Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Hansard source

The Family Assistance, Social Security and Veterans’ Affairs Legislation Amendment (2005 Budget and Other Measures) Bill 2006, which is before us, seeks to implement a range of measures which were foreshadowed in the 2005 budget. While we support the bill, the opposition—the member for Sydney, in particular—will move a number of amendments which we believe are worthy of government support. I take the opportunity this evening to speak specifically on the changes to the administration of child care outlined in the bill and to touch on some other areas of maladministration of child care, which I think is an important issue that the government must consider.

The bill seeks to provide the Secretary of the Department of Families, Community Services and Indigenous Affairs with the power to take allocated but unfilled places off a child-care provider in order to allow the redistribution of places from areas of low to high demand. This in itself is unobjectionable but, in my opinion, it does not address some fundamental failures in the administration of our nation’s child-care system that I now want to touch on. In my view, the biggest administrative failure—and we can tinker around the edges—is the lack of planning by this federal government. This, as we know, has led to shortages of places, particularly for children under two, across the nation at the same time that pockets of oversupply exist in some other areas.

According to the most recent ABS data that I could find, in June 2002 over 61,000 children could not access services because all the services were booked, 30,000 children could not access services because of the expense of the services, and 22,000 children would could not access services because there were no services available in their area. So, when you look at June 2002 data, which is quite dated now, we see that back then around 113,000 children were not accessing formal child-care services because of problems related to access—that is, there were either no places available or the cost of places was prohibitive. So you would have to say that there is something fundamentally wrong with the administration and planning of child-care services in this country.

The bill has a very limited scope in proposing one minor change to the system, where I think the system really does need a drastic overhaul. At a time when, in outlays through the CCB, the cost of child care since 1990 has risen tenfold to around $1.7 billion a year, we as a nation are still short by over 100,000 places through lack of either affordability or accessibility. The child-care system is growing very rapidly in our country, but it is growing in a very unplanned way. This inevitably causes anxiety and hardship for many families—and many families that I represent are living through this experience. Those lucky enough to have places have seen costs rise by around 60 per cent over the last four years. Many local families in my electorate of Throsby are forced to put their names on a waiting list—and, on many occasions, on more than one—in early pregnancy and then have to wait for years for a suitable placement for their young children. No wonder we learn that around a quarter of a million women are not in the workforce because they cannot find or afford a child-care place.

The tragedy in terms of the administration of the system is that the Howard government has allowed this system to become dominated by private providers, for whom the profit motive becomes a primary motivator. Child-care provision unfortunately has become a licence to print money, as I said earlier, with the government outlaying some $1.7 billion through the child-care benefit scheme. As Mr Groves, the CEO of the largest private conglomerate, said recently, ‘You cannot help but make some money.’ He confirmed that ABC Learning Centres had received 44 per cent of its income from government subsidies—that is $128 million of its $292 million revenue—last year. This company has spent around $700 million on acquisitions and takeovers and it now controls about 930 centres, with the aim of expanding its coverage to 1,300 by mid-2008.

A recent analysis of the ABC Learning Centres projects that the company is to make a net profit in the order of $379 million by the year 2008. If the figure of 44 per cent of revenues coming from the government’s subsidies remains constant, this will translate into $167 million of taxpayer moneys being transferred directly into the pockets of Eddie Groves and his shareholders. No wonder their recent announcement of $88 million in profits was described as appalling by the convener of the National Association of Community Based Children’s Services. She argued—and I agree—that the $88 million in profits announced by ABC Learning Centres could be going to far better use in making child-care services more accessible and more affordable.

The truth is that companies like ABC Learning Centres have tapped into a rich seam of taxpayer funding, which is underpinning its earnings and its profit levels with a government guarantee that is underwritten by the CCB. What really worries me—and I am not against the notion of private provision—is that often these healthy profits are coming at the expense of ensuring decent conditions for staff working in these centres and in the provision of quality of the facilities on offer.

Interestingly, in the recent Herald series on the inadequate quality controls of many of our centres, it was reported that ABC Learning Centres last September was ordered to pay $76,792 in fines and costs after an inspection of one of their centres at Wee Waa. This inspection found ‘mouse droppings on the floor and in bedsheets, redback spiders in an outdoor toy storage area accessible to children, and no smoke detectors’. The company had also failed to keep ‘dangerous cleaning materials, disinfectants, poison, medication and other dangerous substances away from children’. This is a company, as I say, that recorded an $88 million profit, which was underwritten by the outlays of the government through the CCB. Lynne Wannan, the spokesperson for the community based sector services, commenting on the child-care industry recently, had this to say:

Standards have been lowered, poorly paid and inexperienced staff employed and dubious practices crept in as larger providers built bigger centres and strove to get economies of scale. As they became larger, they used predatory pricing to drive smaller, community-based services and even smaller private operators out of business.

