LABOR SENATORS' DISSENTING REPORT
Key issues
1.1
Labor Senators do not support the chair’s report into the Family
Assistance Legislation Amendment (Child Care Measures) Bill (No. 2) 2014 (the bill).
1.2
The
Coalition’s pre-election policy document, The Coalition’s Policy for Better
Child Care and Early Learning, published in September 2013, states the
Coalition’s commitment 'to help ensure child care can be more accessible and
affordable'. This bill completely goes against that policy statement by forcing
up costs for families already facing rising fees.
1.3
Labor believes in good quality, accessible early childhood
education and care (ECEC). In government we undertook major reform in the ECEC
sector. Part of the reform is still under way. Our reforms focussed on
improving educational outcomes for Australian families. The early ECEC sector
has overwhelmingly endorsed Labor’s reforms.
1.4
Evidence received by submitters, and evidence presented at the public
hearing confirm that the measures contained in the bill are simply budget
savings measures, as reflected in the budget papers, redirected by government
to repair the budget and fund their policy priorities, without proper
assessment of the impact on families.
The bill will not deliver the
savings measures announced by the government
1.5
The Department of Education (the department) was unable to release
accurate data on how families will be affected by the bill. During the public
hearing and in further questions on notice, Senators requested this data from
the department, who were either unable, or unwilling to provide it.
Senator
LINES: Do you have an idea yet of whom this CCB change will
impact on and how it will affect them?
Mrs
Pearce:
That goes to a question on notice from Senator O'Neill that we did answer,
actually.
Mr
Willing:
In the broader sense, the model produces national savings data. The 500,000
families and 800,000 children that we advised of was the smallest breakdown we
could find. For example, I think we were asked a question on notice about income
ranges. That cannot be provided because the model does not go to the detail of
the circumstances of individual families. The data is quite flat in so far as
it goes to the child, the hours and then the rate. The model does not then link
multiple children of a family back to a parent or family, so it cannot produce
the data about a particular family or particular types of families.[1]
1.6
Furthermore, on the issue of retrospectivity outlined in the Bills
Digest,[2]
the department were unable to provide any data or assessment of the costs to government
or families on retrospectively applying the changes in the bill. Labor Senators
of the committee continue to hold concerns regarding the effect of
retrospectivity on families, especially considering the government has failed
to instruct the department to undertake modelling on the matter.
Mr
Willing:
If asked we could probably provide some sort of advice or modelling for
government.
Senator
HANSON-YOUNG: But you have not been asked to do that?
Mr
Willing:
We have not been asked and we have not done any modelling.[3]
1.7
We therefore assert that it would be impossible for the government to
have any accurate assessment of the costs of administering, or the saving
measures achieved by implementing the bill.
The government is avoiding scrutiny
over changes to the Child Care Benefit Scheme at the detriment of Australian
families.
1.8
Despite new and compelling evidence from peak bodies like Australian
Council of Social Service (ACOSS)[4],
key researchers Deborah Brennan and Elizabeth Adamson from the Social Policy
Research Centre (UNSW)[5],
and the Parliamentary Joint Committee on Human Rights releasing their Ninth
Report of the 44th Parliament that explored the bill[6],
Coalition members of the committee would not agree to hold a hearing receiving
evidence from any submitter except the department.
1.9
Labor Senators can therefore only infer that these submitters would have
produced evidence oppositional to the government’s agenda.
The bill will exacerbate already
rising pressures on costs
1.10
Eligibility
for CCB has consistently moved away from average earnings. In 2004–5, a family
on 70 per cent of average full-time weekly earnings received full CCB. By 2013–14,
the income cut off for CCB had fallen to just 55 per cent of average full-time
weekly earnings, and by 2019 will fall below 50 per cent.
1.11
Yet, wages for educators remain low in the sector, and Labor Senators do
not support a reduction or maintenance of wages to keep costs low, rather
increased support from the government to keep services affordable for families.
1.12
Labor Senators support evidence given in the Submission by Deborah
Brennan and Elizabeth Adamson, Social Policy Research Centre NSW, stating:
There are, of course, sound reasons why some services charge
high fees. They may have a particular commitment to quality and employ
teachers and educators with higher than required qualifications, they may face
high rents or be located in remote areas where all inputs other than labour are
likely be cost more than in urban areas. From a policy perspective, however,
there needs to be a way of distinguishing between fees that are high for
legitimate reasons and fees that are high because of premium features that
parents should purchase for themselves or because excessive profits are being taken.[7]
1.13
Labor Senators refer to similar policy that exists under the Aged
Care Act 1997 for Aged Care Services, where care is funded at an adequate
level and the user pays for additional services.
1.14
Evidence
submitted to the committee demonstrates that prices are likely to continue to
rise above general inflation into the future, continuing the long term decline
in the value of child care subsidies.[8]
A continued freeze of income thresholds relating to CCB payments will only
increase this erosion.
1.15
The department
gave evidence pertaining to this during the public hearing, where Mr Willing of
the Department stated that child care prices were forecast to increase annually
by around seven per cent on average over the forward estimates.[9]
1.16
Furthermore,
Mr Willing gave evidence demonstrating that up to 73 per cent of families (800
000 of the 1.1million children in families eligible for CCB) are likely to be
effected by the bill.[10]
1.17
The Labor Senators of the Committee note that the costs of basic
childcare are rising, and increasing in comparison to average family income. Therefore, Labor Senators
believe a further freeze on CCB that decreases the accessibility to childcare
for almost 73 per cent of families is unacceptable where money is returned to
the budget bottom line rather than reinvested into the sector.
