The Coalition supports policies and measures that help to ease cost of living pressures faced by families, especially measures that will support women who are looking to get back into the workforce or increase their hours.
The Coalition unreservedly supports giving families the choice to determine what will work best for them—whether that be formal or informal arrangements, or a combination of the two.
While in government, the Coalition delivered increased access to care, investing $11 billion in ongoing funding for preschools and kindergartens in 2022–23, up from $6.2 billion in 2013–14. Under the Coalition, 280 000 more children were in early learning, and approximately 90 per cent of families using approved services were eligible for a Child Care Subsidy of between 50 per cent and 85 per cent.
The Coalition has a proven track record of solid financial management, particularly over the COVID-19 pandemic. The December 2021 National Accounts showed Australia's economy grew 3.4 per cent since the pandemic— more than the United States of America, the United Kingdom, Canada, Germany, Japan, Italy and France. In April 2022, unemployment fell to 3.9 per cent, the lowest level in 48 years, considerably lower than the 5.7 per cent unemployment rate left by Labor in 2013.
The Coalition has always supported the economic empowerment of women. Since 2013, around 55 per cent of the 1.9 million jobs created have gone to women. Women's workforce participation reached a record high of 62.3 per cent in May 2022 under the Coalition, compared to 58.7 per cent when Labor left office. The gender pay gap was reduced from 17.4 per cent under Labor, to 13.8 per cent under the Coalition.
The Coalition supports this bill in principle but maintains concerns over how the policy will deliver what it has promised.
The Albanese Labor Government has promised:
$4.7 billion over 4 years from 2022–23 to make early childhood education and care (ECEC) more affordable for families and reduce barriers to women's labour force participation. Based on analysis of past subsidy increases, Treasury estimates the Government's Child Care Subsidy changes will increase hours worked by women with young children by up to 1.4 million hours per week, equivalent to an extra 37 000 full-time workers, in 2023–24.
Coalition Senators are concerned that the Albanese Government's 'Cheaper Child Care' policy is based on a lack of modelling and incorrect assumptions. While the Albanese Government has argued that this policy will increase access to early childhood education and care for families, increase workforce participation rates and reduce out of pocket costs, evidence from Treasury indicates that modelling was only done on the impact the policy will have on mothers with children aged 0–5 years.
Treasury official, Mr Mark Cully, testified:
The way in which we've done it is we've looked at the range of research that's been done by academic economists looking at how child care costs have influenced the decisions of households as they presently are...The first thing that we've identified is the size of the population of interest here. We've used the labour force survey to identify that there are 1.4 million employed mothers who have children who are aged nought to five. Additionally, there are 0.5 million mothers who are not employed who have children aged nought to five. That's the group of people we looked at and who were of interest. We did not look at men.
Coalition Senators are concerned at the lack of Treasury modelling on GDP, supply and demand, wage costs or increases, the impact of rising fees and the provision of early childhood educators, especially given that there are
7200 current vacancies across the sector.
Mr Cully stated, in response to a question around Treasury modelling on the impact of changes to the Child Care Subsidy on the demand for ECEC services, that modelling has not been done. He also noted that Treasury has not done modelling on whether any increase in demand for ECEC could drive up the price charged by providers, referring it back to the Department of Education:
Senator Faruqi: Has Treasury done any modelling on the impact of changes to the childcare subsidy, based on this bill, on the demand for ECEC services? Is there any modelling on how much the demand will increase?
Mr Cully: No, we haven't. That [modelling] has not been done.
Senator Faruqi: Has Treasury considered whether any increase in demand for ECEC could drive up the price charged by providers? Or is that also a question for the Department of Education?
Mr Cully: That’s definitely a question for the Department of Education. Our assumption, for the purposes of this exercise, is that there is no increase in childcare prices in response to the subsidy. That's one of the assumptions we've made in arriving at our number.
Senator Faruqi: What is the assumption about demand?
Mr Cully: The assumption is that, by the time we get to 2023–24, additional places or additional days will be available for those households and parents who wish to make use of the enhanced subsidies.
Coalition Senators are concerned that the Department of Education has not done any modelling on the effect of this policy on childcare fees:
Senator O'Sullivan: Have you done modelling on the effect of this policy on childcare fees?
Mr Philp: No, I don't believe we have.
Mr Reed: No, we haven't done modelling on that.
It was noted by several stakeholders over the course of the two scheduled hearings that many in the sector are particularly concerned about the impact of this bill on exacerbating current workforce shortages.
