has to date done nothing to increase the availability of
ECEC places in areas of high need. It would be completely unreasonable for the
Government to introduce a new test that could make accessing care for families,
in particular women, without addressing the rising costs of that care.
A number of submitters argued that the new activity test will be
particularly unfair to parents who are in a casualised, seasonal or unstable
For example, Goodstart Early Learning submitted:
The current subsidy system is very efficient at supporting
low and middle‐income
families with at least one parent in irregular work because it provides a broad
base entitlement and a very simple activity test. The new system is more
targeted but inadvertently creates barriers to work for families where at least
one parent does not have secure, regular employment.
Under this proposed activity test many parents will be fearful they
might not meet the work requirements sometimes – if they don't get called in
for a shift, if they are ill, or if they have to go away, further adding to the
complexity of understanding and administering the system.
The demand for ECEC also means parents cannot simply withdraw their children
from ECEC one week and return them in the following month when they have more
According to the
Independent Inquiry into Insecure work in Australia, nearly 4 million workers
are in insecure employment, whether engaged as casuals, on short term
contracts, in labour hire or as independent contractors, casuals, on short term
contracts, in labour hire or as independent contractors.
The new activity test will also reduce access to early education for
many children, while pushing others out of the system entirely. For example,
parents who volunteer, as oppose to engaging in paid work, will be discouraged
from doing so. Despite Senator Birmingham reporting that this was something he
was keen to ensure was protected, this bill fails to address how parents who
volunteer their time could meet the activity requirements, or how the gap in
duties performed by these volunteers would be addressed.
What I do want to have a look at, Patricia, though is making
sure that the activity test – which is only four hours for entry – is also
really encouraging people and parents, especially in the volunteering space, to
be engaging in the learning of their children... because that is how we can not
only make sure that we get people out of the home and engaging, but of course
more engaged as parents in the learning of their children.
Women are also more likely to be employed in insecure work arrangements.
It is therefore women, and women headed households, who will be most
disadvantaged by the reforms in this bill. Labor Senators therefore argue that
this test is too complex, too harsh and will discourage many parents, many
women, from returning to the workforce.
In the joint submission from the Women and Work Research Group (of the
University of Sydney) and Work + Family Policy Roundtable, the groups argue
that the creation of more stringent work or training requirements to access
care impinges on the inclusivity of early years education, and reduces
accessibility for parents with intermittent or casual working conditions. They
also argue that the approach proposed by the Government ignores the value on
early learning in building and strengthening the development of children's
early cognitive, social and emotional development.
There exists significant evidence that participation in high‐quality early learning
is beneficial for all children, and improves development and school readiness.
Goodstart Early Learning, in submission to the committee refer to OECD
data and significant international studies demonstrating the correlation
between increased literacy and numeracy skills for primary school students and
greater interaction with Early Childhood Education and Care.
A growing body of research recognises that early childhood
education and care (ECEC) brings a wide range of benefits, for example, better
child wellbeing and learning outcomes as a foundation for lifelong learning;
more equitable child outcomes and reduction of poverty; increased
intergenerational social mobility; more female labour market participation;
increased fertility rates; and better social and economic development for the
society at large. But all these benefits are conditional on 'quality'.
International studies in literacy and numeracy of primary
school children have also found higher test scores for children who attended 3
or more years of pre‐primary
education. Again, Australia was one of the countries with the lowest levels of
participation in early entry to pre‐primary
education. Further, a long‐running
study of the educational experiences of children in England recently reported
that 16 year olds who had attended more than two years of quality preschool
(compared to none) scored on average 51 points higher on their final GCSE
exams, which is the difference between getting eight 'B' grades versus eight 'C'
Impact on vulnerable children and Indigenous Services
The Explanatory Memorandum to the bill recognises access to early
childhood education and care as 'one of the most effective early intervention
strategies to break the cycle of poverty and intergenerational welfare
Unfortunately this does not appear to be adequately reflected in the bill.
