The measures in this bill are unprecedented. No government has frozen indexation on the child care rebate without using the proceeds of the savings to help fund child care quality measures by returning the savings to early learning. No government at all has frozen the income thresholds on the child care benefit. These unprecedented measures are greatly disappointing, but sadly this approach is consistent with the Liberal-Nationals' longstanding failure to support accessible, affordable child care.
Ms BUTLER (Griffith) (10:11): Our population is changing. There are more older people than before. Baby boomers have started to retire, and people are living longer. It is all good news. One consequence of those changes is that Australia needs workers. Among others, we need people in their 20s, 30s, and 40s to have every opportunity to participate in our workforce. We need them to use their skills, to develop their skills, to be productive, to pay taxes and to stay in the workforce so that their pay increases, so that their tax payments increase, so that they do not lose their skills, so that they learn, so that they stay connected, so that they can contribute.
One thing our country needs, so that people of parenting age can stay in the workforce, is child care. Child care allows parents to return to work. More than 978,000 families across Australia rely on child care on a daily basis. There are lots of good reasons why a parent might want to return to work—there is the obvious financial benefit of earning a wage, but there are other benefits too. One is that the longer you are away from the workforce, the more likely it is that your skills will become eroded or outdated. That can make it harder to get back into the workforce, and even once you are there it can mean delayed promotion, delayed opportunities for development and lower wages over a lifetime. You can miss opportunities for promotion that you would have had, had you had a shorter absence from the workforce.
Another reason that people might want to return to work is wellbeing. For a lot of us, our identity is wrapped up in our work. If you have built a successful career, or developed skills, or you have been part of an organisation successfully for a long period of time, your identity can be largely wrapped up in what you do. It can be an opportunity for inclusion, an opportunity for social contact, an opportunity just to have a conversation that is not about nappies or pressing domestic concerns. It can affect your sense of self-worth. For those reasons it is important not just from a national perspective but also from an individual perspective that we remove barriers and impediments to returning to work for people who are parents.
None of this is intended to denigrate or belittle the work of those who choose to remain out of the paid workforce to undertake important parenting responsibilities. Having been both a stay-at-home parent and a principal in a national law firm, I value both roles, and I know that in a lot of ways that stay-at-home parenting work can be tougher and more demanding than returning to a career in the paid workforce. For those who want to return to the paid workforce, our nation should do what it reasonably can to remove any barriers. One aspect of removing barriers is good regulation that allows people to have a job that they can return to, that prevents them from being sacked for taking parental leave, that helps working arrangements to fit around life as a parent and that helps to fight discrimination against parents.
Another aspect is not legislative; it is building a culture where absence from the workforce to have a child is seen as the norm for people of parenting age—in other words, a work culture where work and family fit together and are not in competition with each other, and where people are seen as individuals and parents, not just as workers.
Obviously a further aspect is paid parental leave. It takes away some of the pressure of absence and helps reduce disadvantage, and it allows the person taking parental leave to keep in touch with the workplace throughout their absence.
Of course, child care is a very important part of the puzzle. Without child care, returning to work can be just impossible. Australian parents and their kids need quality, accessible and affordable child care. Research shows the relationship between workforce participation for women particularly and the cost of child care. When the gross costs of child care go up by one per cent, women's workforce participation decreases by 0.7 per cent. These are obviously concerning statistics given the imperatives that we have to make sure that our paid workforce base is as big as possible as our population changes and we face the challenges inherent in those changes. Child care is not just important for today's workforce; it is important for our nation's future. It is important to our ability to raise enough revenue to pay for the services that our people need. It is also important for our children's future. Early learning is so significant when it comes to making sure that our children will have the best prospects, the best opportunities and the best future possible.
The reason I made those opening remarks was to explain why I find this bill so disappointing and why I so strongly support the Labor amendment. It is because this bill is aimed at making child care less affordable for parents. The bill will decrease the real value to working families of the child care rebate and the child care benefit. It will do so by freezing indexation not just for the non means tested child care rebate but also for the income thresholds of the means tested child care benefit. It is a cut of $336 million from childcare support that low- and middle-income families in Australia rely on.
It is so ill timed. It comes only weeks before the Productivity Commission inquiry that the government itself instigated is due to provide an interim report. The government should await the Productivity Commission's recommendations and views on child care before altering childcare policy. This is an alteration in policy in that it is aimed at making child care less affordable. Like many other Australians, I made a submission to the Productivity Commission inquiry into child care in good faith, expecting that the government of the day would await its recommendations before making changes to child care. By reducing access to child care and reducing affordability the government is jumping the gun. It should be waiting for the Productivity Commission.
But more important than process issues are substantive issues. The measures in this bill are unprecedented. No government has frozen indexation on the child care rebate without using the proceeds of the savings to help fund child care quality measures by returning the savings to early learning. No government at all has frozen the income thresholds on the child care benefit. These unprecedented measures are greatly disappointing, but sadly this approach is consistent with the Liberal-Nationals' longstanding failure to support accessible, affordable child care.
I remember very well in the late 1990s that one of the first the measures of the newly elected Howard government was to abolish operating subsidies for community childcare centres. In the same year, they reduced the child care cash rebate from 30 per cent to 20 per cent for one-child families with incomes above $70,000 a year. The Howard government just did not get child care. Unfortunately, it is a pattern that is continuing.
