Julia Irwin (Fowler, Australian Labor Party) Share this | Hansard source

There is a political saying that the government obviously knows only too well. It goes along the lines of: ‘You can fool some people some of the time but you cannot fool all of the people all of the time.’ Members may recall that just before the last election, in 2004, this government made the promise that it would allow a tax rebate for 30 per cent of the cost of all child care. That was a big issue then, as it is today. So I am sure many working families across Australia took that promise at face value and worked out how much they would get back on the cost of child care. Many would have supported the government as a result of that promise. But guess what happened after the 2004 election? The Treasurer told us that we should look at the fine print. For a start, he said that it would not be the full cost of child care but only that part not already covered by childcare benefit, and it would be capped at $4,000 per child per year. It is very funny that we did not hear that before the last election. What sounded like a $4,000-a-year tax deduction worked out at something a lot less. To make matters worse, the Treasurer said that you could not get the rebate straightaway. You would have to wait well over a year before you actually got the money. There is another saying that is well worth noting. It goes like this: ‘Fool me once and it’s shame on you, but fool me twice and it’s shame on me.’

Working families might be excused for being a bit suspicious about anything that the Prime Minister might promise in the lead-up to this year’s election. ‘Once bitten, twice shy,’ you might say. So the Treasurer needed to sound a lot more convincing this time around. You would not have believed this government promising anything about child care after they had ripped everyone off last time. You would not trust them again, would you? So I am sure that when the Treasurer sat down to frame this year’s pre-election budget he might have started by thinking about what he needed to fix before he could make any more promises for this election. One thing that would have been staring him in the face would have been the childcare tax rebate rip-off. The fact is that the Prime Minister could not look the Australian people straight in the eye with any sort of promise on child care after the way he handled this mess three very long years ago. So somewhere close to the top of this government’s agenda for the budget was this measure to fix part of the childcare tax rebate. We can only wonder what promises this desperate government will come up with for the election due later this year. But we should all be wary of the fine print, because we can be sure that, once again, what we finish up with will be a long way short of what the government promised.

I want to get down to the measures in the Families, Community Services and Indigenous Affairs Legislation Amendment (Child Care and Other 2007 Budget Measures) Bill 2007 in detail. I took the opportunity of the budget debate to mention some parts of the changes which this bill covers, and I will now go over some of the detail of the measures and how they fit into the overall scheme of childcare assistance as it operates at the present.

The issue of assistance to working families with children is indeed—as the Prime Minister described it—a barbecue stopper. For thousands of working families across Australia the cost of child care is definitely the third biggest item on the household budget. After rent or mortgage payments and the family grocery bill, childcare costs come in at third place. In much of the Sydney area child care for two days a week can cost a family $100 a week or more, even after the childcare benefit is claimed. The effect of the childcare tax rebate, as it currently applies, reduces this amount by less than a third. That is just the start. Getting the right child care when you need it is an even bigger concern.

For the sake of this bill I will concentrate on the cost of child care to working families. We know that the average payment to families under the childcare tax rebate was $813. That would suggest that the full cost to the average family was over $2,400 a year or close to $50 a week. But I stress that $50 a week is the average, and for many working families the cost would be much higher. We should not forget that the rebate was capped at $4,000 per child per year. That is a very big sum to be out of pocket for when it takes more than a year before it is paid back under the existing legislation. Just to put that into the picture, from next month when working families start putting together their tax returns for the 2006-07 financial year they will be able to claim the cost of their childcare expenditure for the 2005-06 financial year. It will be well over 18 months from the time they paid for their child care to the time that they get their childcare tax rebate.

It really never made sense why working families were expected to wait that long before getting the childcare assistance that they so desperately needed. I cannot imagine the bank that holds their mortgage saying, ‘It is okay to not pay us any interest for 18 months.’ I cannot imagine their credit card issuer saying, ‘It is okay, you do not have to make any repayments for 18 months.’ But that is what this government has asked working families to do when it broke its 2004 election promise. To meet the cost of child care for 18 months before the government pays for any assistance is a very big ask for struggling working families. We know that the main reason for women going back to work when they have a young family is the pressure of making ends meet. High mortgage repayments mean that for many families it is necessary for both parents to return to work. Knowing this, the government has been happy to reap the economic benefits of the increased participation of women in the workforce but it has definitely failed to meet its end of the bargain. A report in the Economist looked at the economic benefits of increased participation of women in the workforce. It said:

Arguably, women are the most powerful engine of economic growth ... Over the past decade or so, the increased employment of women in developed countries has contributed much more to global growth than China has.

That is just one measure of the importance of women rejoining the workforce. As Deputy Chair of the House of Representatives Standing Committee on Family and Human Services of which you, Madam Deputy Speaker, are chair, we inquired into the issue of balancing work and family. We looked closely at participation rates for women in the workforce in Australia and other countries. On the 2003 figures the committee found that the participation rate for women in Australia with two or more children was 56.2 per cent, compared to 61.8 per cent in the United Kingdom, 64.7 per cent in the United States, 68.2 per cent in Canada and 77.2 per cent in Denmark. In a survey of OECD participation data, Ian Campbell Sarah Charlesworth commented:

Motherhood appears to have a bigger impact in impeding employment in Australia than it does in comparable countries.