Vulnerable and disadvantaged children have the most to gain from early
education; we do not want to see them worse off. The new activity test presents
an additional administrative burden on already vulnerable families that will
act as a barrier to accessing quality early learning for their children, and
possibly act as a disincentive for women to return to paid work.
There is strong evidence that children from disadvantaged backgrounds
benefit most from access to early learning.
ABS data on preschool attendance shows that children from non‐working households
were five times more likely not to attend preschool as children from households
where both parents work.
Labor Senators argue that we should be increasing the accessibility to ECEC for
vulnerable families, rather than decreasing that access.
A PricewaterhouseCoopers report in 2014 found that the long-term gains
in productivity from children who participate in quality child care when they
enter the workforce are even greater than the gains from increased workforce
participation from their parents. When looking at children in disadvantaged
families who were receiving no formal early childhood education, engaging them
in early childhood education and care would boost Australia's GDP by a further
$13.3 billion by 2050.
The Parenthood presented evidence to the committee demonstrating that at
least one in ten families surveyed said they will not meet the new activity
test and will therefore likely need to pull their children out of early
Treating early education and care as a national economic priority is not
just about getting parents into the workforce – it is also about acknowledging
the substantial benefits which come from investing in our children. Children
who attend quality early education go on to do better in school, in employment
and in life.
The Murdoch Children's Research Institute's Centre for Community Child
Health argue that;
... children who have poor experiences in early childhood and
arrive at school developmentally vulnerable have higher rates of abuse and
neglect, early mental health problems, conduct problems and poor health and
nutrition, all of which lead to longer-term problems in adulthood and thus the
cycle of disadvantage is repeated.
In the long run, significant improvements in literacy,
numeracy and other skills are unlikely without substantial investment in early
Goodstart Early Learning, a peak body in the ECEC industry, argue:
The 23 per cent of Australian children who start school
developmentally vulnerable represents a significant long‐ term diminution of Australia's future
human capital potential.
Locking children out of the benefits of early education is short-sighted
and shows a lack of understanding about the enormous economic and social
benefits from having children access quality early education.
Children with Disability Australia (CDA) (now Children and Young People
with Disability Australia (CYDA)) presented evidence to the committee on the
impact the changes would likely have on children with disability who already
face significant barriers in accessing early learning services. They argue that
the bill lacks consideration of the needs and circumstances of children with
disability and families.
Families of children with disability are sometimes referred
to as carers as they provide unpaid care and support to their child. Available
statistics show carer workforce participation is much lower than the rest of
the community. CDA members frequently report difficulties with gaining and
keeping employment. Many families report a strong desire to undertake paid
employment. The overwhelming lack of care options for children with disability
creates a barrier to achieving this.
Further to this, Labor Senators argue that provisions in the Bill
regarding the Additional Child Care Subsidy (ACCS) for children at risk of
experiencing abuse and neglect (of which children with disabilities face a
higher risk in general) require clarification, and key definitions regarding
the payment of this subsidy should be contained not in the Minister's Rules
but in the explanatory memorandum of the bill.
It is also worth noting that in its current wording, the bill leaves
open the possibility that a child in the child protection system who has access
to the Additional Child Care Subsidy (at risk) might not have all their child
care costs met by the Government. Labor Senators argue that this leaves
children in the child protection system worse off under the reforms.
Labor Senators also have particular concerns regarding the replacement
of the current Budget Based Funding program, which provides block funding to
Aboriginal children's services (and some other services) with mainstream, user
pays models, and the impact the government's changes will have on Indigenous
children and families who access these services.
Currently, approximately 240 Budget Based Funded Services and 38 Aboriginal
and Torres Strait Islander Children and Family Centres provide focused and
community based early years services for Indigenous children, in addition to a
number of mainstream services. These are developed and operated consistently
with evidence on what works to support positive outcomes for Indigenous children
These services are often small and in remote locations and have given
evidence that they would not survive in a mainstream model. Many have extensive
waiting lists, and are already under pressure from their communities.