Ms Samantha Page from Early Childhood Australia said:
We really do have a chronic workforce shortage, and one of the difficulties in delivering the government's intention with this bill—to improve affordability—is going to be that, if we don't have the workforce to deliver on it, families won't be able to benefit from that. At the moment, we have services capping hours for families, closing rooms and partially closing services because they just can't staff them, and we really need to address that in order to have the full benefit of this legislation.
Ms Elizabeth Death from the Early Learning and Care Council of Australia noted that:
The Government must concurrently invest in targeted action to retain and attract a stable, quality early learning workforce… Significant additional Government support is required to stem workforce attrition across the sector, and ensure demand for places can be met.
Mr John Cherry from Goodstart Early Learning highlighted in his opening statement that:
Educator vacancies are currently running at 7200 a month, more than twice the pre-pandemic level of vacancies. Goodstart's educator attrition rate is currently running at 10 per cent higher than it was pre-pandemic and continuing to rise. Many of our centres have had to cap enrolments because they cannot find staff. The ability of the sector to accommodate extra demand for places next July given current staffing challenges should be of concern to this committee.
Coalition Senators are concerned that the lack of modelling means that additional workforce requirements have been overlooked by the Albanese Labor Government when introducing this legislation.
Senator O'Sullivan: Has the government done any modelling on how many extra childcare places this policy will create?
Mr Reed: I wouldn't say we've modelled how many additional places it would create. We've said that Treasury have estimated the participation effect as 37 000 full-time workers. We haven't modelled how many places would be required.
Senator O’Sullivan: To meet that expected growth to meet that need, we're going to need more workforce. There are a considerable number of childcare deserts, so I'm very interested in understanding: has the government done any workforce modelling to show how many more workers will be required to fill this policy's needs?
Mr Philp: We haven't modelled the extent to which new workers are needed, as part of this policy development.
Another major concern for Coalition Senators is the lack of action from the Albanese Labor Government to address the broader accessibility challenges for the children and families who live in rural, regional and remote parts of Australia.
Families living in rural and regional communities face disadvantages due to a lack of services available in those regions, which are often classified as 'child care deserts', defined as:
A populated area where there are less than 0.333 childcare places per child, or more than three children per one childcare place. About 568 700 children aged 0 to 4 years, or 36.5 per cent of children in this age group, live in neighbourhoods we classify as a childcare desert.
Coalition Senators are concerned that the proposed legislation does nothing to assist families living in childcare deserts to access early learning services.
The John Moriarty Foundation noted in their submission that:
There are around 150 000 Indigenous Australians living in more than 1200 remote and very remote communities around the country. Changes to the childcare subsidy will not reach the majority of vulnerable children in these communities.
Mrs Tina Holtom from Child Australia noted:
The commitment feels a little empty, given the barriers that are already in rural and remote areas. Accessibility is going to be an issue for these families, quite simply.
Mrs Ros Moriarty from The John Moriarty Foundation stated in response to a question around the impacts of increasing the childcare subsidy rates:
Where we operate, so in remote and very remote communities, it won't have an impact because most of the children and families in those communities will not be eligible for this, nor will they have the means to access any kind of subsidy.
Ms Georgie Dent from the Parenthood said:
Improving affordability, however, is moot if families are unable to access additional places in services.
Furthermore, several stakeholders have recommended a minimum level of access to quality early childhood education and care of at least 72 hours a fortnight, which would give children three days a week of access to early childhood education. Stakeholders note that this is the optimal minimum amount of access to ensure that every child has the best start possible. Coalition Senators have noted that this is particularly crucial for those children who are experiencing developmental delays or need additional support— however the proposed legislation simply increases hours of access to the subsidy without addressing access to services, leaving it unclear if the benefits will be realised.
Recommendation
Coalition Senators recommend that the Senate note that the bill does nothing to address broader challenges for access to early learning in Australia, namely service gaps in regional Australia and early childhood education and care workforce shortages which are preventing families from accessing the care they need.
Recommendation
Coalition Senators recommend that the Senate note that the Government's child care package, which costs $4.7 billion, does not add one additional early learning place.
Recommendation
Coalition Senators recommend that the Senate call on the Albanese Labor Government to ensure that the promised savings for families will not be eroded by higher fees due to the additional demand for early learning services as a result of the bill.
Recommendation
Coalition Senators recommend that the Senate note that early learning providers have already increased fees since the Government came to office and the additional demand placed on early learning services as a result of the bill will put further inflationary pressure on fees.
Recommendation
The proposed legislation commits to higher ongoing structural spending. Coalition Senators urge the Senate to hold the Albanese Labor Government to account over its spending commitments to improve the budget while standing by their promise to deliver legislated targeted income tax relief.
Senator Matt O'SullivanSenator Kerrynne Liddle
Deputy Chair Liberal Senator for South Australia
Liberal Senator for Western Australia