The bill negatively impacts labour
force participation of parents, and in particular, infringes on women’s right
to work
1.18
Child care plays a crucial role in supporting the labour force
participation of parents, in particular, women’s labour force participation,
and family income plays an integral role in allowing access to child care.
1.19
According to data from the Australian Bureau of Statistics (ABS), in
families with a combined weekly income of $2 000 or more, 52 per cent of 0–14
year old children regularly participate in child care, compared with 25 per
cent in families with a weekly income of $800 or less. Families earning $800–999
per week are the least likely to use either formal or informal child care.[11]
1.20
NATSEM modelling conducted for the Grattan Institute showed that two
parents working full time and earning $40 000 each, with one child in long day
care take home only about half the second earner’s wage.[12]
1.21
Increases in the out of pocket costs for childcare creates substantial work
disincentives, particularly for second earners in couple families, and can
significantly reduce if not remove the monetary benefits of work.[13]
1.22
Labor Senators are aware that affordability is a major barrier to
children’s participation in early learning, and therefore a contributing factor
in their ability to access the inarguable benefits gained from early learning,
particularly among already disadvantaged children.
1.23
One of the largest childcare providers in Australia, Goodstart Early
Learning, have previously expressed their concern at the impact the CCB income
threshold freeze would have on affordability, particularly for low-income
families:
We are certainly concerned about it over the longer term,
because it is a slow burn impact. Low-income families, as I said, are
struggling the most with childcare costs. We should be looking to increase
assistance for that group rather than reduce it. We are worried that reducing
the amount of CCB for working families will have an impact on whether parents
can afford to go back to work. People do make very conscious decisions based on
their tax after childcare benefit and whether they can return to work.[14]
1.24
Similar evidence was submitted to the committee from the Crèche and
Kindergarten Association, who noted that parents will not be able to afford the
out-of-pocket expenses for childcare and are likely to choose to remove their
children from the services. They could also reduce their working hours which
will adversely impact on productivity resulting in lost taxation revenue and an
increase in family assistance subsides.[15]
1.25
The Parliamentary
Joint Committee on Human Rights releasing their Ninth Report of the 44th
Parliament, published July 2014, explored the bill. The Committee majority came
to a number of conclusions regarding concerns of the bill infringing on human
rights conventions.
1.26
Under
article 2(1) of International Covenant on Economic, Social and
Cultural Rights (ICESCR), Australia has certain obligations in relation to the right to
work. These include:
the immediate obligation to satisfy certain minimum aspects
of the right;
the obligation not to unjustifiably take any backwards steps
(retrogressive measures) that might affect the right;
the obligation to ensure the right is made available in a
non-discriminatory way; and
the obligation to take reasonable measures within its
available resources to progressively secure broader enjoyment of the right.[16]
1.27
Of
further relevance to the right to work in this context, the Convention on
the Elimination of All Forms of Discrimination against Women (CEDAW)
requires States parties to implement measures to eliminate discrimination
against women in the field of employment. These include the obligation to
encourage the provision of the necessary supporting social services to enable
parents to combine family obligations with work responsibilities and
participation in public life, in particular through promoting the establishment
and development of a network of child care facilities.
1.28
Accordingly, that Committee recognised that the availability of
child care is a critical component of the right to work.
1.29
On exploring the bill, the committee's view was;
the effect of the measure on the affordability and availability
of child care may thus be seen as a limitation on the right to work. The
committee notes that the statement of compatibility provides no assessment of
the impact of the measures on the right to work.[17]
Labor Senators view
1.30
Labor Senators believe that not only does the bill negatively impacts
labour force participation of parents, creating a disincentive for work, but
infringes on the human rights of 51 per cent of the population and 46 per cent of
the working population.
The bill has a disproportionately
adverse effect on low-income families
1.31
The committee was presented with damning evidence from the peak body of
the community services and welfare sector, ACOSS, regarding the effect of the bill
on low income families, in particular:
that the maximum rate income threshold as it stands is only
around $5,000 above a full time minimum wage.
that the majority of families who receive the maximum rate of
CCB are sole parent families (72.6%).
that the bill could create a situation where a sole parent faces
an effective marginal tax rate of more than 70% due to the combination of
income texts for CCB and Family Tax Benefit Part A.[18]
1.32
Labor Senators note that whilst the actual dollar amounts outlined in
the bill may not be extreme for individual families, it should also be
considered in the context of other budget changes which are likely to impact on
the affordability of child care, particularly for already disadvantaged and
vulnerable families.
1.33
Under the changes proposed in the most recent Coalition budget, parents
will be required to pay most of the gap between CCB and actual fees, with the government
Jobs, Education and Training (JET) contribution capped at $8 per hour. The
budget also introduces a weekly cap (36 hours per week, down from 50 hours a
week for those engaged in approved activities).
1.34
Labor Senators express disappointment that the committee majority failed
to recognise the disproportionate impact in vulnerable families who will
already be hit hard by a harsh budget.
The bill inappropriately precedes
the final report of the Productivity Commission Inquiry into Childcare and
Early Childhood Learning
1.35
The Coalition made an election commitment to inject $2 million into the
Productivity Commission Inquiry into Child Care, and to implement any decisions
on the matter prior to the final report demonstrates a disregard for the
results and makes it difficult for the Commission to provide accurate
recommendations, as these recommendations are to be based on existing funding
parameters, as per the Terms of Reference.
1.36
The Labor Senators do not support the explanation given in the committee’s
majority report, and assert that to utilise tax-payer’s funds to undertake a
multi-million dollar productivity commission inquiry, yet enact amendments to
policy before receipt of the outcomes of that report not only undermines the
process, but also demonstrates the arrogance of the government.
Recommendation 1
1.37 The Labor Senators recommend that the Senate
reject the bill.
Senator Sue Lines
Deputy Chair
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