Coalition Senators Minority Report
Family Assistance Legislation Amendment (Child Care
Budget Measures) Bill 2010
Introduction
1.1
On 13 May 2010 the Senate referred the Family Assistance Legislation
Amendment (Child Care Budget Measures) Bill 2010 (the Bill) for inquiry and
report.
1.2
As announced in the 2010 Budget, Schedule 1 of the Bill makes amendments
to the A New Tax System (Family Assistance) Act 1999 to set the
maximum per child amount of Child Care Rebate at $7,500 per annum and
suspend indexation until July 2014 (the Measure).
1.3 The Measure will take effect from July 2010 and savings of $86.3
million are anticipated over the ensuing four years.[1]
1.4 The most recent indexation took place on 1 July 2009, increasing the
child care rebate limit for the 2009-10 income year to $7,778.[2]
Background
1.5
The Childcare Tax Rebate, (CCTR) as it was previously known, was introduced
by the Howard Government in 2005. It was backdated to commence on 1 July 2004.[3]
1.6
In his Second Reading Speech on the TLAB, the then Minister for Revenue
and Assistant Treasurer, the Hon Mal Brough MP said:
Schedule 1 introduces the child-care tax rebate. This
initiative will help families by giving them a rebate on their tax of 30 per
cent of out-of-pocket child-care expenses. The rebate will cover child-care
expenses for taxpayers who use approved care and meet the childcare benefit
work test or one of the equivalent childcare benefit limits. The rebate will be
payable up to a maximum of $4,000 per child...
The child-care tax rebate will assist families with the cost
of approved child care, building on the childcare benefit system and family
assistance currently provided through initiatives such as family tax benefit,
and honours the coalition’s election commitment.[4]
The limit was to be subject to indexation.[5]
Changes to the CCTR
1.7
From the 2006-07 income year, the CCTR was removed from the tax system and
was delivered as a Family Assistance payment through the Family Assistance
Office.
1.8
From July
2008, the CCTR was increased to 50 per cent of out-of-pocket child care costs,
up to $7,500 per recipient per child per year. It continued to be indexed.
1.9 On 1 July 2009 CCTR was renamed the Child Care Rebate (CCR)
to recognise that the rebate is no longer a tax offset.
The Bill - Government
position
1.10
The Government views this specific measure as a 'savings measure' to
offset some of the $273.7 million to be spent implementing the National Quality
Framework (NQF) for early childhood education and child care.
1.11
The NQF involves the progressive phase-in of improved carer-to-child
ratios and higher qualification requirements for carers from January
2012.
1.12
From July 2010 a transition phase commences in which services will begin
to undergo assessment against the NQF’s National Quality Standard.
1.13
The NQF will increase the costs faced by child care services and it is
anticipated that these increased costs will be passed on to families using
child care.
1.14
The Child Care National Association (CCNA),
in their written submission to the Committee, at page 2 state that:
Many informed childcare stakeholders have foreshadowed cost
increases flowing from the proposed COAG changes to be from $1,500 to $5,000
per child per year.[6]
1.15
In a press release dated 11 May 2010, the Deputy Prime Minister claimed
that the change proposed by the Bill will only affect three per cent of families
receiving the rebate in 2010–11.
1.16
The CCNA, again in their written submission to the Committee,
disputes the statement by the Deputy Prime Minister that 'the change will only
affect three per cent of families receiving the rebate in 2010 – 11.'
1.17
The CCNA state at page 3 of their submission:
With the COAG cost increases included onto the average costs
at $1,000 per part time LDC child per year and $2,000 per year per full time
child, CCNA estimate the number children/families to be adversely affected by
this Bill to be conservatively of the order of 1/8th (or
12.5percent) of all children/families rather than the 3 percent indicated by
Members/Senators with additional out-of-pocket expenses for these families of
an additional $2,000 per year.[7]
1.18
In any event, based on the admissions of the Deputy Prime
Minister, this means that approximately 20,700 families will be worse off
by up to $9.00 per week (taking account of the indexation of the cap that
was due in July 2010).
1.19
Coalition Senators note that other claims have been made that some
families face fee increases of up to $13 to $22 a day per child from 2011 to
meet childcare quality reforms.[8]
1.20
In her press release of 11 May 2010, the Deputy Prime Minister also
claimed that:
The Australian Government is committed to ensuring families
have access to high-quality, affordable child care.
1.21
Coalition Senators find this statement both ironic and contradictory
given that the effect of this Bill will see approximately 20,700 Australian
families worse off as a result of this so called 'budget saving' measure.
1.22
Coalition Senators consider the Government's initiative is yet another
blow to women who want to care for children in a home setting. Coalition
Senators also note that the Government is also cancelling the $1500 start-up
grant for Family Day Care services ($5000 for Remote Areas).
1.23
The Coalition considers the actions of the Government are unfortunate as
they will impose unnecessary financial hardship on many families using childcare
services.
1.24
Coalition Senators note that the fundamental reason for the Government
having to adopt such harsh budget savings is in part, due to the Rudd Labor
Government's inability to properly manage the Australian economy. This
financial mismanagement has caused a massive blow out in Australia’s net debt
which will cause a significant blow out in the interest payments required
to service this debt.
1.25
As stated by the Hon Sharman Stone, Shadow Minister for
Childcare in her Second Reading Speech on this issue on 2 June 2010:
I certainly feel that this childcare budget measure is
ill-conceived. It only saves $83 million over four years, and when
you think about it that is not very much when you are inflicting so much damage
and so much distress on so many families.[9]
Coalition Senators' conclusion
1.26
The Coalition considers the actions of the Government are unfortunate as
they will impose unnecessary financial hardship on many families using
childcare services.
1.27
The Coalition will not oppose the Bill, but when in Government will seek
to address the affordability of childcare in Australia and alleviate the
financial burden being imposed on families by this budget related measure
Senator
Michaelia Cash
Deputy Chair |
Senator Chris Back
|
Navigation: Previous Page | Contents | Next Page