LABOR SENATORS’ ADDITIONAL COMMENTS
Key issues
The bill does not fulfil Coalition pre-election policy statements
1.1
Submitters voiced concerns that the bill would not achieve the aims of
the policy behind the Child Care Benefit (CCB) and Child Care Rebate (CCR) to
provide financial assistance to families to help support access to child care
and to increase workforce participation, and social and educational development
for children. Labor Senators support these concerns.
1.2
The Coalition’s pre-election policy document, The Coalition’s Policy
for Better Child Care and Early Learning, published in September 2013,
states the Coalition’s commitment “to help ensure child care can be more
accessible and affordable”. This bill completely goes against that policy
statement by forcing up costs for families already facing rising fees.
The bill will exacerbate already rising pressures on costs
1.3
While the committee majority noted concerns about maintaining the
current CCR limit and CCB income thresholds, it was not persuaded that
childcare will become unaffordable or inaccessible as a result of these
measures. Labor Senators do not support this view.
1.4
Evidence submitted demonstrated that prices are likely to continue to
rise above general inflation into the future, continuing the long term decline
in the value of child care subsidies.[1]
The value of CCB has been eroding because the income thresholds and the rates
have both been indexed to CPI, resulting in costs continuing to exceed any
indexation into the future following the freeze.
1.5
The Department of Education gave evidence pertaining to this in its
recent appearance before Budget Estimates. The Deputy Secretary of the Department
of Education stated that child care prices were forecast to increase annually
by around seven per cent on average over the forward estimates.
1.6
Submitters expressed concern that the measures proposed by the bill will
mean that more families receive less, and that some may lose the CCB
altogether. In particular, that as the benefits reduce, out of pocket costs
rise and families will reach the $7,500 CCR cap earlier.
1.7
The three year temporary freeze implemented by the former Labor
Government in 2011 impacted only 5 per cent of families using child care. These
were primarily high-income families using expensive child care. This no longer
the case. By 2013-4, the cap affected 72,000 families, or 7.8 per cent of all families.
By 2016-17 this number will double, with 147 000 families, or 15.8 per cent of
families, exceeding the cap by 2016-17.
1.8
Eligibility for CCB has also been moving further away from average
earnings. In 2004-5, a family on 70 per cent of average full-time weekly
earnings received full CCB. By 2013-14, the income cut off for CCB had fallen
to just 55 per cent of average full-time weekly earnings, and by 2019 will fall
below 50 per cent.
1.9
During the latest round of Budget Estimates, the department also
confirmed that the child care and early learning space is a market, and not
bound by pricing guidelines from the government, resulting in a total inability
of the Coalition to be able to deliver on a promise around fees.
Ms
Wilson: The market is the market; we
do not intervene in the market.
Senator
LINES: That is right.
Ms
Wilson: People make assessments for
themselves based on business viability about the demand, the need, the CCB and
CCR they will get, the fees they charge.[2]
The Bill negatively impacts women’s workforce participation
1.10
AI Group argued the bill would not have significant impact on
productivity or workforce participation.[3]
Although the majority report relies on this submission, other submitters did
not reflect this evidence.
1.11
Early Childhood Australia presented evidence about the well-known
correlation between child care affordability and women’s workforce
participation, presenting academic works demonstrating that a one per cent
increase in the gross child care price on average, results in a decrease to
mothers’ employment rate of 0.07 per cent,[4]
and that families on lower incomes are more responsive to increases in child
care prices.[5]
1.12
Affordability is a major barrier to children’s participation in early
learning, and therefore a contributing factor in their ability to access the
inarguable benefits gained from early learning, particularly among already
disadvantaged children.
Productivity Commission inquiry
1.13
The Labor Senators of the committee echo the concerns of some submitters
about the measures being purely cost cutting measures that should be postponed
until after the Productivity Commission's inquiry handed down its final report.
1.14
The Coalition made an election commitment to inject $2M into the
Productivity Commission Inquiry into Child Care, and to implement any decisions
on the matter prior to the final report demonstrates a disregard for the
results and makes it difficult for the Commission to provide accurate
recommendations, as these recommendations are to be based on existing funding
parameters, as per the terms of reference.
Recommendation 1
1.15
The Labor Senators recommend that the Senate consider the issues
outlined when deliberating the bill.
Senator Sue Lines
Deputy Chair, Legislation
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