Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Hansard source

I thank all the members for their contributions, particularly the member for Indi. I know that the member for Indi has discussed this issue and matter at length with the Minister for Education and Training—his knowledge about the matter certainly exceeds my own—and I know that he has indicated to you, Member for Indi, that we are not inclined to agree to the amendment and we will not be agreeing to it today. But no doubt the discussions between you and him will be ongoing. We understand the issue. It is not a lack of bravery, Member for Denison, that motivates us to not accept the amendment; rather, we think that what is in the legislation copes with the situation that you have identified. To the extent that you might disagree with that, I know that there are discussions that are ongoing, particularly in circumstances where part of the solution that we are proposing is ongoing reviews of the situation.

But I think it might be useful just to place on record some of the terms of the discussions that I understand have happened between you, Member for Indi, and the education minister, starting with a very brief description of the historical nature of the budget based funding, which is that it is in effect closed and capped. So one of the difficulties that have arisen, as I am sure you would agree, is that under the present system of BBF funding there is not any ability to respond to changes in community circumstances. If there is an increased number of children in a particular area, whether it is one that has been described by members opposite, or in an electorate, under the present funding system there is an inability to respond to that increased number of children.

The other difficulty, I understand, about the historical formulation of funding of this closed and capped BBF Program is that you do have very strong inequities arising. In some areas some childcare services would be receiving as little as $35.95 per child, whereas in other areas there would be very large amounts per child, and my information is that some of those get to as high as tens of thousands of dollars per child. So there is the historical legacy agreement of funding, there are inequities in that, and it is inflexible and does not allow for growth in some areas or for a decreased population in other areas.

What has been proposed in this bill is to allow the current budget based funded services to be properly funded for services they deliver by transitioning them into what is effectively their part in the same system that would apply to all childcare providers, but with some access to particular areas of funding that would sit on top of the basic funding model. It offers service providers flexibility and support in that, if there is an increase in the number of children or there are population pressures in the area in which a BBF service provide services, they would be able to increase their income by expanding their service delivery instead of having their service constrained by the fixed amount of allocated grant funding.

Member for Indi, you noted that you think one of the problems with the solution that is being proposed is that it is in effect grant funding. I think that is partly true, but of course the existing BBF system is in a sense grant funding which is quite fixed and quite inflexible. What is being proposed—and I am sure this has been part of the discussions between you and the education minister—is that the BBFs will be able to, first of all, access the general childcare subsidy. As you are aware, that is a payment per child, so services with more children than are currently recognised through their budget based funding are going to be able to benefit by having increases in their funding based on increases in the number of children that they are caring for. Again, families on an income of around $65,000 or less are going to receive a subsidy of what is effectively 85 per cent of the actual fees charged, up to the hourly fee cap.

So the first point is that the access to the general childcare subsidy means that the BBF model can grow along with population growth and the growth in the number of children that the services care for. The second point is that the additional childcare subsidy is available as a top-up payment in addition to the CCS, and that is of course a childcare top-up payment. Where some families in some areas—particularly the areas that you represent, Member for Indi, and indeed that are inside my own electorate—have a temporary financial hardship, where there is a transition-to-work issue arising or where there are grandparent carers, in addition to the flexibility of the first source of funding the childcare subsidy offers, there is the second source of funding to the families, which is the additional childcare subsidy.

Of course, where there is an issue around child wellbeing, where a child is at risk of abuse or neglect, the Community Child Care Fund, the CCCF, is going to recognise those unique circumstances in which the BBF would be operating and take into account the additional challenges and costs it faces compared with other types of services. Talking about the CCCF, that represents $110 million available each year. So, firstly, you have the childcare subsidy, which allows growth in funding per child (Extension of time granted) for the first time, which was not available before under what was basically block grant funding, although it was recurring. Secondly, you then have the additional childcare subsidy, which also offers an avenue for the BBFs to be funded. And then, thirdly, you have the CCCF, which represents $110 million.

We accept, and I think this was implied in your contribution, that the applications to the CCCF are on a competitive basis and you must be very careful to ensure that the BBFs are not outcompeted for that money. But I am sure, again, as has been discussed, there will be capacity inside the CCCF amount, the $110 million, for discretionary funding of services outside the main competitive funding. Those funding determinations would be informed by the work of the PwC consultants. I think that it is important to acknowledge that the PwC consultants are going to look at the particular needs of every single BBF in the country so that the minister and the department are well informed as to those particular needs and their particular circumstances, and how the first two rounds of funding are applying to them in making this decision with respect to the discretionary funding of services.

I heard and understood, and listened carefully to what the member for Adelaide had to say. It does seem, I think, improbable to suggest that you are going to have a failure in this sector when you are moving from one closed and capped source of funding to what are three sources of funding where at least one is not closed and capped, in the sense that it can provide for growth in the number of children being cared for in each of the BBFs that we are considering.

So, obviously, we join issue with you in understanding that there are very peculiar circumstances and particular circumstances with respect to the BBFs. We are not declining this amendment because its instincts are not right; we simply consider that these are matters which have been taken into account in the drafting. Now, there may be a different view on that. I am sure that these discussions between you, Member for Indi, and the education minister will continue, but it is not an amendment that we are inclined to agree to today.

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