Zali

Zali Steggall statement on Childcare Subsidy Bill 2021

5 August 2021

I support this Bill and the implementation of the measures announced in the Budget to make child care more affordable for families. The Bill removes the annual child care subsidy (CCS) cap so that there will no longer be a limit on the amount of subsidy that families, earning over $190,000 combined income, can receive each year;

It also increases the maximum subsidy rate of the Child Care Subsidy for second and subsequent children, where a family has more than one child under 6 years of age.

These measures will be of great benefit to many families of Warringah who previously found their subsidy capped out after 9 months of care and they then had to pay full fee for child care for the remaining 3 months of each year. It is anticipated that around 250,000 Australian families will benefit. That’s about a quarter of families with children in care according to the Grattan Institute.

The measure will mean the equivalent of 40,000 people are able to work an extra day per week and will boost the economy by up to $1.5 billion per year, according to an announcement by the Minister. The Government estimates that the measures in this Bill will reduce out-of-pocket costs by up to $183 a week for families with a second or third child in care. This is especially welcome at this time when many families are finding it tough.

However, there is room for further reform of the childcare and family policy which will generate greater economic and social benefit. There are enormous economic benefits of getting childcare and parental leave arrangements right, as shown by the motion I tabled in February this year, but the Government has underinvested and so the full returns won’t be realised. The benefits of the strategy if implemented would be substantial, with the Australian Parenting Strategy report released by Equity Economics and the Parenthood Group estimating a 8.7% boost to GDP by 2050.

These results are recognised by the majority of the population with a recent poll indicating that over 65 percent stating that universal, high-quality early learning and care system would be good for Australia’s economy. The Productivity Commission found that the high cost of early childhood education and care is a barrier to parents returning to work.

In February this year I tabled a motion which was debated in this place calling for a comprehensive reform to parenting policy in Australia. The development of a strategy that covers parental leave, child care, pre school and support for parents and potential parents in the workplace. To that end, I feel that while this Bill is a step in the right direction, it is lacking the comprehensive overview that is required to the systems and policies that support parenting in this country. The Government has missed the opportunity to address inequalities in the paid parental leave scheme such as removing the means testing or at a minimum means testing the family income rather than solely that of the primary carer.

Warringah

There are 2.6million families in Australia with dependent children under the age of 15. 20,000 of those families live in Warringah. Many have told me of the need for a more supportive approach, the disincentive to returning to work due to the cost of childcare and discrimination experienced in the workplace.

I welcome the measures provided for in this Bill but believe it needs to go further and be part of a more consistent and supportive approach to parenting strategy in Australia is required to address these concerns. From my own experience, starting my career as a lawyer and at the NSW Bar with young children, it was already incredibly frustrating that conferences to exotic overseas locations was tax deductable but the real everyday cost of childcare was not and remained so high. The tax system is not gender neutral and it’s time our system caught up with the 21st century reality of working parents.

Childcare is commonly viewed as child-minding rather than early education of children, this needs to change given:

  • A child’s brain is 90% of the size of an adult’s by the age of five.
  • The cost of childcare in Australia has risen faster than housing or electricity.
  • The Productivity Commission report last year found that 90,000 parents stayed out of the workforce due to the cost of childcare.

Impact of these policies is that, Australia has a peculiarly low rate of female workforce participation post childbirth and the gender pay gap persists at 14.1%. Those with more supportive parenting strategies are leading the way reducing gender pay gap, Belgium’s gap is 3.3%.

COVID Response

The Childcare sector is one of the hardest hit during COVID and the Government’s response last year was confusing and created much angst for all those involved. The response this year to the latest lockdown in NSW has been much swifter and more flexible, however, issues are still present.

I appreciate the Government’s quick decision to waive gap fees for parents who decide to keep their children home. However, I have had parents contacting my office complaining that despite this decision, the centres are still charging the gap fees because it is at the discretion of the centres whether they pass the waiver on to parents. I acknowledge the need for this flexibility in the process but parents are contacting me dismayed at having to pay for services that they were not receiving.