We have a new minister, and I am pleased to see he is in the House tonight. Last year, in response to a question on notice I put to the then minister, I was advised that, of the 6,333 children in my electorate of Throsby who were using formal child-care services in the 2003-04 financial year, nearly 60 per cent were in private centres. Interestingly—and I hope the minister picks up on this—when it came to placements for children under two, which is a national problem, of the 930 children under two in child care in Throsby, 70 per cent were in fact in community based child-care services. In his answer, the minister advised me:

There are no requirements for private providers in areas of high demand to provide places for children under 2 years of age.

In other words, companies like ABC Learning Centres can cherry-pick the market, free of any government constraints. The company profits are underpinned by taxpayer funding, yet the taxpayers’ interests—having accessible and affordable services—are left to the mercy of the marketplace, free from government intervention, free from any overall consistent planning and free from any form of regulation.

We can add to this another case of maladministration by this government: their much touted 30 per cent child-care rebate. As we know, the rebate was promised at the last election, though no-one has yet seen a single cent of it paid out. Parents, as we know, have to wait up to two years for tax relief, and you have to hope that they have not lost their receipts in that time. It is a highly complex system which no doubt favours higher income earners. Beyond that—and very worryingly, Minister—this rebate inevitably will promote price inflation, with no guarantees of quality improvements attached to the additional costs of care. It sends the wrong signals, yet again giving scope for profit-making centres to further increase their fees. We already know from the available data that child-care costs rose by 10 per cent last year and by 60 per cent over the past four years, five times the rate of inflation. Child care in many areas is becoming more expensive than private education, with the parents of children in some long day care centres being slugged $100 a day.

It is true, and I acknowledge, that the child-care benefit assists many in our community, but the value of the benefit is not linked to the actual cost of providing care. As child-care costs have risen, the relative value of CCB, which is only indexed to CPI, has declined and the out-of-pocket costs faced by families have had to rise to meet the gap between the entitlement and the fees charged. Child-care costs have risen by 49 per cent, above the rate of inflation between 2000 and 2004, and it is families like the ones I represent who have had to meet these additional gap costs. Not surprisingly, recent data shows a steady decline in the affordability of child-care services. So, beyond the minor amendment that is proposed in the government’s bill, I think the time has come for the government to examine the impact of both the child-care benefit and the rebate on the crisis in child-care provision in this country.

I am concerned, in terms of the administration of the system, that the 30 per rebate places no obligation on child-care operators to provide better access to services or to improve their quality in return for the money that will flow into the industry. Interestingly enough, the government itself has acknowledged that a portion of the rebate might flow directly to the profits of child-care operators rather than to the parents who use the services. So yet again I lament the fact that private providers stand to benefit, in the absence of government requirements. We could well see the value of the tax rebate eaten up entirely by an increase in child-care fees and profits, without any real benefit to children or their families.

There are many areas of serious concern in the administration of child-care provision. With an estimated outlay of $1.7 billion by the federal government through the benefit—on some estimates, rising to $2 billion when you add in the tax rebate to come—its hands-off approach has left the community with a sense of no coherent planning, huge areas of unmet demand, large cost increases which are making services unaffordable, a child-care benefit which today bears no relation to actual costs and a new rebate which will be inflationary, adding further financial pressures onto families who are struggling to cope.

Jackie Kelly, the member for Lindsay and a government member, was right in saying the system is a shambles. The Prime Minister and the Treasurer need to get their heads out of the clouds and understand the huge dimensions of the child-care crisis in our nation. I am pleased that the Treasurer is on the public record as saying recently:

We must look at how to improve opportunities for women, create the most female-friendly environment in the world.

We would be right behind him if his rhetoric actually translated into some real and tangible achievements. A modest start to the Treasurer’s grand vision would be a commitment in the coming budget to fix the shambles that is the child-care system. In that regard, I would draw the minister’s attention to some of the very constructive proposals for change that have been aired by the Leader of the Opposition and the member for Sydney, and to a recent document issued by ACOSS under the title Fair Start: 10-point plan for early childhood education & care.

This government has billions of dollars in its surplus and unprecedented powers to push for changes in the system; it just needs the will to do so. But, after 10 long years, many promises and a lot of rhetoric about the work and family balance being the big barbecue stopper, I must say that the families I represent do not see a material difference in policy outcomes. Despite all its rhetoric, the government has refused to increase the number of long day care places that are affordable and within reasonable travelling distance of home. It controls the supply of family day care and outside school care places with an iron fist, resulting in chronic supply-and-demand problems.

As I said earlier, it has refused to acknowledge that the child-care benefit needs to be increased to actually represent the costs of child care, and it has relied increasingly on families to meet the ever-widening gap between the benefit and fees, such that child care in many areas of the country is becoming a luxury service purchasable by some but not all. As I pointed out in my contribution tonight, I am most concerned that private providers under this government are allowed to cherry-pick the system and to amass huge profits underpinned by government outlays through the CCB. The time for tinkering with the system is over. Australia’s provision of child-care services needs and demands a thorough overhaul so that the system works in the interests of the public by providing affordable and accessible places in a planned and coherent manner.

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