And in particular:

The absolute drop in employment rates associated with the presence of two or more dependent children in Australia is dramatic ... These data suggest that there is something distinctive about the labour market transitions in relation to Australia.

I do not want to suggest that the flawed and deceitful childcare rebate scheme is the only cause of this. For that matter, I do not think that there is a silver bullet solution. But I do know from listening to mothers, especially in my electorate, who are either in the workforce part time or considering re-entering the workforce and making decisions about how much work they do, that they place a great deal of emphasis on the cost of child care—it is a factor in their decisions. And it is not a simple calculation. As well as the cost of child care, there is the loss of family tax benefit part B and in many cases the loss of family tax benefit part A as well. The delay in payment of the childcare tax rebate is a big factor in all of this.

What the government has failed to realise in the disgraceful way that it has handled this issue is that working families know that a bird in the hand is worth two in the bush. The promise of assistance in two years time does not put food on the table today, and that was always the fatal flaw in the childcare tax rebate. Businesses can account for deferred payments—they do not keep their accounts on a cash basis. But working families depend on their weekly cash flow, and that makes all the difference when families make decisions about a parent re-entering the workforce or increasing the number of hours worked. Those decisions will not always be based on economic factors alone.

Increasingly, I hear working families taking a longer term view. When a mother is deciding to return to work, she will weigh up the cost of child care and, if the outcome is a very small return for the effort, she will often decide that it is just not worth it. The choice is to go out to work for very little return or to stay at home and reap the benefits of family tax benefit part B and then return to work when the children are of school age. More working families are making that decision, especially in my electorate—enjoy your children in the early years and make up for the lost income when they go to school and there are no expensive childcare fees to worry about. That is one way to account for the low participation rate for women in Australia compared to other developed countries. But this comes at a great loss to the economy. We are not just talking about low-skilled women staying away from the workforce. In 1951 women made up only 20 per cent of tertiary enrolments. By 2004 women made up 54 per cent of tertiary enrolments. By failing to address the twin issues of childcare costs and balancing work and family policies, the government is throwing away the economic growth potential that can flow from increasing the participation rates of women in the workforce. The importance of this was highlighted in research presented to the family and human services committee. Access Economics made the impact of improvements to participation crystal clear when it commented on the results of its modelling, which revealed that increasing the full-time participation of women could increase per capita output by 4.4 per cent. Access Economics added the comment:

Past analysis has suggested that the tax reforms of 2000 may have added somewhere in the region of 2.5 per cent to the national income of Australians ... while promoting national competition policy may have added 5.5 per cent. Therefore, the results are revealing. They suggest that the benefits to the national income of boosting full-time female participation rank somewhere above those of tax reform and below those of promoting competition policy. Such estimates are imprecise, but they are a timely reminder of the importance of an issue that will grow with the passing of time. The potential bang for the buck in policies which help to unlock the participation and productivity of women workers is large, not merely in the longer term, but—given the current capacity constraints which the Reserve bank has highlighted—in the short-term as well.

Child care is not just a policy area suited to election gimmicks. It is not something to be played with when the government needs something to save it at the polls. It is an element of the economic policy of this country. If we get it right—and we have to get it right—according to Access Economics it can give our economy one of its greatest boosts. If we get it wrong, and that is the record of this government so far, it will cost us dearly, both in the short term and the long term.

To come back to the detail of the measures proposed in this bill, we see a one-off increase of 10 per cent for the childcare benefit but, as any parent with a child in child care would know, the cost of care has been rising faster than most other costs. The 10 per cent increase will ease the burden slightly, but will not take the family outlay on child care back to what it was five years ago, even allowing for inflation. The 10 per cent increase in childcare benefit is welcome, but it is nothing to get excited about. As I have said, unless there is some real relief from the high cost of child care, we will not see an increase in the participation rate of women in the workforce. The changes to the childcare tax rebate are also welcome and long overdue. Labor proposed the earlier payment when the original legislation was debated in this parliament two years ago. But as we have seen, it is only the prospect of annihilation at the polls that has forced the government to see the light and make the necessary changes. The proposal to change the payment from a tax rebate to a payment through Centrelink will not only avoid the earlier excuse for delays in payment but will call the payment what it really is. I have always thought it was a bit of a con calling such payments ‘tax rebates’. Maybe it goes over well at Liberal Party branch meetings, where I am told—and I have one or two friends who are members of the Liberal Party—there are calls for tax rebates for just about everything. But in reality it is a transfer payment made to families to offset the cost of child care, and we really should call it by its proper name. The other amendment deals with the extension of the healthcare card to all former carer allowance child recipients while they remain full-time students until age 25. This is a common sense measure and is supported.

As we approach another election, I am sure that childcare policies will again be centre stage. Voters were taken in last time by the government’s announcements on the childcare tax rebate and I have a feeling that they will not be so gullible this time. In any case, I would suggest that voters take the government’s announcements on child care with a grain of salt. They have seen in this sad experience that you cannot trust the government when it comes to child care. Voters will have every reason to be once bitten, twice shy.

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