Similarly, with the extension of the lockdown for another four weeks, many childcare centres are now finding themselves in financial difficulty with lower attendance rates and higher costs. Childcare centres need to pay additional cleaning costs and factor in PPE for their staff yet are operating on half revenue if they have chosen to waive the gap fees for those not attending. This is especially acute in the eight impacted local government areas where attendance is down 70 percent. The cost for the waiver of gap fees is born by providers who are struggling to stay operational

I urge the Government to provide additional financial assistance to childcare providers passing on the gap fee waiver. It is a complex policy area but it doesn’t need to be, a simplified universal system would be more equitable and generate economic benefit for the Australian economy.

Moratorium on Centrelink debt notices during lockdown

An impact of this complexity is the accrual of large debts by parents through no fault of their own. I have received complaints at my office and there are hundreds of examples on North Shore Mums of parents who have been issued with bills of up to $11,000 owing to Centrelink as a result of overpayments of subsidies in the past two years.

I urge the Government to issue a moratorium on the issuance of notices for child care subsidy fees owing from the last two years for those under lockdown orders. This is particularly stressful time for parents and they don’t need further stress of debt notices from the government. Many don’t have $11,000 to pay out, especially now.

It is important to remember, this is not money that these parents ever saw in their pocket, the subsidy is an arrangement between providers and the government. It is a complex and opaque system which is now hurting families at a time of intense stress.

We need a moratorium on these notices immediately.

Future childcare policy

I would urge the government to do more to make the industry more robust and sustainable over the long term. The COVID flip-flopping policy response revealed the vulnerability of our current system. The cost of childcare in Australia has risen faster than the cost of housing or electricity.

  • A family with two kids in childcare can shell out $25,000 a year in childcare costs.
  • Families who wish to work more than three days a week are discouraged because the costs are higher than wages earned and while this Bill goes someway to addressing this by removing the cap, a disincentive remains.

I have also met with the Thrive by Five campaign led by Nicola Forrest and Jay Weatherill who have identified a range of weaknesses in the current model of early childhood education and care. There are many groups working towards increasing the sustainability of the sector and quality of early education and care for Australian children.

Many of these organisations argue that there needs to be a shift in the perception of childcare to emphasise the education aspect.

  • Australia’s participation in early childcare education and care is only 66%.
  • The UK has 100% participation for children aged 3 and 4.
  • Across the OECD the average is 72%.
  • It is no wonder therefore that 22% of Australian children start primary school developmentally vulnerable

With a greater emphasis on early education, we can improve outcomes for children. ECEC has been found to be associated with a significant increase in academic achievement scores at age 15, for children who experienced the highest levels of quality education and care.

This was especially the case for children from disadvantaged socio-economic backgrounds, demonstrating that a “focus on early years investment is crucial in fostering development opportunities for future generations”.

Paid parental leave

Paid parental leave is another key dynamic in the parenting strategy debate and child care. It is appalling that we have such stark inequities in our law that the eligibility for the Government’s paid parental leave subsidy is solely determined by the woman’s income. If you as a mother earn over $150,000 per year in this country, you get no government support for parental leave. Regardless of your partner’s earnings.

This policy:

  • discourages women from career advancement,
  • reinforces the concept of the male as the primary breadwinner,
  • disincentivises men from being the primary carer and
  • reinforces gender stereotypes.

If the Government is looking for more quick fixes to the Australian parenting model, they should start with removing this barrier and implementing a gender neutral parental leave policy.

Conclusion

I support this Bill and the increased support that it could enable the Government to provide to the childcare sector in the future. But I urge the government to look at childcare more holistically. Consider the educational benefits and the economic benefits of improving the availability, affordability and quality of care. And invest in a new model that will not require patches and disaster recovery responses. Invest in a long-term sustainable model of early childhood education and care.

Combine this with a more generous and equitable approach to paid parental leave and realise the economic and social benefit of increased female workforce participation and increased male participation in caring activities. This budget, I was pleased to see the Government to reinstate the Women’s Budget Impact Statement, which I had been calling for since coming to this place.

In doing so we saw more supportive packages to parenting announced such as the one enabled by this Bill. I trust that this statement will continue as a feature of the Budget process and will continue to promote measures to support women and parents generally in the workplace.

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