They are not financially viable without ongoing support, but for many
Indigenous children they are the only available early education service. Many
provide a base for the entire family to access services and engage with the
Indigenous children comprise just 2.9 per cent of children participating
in early childhood education and care programs, despite making up 5.5 per cent
of the population.
The Productivity Commission has identified that 15 000 more early education
places are needed for Indigenous children.
Labor Senators argue that the Government should create more services – not
The Secretariat of National Aboriginal and Islander Child Care (SNAICC)
using data analysed by Deloitte Access Economics (DAE) in their submission to
the inquiry argue that;
...when the eligibility requirements for the CCS are taken into
account, including the activity test and the reduction in the minimum
entitlement for low-income families, access to subsidised hours for many
vulnerable families is significantly reduced and funding received by services
is, on average, materially lower than current levels.
DAE concluded that:
Without additional funding from alternative government
revenue streams, such as grants under the IAS, it could be expected that
services will increase fees, reduce their size and/or reduce staff numbers in
order to remain viable. In addition, wrap around services which are provided to
encourage increased engagement in early childhood services, and provide other
community services, may also be reduced. Each of these measures may adversely
impact on the level, nature or quality of services provided to Aboriginal and
Torres Strait Islander children and families.
Labor Senators support the arguments submitted by SNAICC with regard to
the impact on Indigenous and remote families and communities. We commend them
for their efforts in analysis of the Bill, and implore Government Senators to
more closely analyse the impact on these communities.
Labor Senators believe that the additional investment is poorly targeted
to achieve policy outcomes.
One in three families will be made worse off by these changes. Many of
those families will be worse off are those marginally attached to the
workforce, or seeking to engage with the workforce. The proposed activity test
will make workforce participation more difficult for many families. The Bill
will not limit out of pocket costs for families, or put a cap on rapidly rising
fess – it will only limit cost to government.
The Government simply has not convinced Labor senators of this committee
of the policy merits of their child care changes, and of the merits of this
Bill. We also note research from the Australian National University (ANU)
commissioned by the Early Childhood Australia that found one in three families
would be worse off under the bill, and the inability of the Government to argue
against the accuracy of these figures.
Considering the evidence presented to the Committee,
Labor Senators recommend the following amendments to the Bill:
- Ensure that vulnerable children, or children at risk
of abuse, not be worse off under the reforms;
- Ensure that families in Aboriginal and Torres Strait
Islander communities not be worse off under the reforms by establishing an
Aboriginal and Torres Strait Islander community based program within the new
Child Care Safety Net;
- Ensure volunteering is treated similarly to paid
work or study under the activity test;
- Ensure provisions are made to ensure casual and
seasonal workers are not disadvantaged by the activity test by including
appropriate averaging and transitionary arrangements, and including a six week 'exceptional
circumstances' exemption; and
- The Government should provide modelling showing the
longer term impact of the proposed benchmark price on the proportion of ECEC
costs borne by parents and its impact on out of pocket costs. The Government
should structure the child care subsidy more effectively to limit out of pocket
costs for parents.
Further, Labor Senators recommend that the government:
- Expand the Explanatory Memorandum to address key
definitions (particularly with regard to abuse and neglect) pertaining to
subsidies and payments;
- Extend the Ministerial Advisory Council on Child
Care and Early Learning to include key stakeholders and peak bodies in the
- Review internationally recognised research on the
returns on investment that public expenditure on early learning brings, ensure
ECEC in Australia is in line with OECD best practice, and make sure levels of
investment in early childhood are consistent with the best outcomes for
children and the community; and
- Immediately release to the public all data, research
and evidence used in developing the legislation – including complete details of
the impact the changes will have on families - so that the Senate can make a
more informed assessment of its impact on all Australian families.
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