Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Hansard source

It has all the features of that sort of arrangement. Those questions need to be answered. Thank you to Piers Akerman for that excellent article this morning. I think I will continue to find the rest of the material that we dug out earlier when looking at some of these issues.

The second issue I want to talk about this morning is the Balancing work and family report. In the 10 minutes we had available the other day, I was unable to deal with the unfair way in which the current tax system is exercised. A very privileged few are able to get a tax deduction for their childcare expenses while ordinary mums and dads cannot. The method of doing that is to be employed by either the Commonwealth government or large employers such as banks which allow their employees to salary sacrifice for childcare expenses. They are then exempt from the payment of fringe benefits tax.

The commissioner has ruled in a public ruling that if an employer controls a childcare centre, employees may salary sacrifice and get the benefit of paying for their childcare expenses with pre-tax dollars. In other words, they say to the employer, ‘You keep this percentage of my salary, pay it to the childcare centre which you control, thereby I will get an effective tax deduction for my childcare expenses.’ The Commonwealth government in all its manifestations meets that criteria, but it must own or control the centre. The centre does not have to be on the premises, but the Commonwealth must own or control it. It can lease it and let someone like ABC Learning come in and run it. Let me give an example. Defence owns 19 childcare centres. ABC runs them, so ADF personnel who can get their children into those 19 centres can have an effective tax deduction for their childcare expenses. But other people who just go to an ordinary ABC Learning centre or any other sort of childcare centre cannot. There is no fringe benefits tax exemption because the defence department does not own or control those centres.

In Canberra, if you work for the Treasury, you can get a tax deduction because they have a childcare centre. The tax office used to operate their own childcare centre and their employees could get the effective tax deduction; they were fringe benefits tax exempt. They got out of owning or controlling it and gave it over to the ABS, the Bureau of Statistics. Because they were all part of the Commonwealth government, tax office employees could utilise the ABS childcare centre—and on it goes. The largest one is CSIRO’s. I think they have about 134 people utilising it. One department down here is going to spend I think I heard a figure of $2 million to build a new childcare centre—that is taxpayers’ dollars—and will meet the tax office ruling.

There are two things involved here. If we got rid of fringe benefits tax, which the report recommends, on all childcare expenses, everybody would be able to salary sacrifice and get that advantage. That is why we sensibly said in the report that there should be tax deductibility for all childcare expenses, so that we have no losers. If fringe benefits tax were removed all employees could get a tax deduction. But if you are self-employed you cannot salary sacrifice; you are left out in the cold. Equity on all terms says there should be no fringe benefits tax on childcare expenses so that ordinary mums and dads can enjoy the privilege that employees of the Commonwealth Public Service enjoy. It also means that, once you remove it, so that it is fair for self-employed people you need to offer a tax deduction. As I have pointed out many times before, if you can get a tax deduction for your motor car, your computer laptop, your mobile phone, your steel capped boots and so on—this current year we are giving back $16.9 billion for things that are tax deductible—it is an equitable argument which has to be seen as sensible.

When I was talking earlier this week I said that, regarding the money that the budget had allocated for child care, there was a vast underspend—a $280 million underspend in the current year. I should have said that it is in excess of a $280 million underspend over three years. In any event, the point is this: the Econtech report that we commissioned said that the package would cost $262 million. In excess of $280 million would certainly go a long way towards making that very affordable. It is the equity argument, together with the facts and figures put forward by Access Economics, which did our macroeconomic modelling for us, that show it is good for the growth of the economy. It said that if there were more mums who came back into the workforce and worked full time then we would see growth in our economy of between 2.8 per cent and 4.4 per cent, which, as I said, is more than tax reform under competition policy. That growth would be national income.

So we have an argument that says it is good for the economy, and we say it is good for mums and dads because, as I have said in other forums, there are a lot of similarities between aged care and child care. When I was the minister with responsibility for aged care, I was very keen and did in fact introduce thousands of Community Aged Care Packages which enabled people to stay in their own home and have in-home care instead of being institutionalised in an aged-care facility, because that is where they wanted to be. You can apply the same argument to the many mums and dads who would like to have their children cared for in their own home with in-home care so that they can, with a much clearer conscience, be in the workforce without having to institutionalise their children in centre based care, which is where the vast bulk of the $1.6 billion that we pay out on the childcare benefit goes.

So, on all counts, it makes sense. It is good for economic growth; it is good for kids; it is good for parents because it takes away the angst. It might even save a few marriages. If you are a mum, you have to get up, get the breakfast, get the kids washed and dressed, drive one to preschool and one to school, in different localities, you have to work all day and then you come home and you have to be charming as you are cooking the dinner and putting it down on the table. I suspect that if we could relieve mums of some of those pressures, there might be a lot less angst in many families.

I am speaking on this because it is such a sensible proposal. I know that this government responds to good, sensible arguments—both equity and economic. I wanted to wind up the remarks that I began earlier this week because I believe that when the benefits are really appreciated then, hopefully, the proposal will get a damned good hearing.

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