Sussan Ley (Farrer, Liberal Party, Assistant Minister for Education) Share this | Link to this | Hansard source

Today I am introducing the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014 which will do two things:

Both of these measures will apply from 1 July 2014 for three years, to 30 June 2017.

These measures do not in any way pre-empt the Productivity Commission inquiry into child care and early childhood learning, which is a holistic review into what is needed for the next generation—not just the next few years. The Productivity Commission's draft report will give us the first insight into their proposed reforms and is due next month.

The measures contained in this bill are, however, necessary. The government is making decisions that repair the budget, strengthen the economy and prepare Australia for the long-term challenges and opportunities that confront us.

Childcare benefit is a means-tested payment based on a family's income. The childcare benefit provides assistance to families with childcare costs. The amount of childcare benefit a family receives depends on the family's income, the type of care used, the hours of care and the number of children in care, as well as the parent's work, training or study commitments.

The childcare benefit measure in this bill is a 2014-15 budget measure and is one element of the government's broader measure to maintain eligibility thresholds for Australian government payments for three years. Maintaining the childcare benefit income thresholds will provide an estimated saving of $230 million over the forward estimates.

Childcare benefit eligibility requirements will remain unchanged. The government will continue to index—that is, increase—the childcare benefit standard hourly rate, the minimum hourly amount and the multiple child loadings by the consumer price index on 1 July each year.

It is important to note that the out-of-pocket costs incurred by most families because of this childcare benefit measure will be partially offset by the childcare rebate, which is not income tested and which covers up to 50 per cent of out-of-pocket childcare costs up to $7,500 per child per year.

The childcare rebate indexation pause at $7,500 was first implemented by Labor in 2011. Labor announced an extension of the measure as part of their 2013-14 budget and then took the $105 million in savings from the budget bottom line but never legislated for it. When this government sought to legislate the measure, Labor combined with the Greens in the Senate earlier this year to block the legislation that would have given effect to their own measure (as part of the Social Services and Other Legislation Amendment Bill 2013).

Labor tried to justify blocking their own CCR indexation pause by claiming that the savings had been intended to 'directly support' their Early Years Quality Fund. Labor said it opposed the coalition government's attempt to implement Labor's own CCR provision because the coalition government had frozen the Early Years Quality Fund funding.

This government did put a freeze on the EYQF funds—but only while an independent review was undertaken. That independent review found the fund was fundamentally flawed and inequitable and would benefit less than 30 per cent of long day care workers. This government has honoured funds contracted from the EYQF and also redirected the remaining funds—over $200 million—towards professional development activities to benefit the whole long day care sector not just a minority.

So if Labor chooses to block its own measure again, it will need to come up with a different excuse.

These measures will not impact families with incomes below $41,902, which is the lower income threshold for childcare benefit. These families will continue to receive the maximum rate of childcare benefit. The amount of childcare benefit a family receives tapers to zero as their income increases to the relevant maximum income limit. For example, a family with three children in child care for 50 hours per week, with an income of up to $170,404, is currently eligible to receive some childcare benefit as well as up to $7,500 childcare rebate per child per year.

The upper income threshold of $97,632 referred to in the legislation is a mechanism for the very complex way in which childcare benefit is calculated and tapered, depending on a family's income, the number of children in care, the type of care, and the hours used. This is a level of complexity that has been raised by families and service providers alike in the course of the government's Productivity Commission inquiry.

Overall, this government is increasing childcare assistance to $28.5 billion over the next four years to assist around a million families each year through the childcare benefit and childcare rebate.

But we cannot forget the context in which we are all operating today: Labor delivered six budget deficits; they left $123 billion in cumulative deficits ahead; and their debt is costing Australians $1 billion a month in interest, effectively dead money.

The days of borrow and spend must come to an end. The coalition has delivered a budget of both saving and building; it is a budget that ensures we will get back to living within our means, just as households must. Even though we inherited a mess, we are taking responsibility and fixing it up through strong and fair action. This bill is an important part of that action. I move:

That this bill be now read a second time.

Debate adjourned.