Katie Allen (Higgins, Liberal Party) Share this | Hansard source

Many of us in the House are working parents. We know the challenges that face us when we need to return to work and the juggle of a young family and a career. Whether those challenges are financial or emotional, we know it can be difficult on the family. Therefore, it's a great privilege to be in this House to debate a bill, the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021, that will provide much-needed assistance and choice to families right across Australia. I'm proud for all of us here in the chamber, because we all care about not only a productive and efficient economy but also families that are happy and supportive for their children.

In this year's budget, the Morrison government committed to making child care more affordable and, by doing so, providing more choices for families. I'm pleased for the women of Australia and for my daughters and those that follow behind us. That's what this bill is basically doing. Research demonstrates that development during early child care sets either a sturdy or a fragile state for what follows. The Morrison government understands this and will continue to provide and expand subsidy for quality child care to the benefits of parents now and children in generations to come. As a previous paediatrician, I understand the value of child care and quality child care for children, for their best start to life.

The issue of the gender workforce participation rate is also a pivotal concern to the Morrison government. Female workforce participation is currently 67.6 per cent. The Morrison government's policies have enabled this rate to be at its highest in the last 10 years. But it still lags behind men's participation. We need to keep working to narrow the female workforce participation gap. We know that the three Ps—participation, population and productivity—are the keys to a strong economy. This is important now more than ever in our post-COVID era.

We know that an increase in childcare costs is correlated with reduced female employment. In a time when women have been hit so disproportionately hard by the COVID pandemic, the Morrison government recognises the need for more support and will deliver that with this bill. These changes will see 250,000 families pay fewer out-of-pocket costs due to these changes. If not for the removal of the current income cap, there would continue to be a disincentive for a second earner to undertake work by not only paying high childcare fees but receiving fewer childcare subsidies and fewer family tax incentives, and paying more income tax. The Morrison government wants to encourage workforce participation, particularly among women who would otherwise be held back from the workforce without this bill—women who want to make sure that they make an impact on the workforce well beyond the time that they spend with their children, to be able to balance that and know that the government has their back.

A 2008 survey saw 127,000 women across Australia cite caring for children as their reason for not looking for work or seeking more hours. This bill provides support for those very people by removing the cap that currently sees parents limited in their access to affordable early learning and care. The majority of additional subsidy will go into the pockets of low- and middle-income earners, with Australia's lowest income earners those that need it most, privy to the highest rate of subsidy.

Our government policies are already working. This bill before us will again help increase female participation. Results in June this year show that participation is up and that underemployment is down. There were 115,000 new jobs created, 85 per cent of which were full-time jobs. Most importantly, of those 115,000 new jobs around 60 per cent went to women. These figures show that there are more women in work than ever before, and the numbers should give Australians confidence that the Morrison government's economic plan is working.

The Morrison government's investment into child care will target low- and middle-income earners, putting money back in families' pockets. The bill before us targets additional support to all eligible Australian families with more than one child aged under six in child care. This means around 250,000 families will benefit. That translates to an average of $2,260 per year. What a huge difference that will make to a young Australian family.

Everyone knows, when you've got young children, the costs are enormous not just for child care but for all sorts of things, and to have that little bit of comfort that childcare costs will be supported will make such a difference to families. But, importantly, with these amendments, it removes the disincentives to work while maintaining the principles of the system. The amendment before us today targets families who need it most. Child care for younger children is more costly, and because of this it can limit choices for parents when considering whether to take on that extra time in the workplace. This is particularly so when families have more than one child aged under six. Any parent knows what a busy time it is for a young family. These families are also more likely to be working less with lower incomes and higher childcare costs compared to families with older children, and that's why we intend on making positive changes for Australian families through this amendment.

This amendment is slated to come into effect in July 2022. By July 2022, we will increase the childcare subsidy available to families with more than one child. The level of subsidy will increase by 30 percentage points to a maximum subsidy of 95 per cent of fees paid for their second and subsequent child. Around 50 per cent of families who benefit from the measure will receive the maximum 95 per cent subsidy for their second and subsequent child. This will make a significant difference. Around 95 per cent of families who benefit from the measure will receive a subsidy of at least 80 per cent for their second and subsequent child. Importantly, we will remove the $10,560 annual cap on the childcare subsidy for families earning over $189,000, and that will benefit a further 18,000 families. This will ensure families with multiple children don't exhaust their childcare subsidy cap sooner in the year for younger children. These changes will put more money in the hands of Australian families, particularly those who are already dealing with childcare costs. This is a core principle of our childcare subsidy.

The activity test, importantly, does remain in place to ensure families must be undertaking activity, and that's because we want to encourage people to use the childcare subsidy to help them get into work, to help them undertake training or to help them to study so that they can be eligible for the workforce going forward. These measures reduce workforce disincentives for families and encourage parents, especially second income earners who are more often women, to go back to work or to work more, if they choose to, or to get more training so they can be ready for the workforce. Sixty per cent of the additional investment goes to families earning under $180,000. The maximum childcare subsidy rate will increase to 95 per cent for these families and the total subsidy will be important for those who have two children in care. Those who earn the least will receive the most.

As I said before, we plan to remove the annual cap, and this is a core component because this actually creates a disincentive for increased workforce participation. In the past, once a family hit the annual cap, they were required to pay 100 per cent of childcare fees. This results in large effective marginal tax rates and the possibility of significant debts, and this shouldn't be underestimated. If they've got this incorrect, this can actually result in large debts, even if it's by a small amount. Not removing the annual cap will maintain and, in some cases, increase workforce disincentives where a family has a combined income over $189,000. This previously would have negated any extra benefit generated by the increased subsidy.

I have been asked about why we have to wait for the measure to be implemented with this announcement. The reason for this is these measures require several things to be taken into account. They require the development of business requirements to inform the underpinning IT system changes, they require a complex technical build by Services Australia, and they require complementary changes for the software providers and their systems to support the childcare sector. The implementation lead time takes into consideration time to communicate changes with the childcare sector as well as for software providers to build and test their changes to ensure a smooth transition to the new system. This means that these changes will be ready to be implemented by July 2022.

The bill before us today clearly shows the Morrison government is committed to delivering more affordable child care and choice for Australian families. This bill is yet another example that the Morrison government has the back of all families, that we understand how important getting women into the workforce is, but also, more importantly, maintaining them in the workforce. I know, seeing so many of my friends and colleagues moving in and out of the workforce, how having that continuity and support for early child care, and ensuring that it is of good quality and of great accessibility, is important to all women in Australia.

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