In contrast, Labor has an outstanding record on child care. Just last year then Minister Ellis recounted some of our achievements on child care in a speech to the Australian Childcare Alliance. She described some of Labor's achievements and said:
In affordability alone we have seen a massive increase in investment, we have seen an increase in the child care rebate from 30 to 50 percent, we have seen the increase in the cap of the child care rebate from $4,354 a year up to $7,500 per year but importantly they aren't the only statistics that matter.
The statistics that matter is the impact that this increase is having in Australian families. What we do know is that in 2004 when a family was spending on average 13 percent of their disposable income on their childcare fees, that by 2011 that figure stood at 7.5 percent.
So we have seen a reduction in the proportion of disposable income spent on child care. I know that former Prime Minister Kevin Rudd, who was the member for Griffith before my election as the member for Griffith, was very proud of the move to increase the childcare assistance from 30 per cent to 50 per cent. He spoke to me about that change and about the importance of making child care available to working families.
When you look at the history of the coalition's actions and Labor's actions on child care you see the difference. Labor has always believed in and supported workforce participation measures and early learning measures, whereas unfortunately the coalition has not. It is a similar proposition when it comes to paid parental leave. I remember very well when Jenny Macklin was the Deputy Leader of the Australian Labor Party federally and the great pride that I felt as a young member of the Australian Labor Party that she was championing a paid parental leave scheme nationally. At the time, though, unfortunately the Howard government was opposing paid parental leave. Instead, we saw the absolutely flawed policy of the baby bonus—a policy that was widely criticised as an example of poor public policy.
We championed paid parental leave and, once Labor was elected to government, we commissioned a Productivity Commission inquiry and, quite rightly, waited for the outcome of that inquiry. At that point we implemented a paid parental leave scheme consistent, importantly, with the Productivity Commission inquiry recommendations. That was a minimum wage, fixed-amount paid parental leave scheme where everybody would get the same amount. It was a fair scheme, unlike the Abbott government's wholly unfair Paid Parental Leave Scheme where the more well off you are the more money you get from the government. It is frankly ridiculous and repressive.
I know that in this debate there has been a bit of discussion about the priorities in this government's spending when it comes to work and family policies. All I want to say about that is that it is very disappointing that we are seeing a lot of myths being perpetuated in the debate.
For example, last night we heard a member indicating that it was fair for paid parental leave paid by the taxpayer to be paid at full income replacement, notwithstanding the Productivity Commission's recommendation directly to the contrary, because annual leave and sick leave get paid at income replacement rates. That wholly misunderstands the nature of the paid parental leave payment that is going to be paid for by the taxpayer. It is flawed analogy because we all know that annual leave and sick leave are not paid for by the taxpayer; they are paid for by the employer.
This partly demonstrates some of the problems with this paid parental leave scheme. The Abbott government wants the taxpayers to pay income replacement for well-off people and employers to stop paying those income replacements. In those situations where there has been enterprise bargaining and where productivity gains have been exchanged for improved conditions for working people and employers are now paying income replacement paid parental leave, the government would like to relieve those employers of that obligation and to effectively subsidise those employers by transferring the obligation to make those payments from the employer to the taxpayer. Frankly, I think that is ridiculous and unfair.
For that matter, all of the allegations made that everybody should have the same paid parental leave entitlements are really interesting, as they come from a government, a party and a tradition that champions individual bargaining, and I am sure they would not be suggesting that pay and condition improvements ought to come without corresponding increases in productivity and productivity gains. But I digress, Deputy Speaker Mitchell. We are talking about child care.
The Abbott government's record on child care and work and family policy is just atrocious. They promised no cuts to education before the election, and what have we seen since the election—cutting funding for schools, cutting funding for universities, higher university fees for students, failure to guarantee future funding for preschool. And now early childhood education has been added to the long list of Abbott government broken promises. It is pure hypocrisy not least because the Prime Minister personally wrote to centres about the impact of capping the childcare rebate on families before the election, saying it would mean increasing out-of-pocket costs for families. Of course that is exactly what this bill is for; that is exactly what this bill does. We have already seen this government's announcements stripping almost a billion dollars from early education and care, $450 million cut from outside of school hours care, $157 million cut from family day care services and a range of other cuts. But we are now seeing this square, direct attack on the childcare rebate and the childcare benefit.
The childcare benefit is means-tested and targeted. It is extraordinary that the government is going to make cuts to a payment for which eligibility starts to reduce when families earn just $41,000. We know from the Senate committee hearings that the government has done very little, if any, real analysis of who will be hurt by these changes and how much they will pay. Instead, this is a government that is trying to rush these childcare benefit changes through the parliament in a sneaky and underhanded way and these changes are going to have a negative impact on at least 500,000 low- and middle-income families. It is just not good enough.
It is a very disappointing set of changes, and that is why Labor believes that particularly for the childcare benefit there ought to be an opportunity to fully consider, consult and debate in respect of those changes. That is why we have moved the amendment to split the bill. We believe that particularly for that relief targeted to lower and middle-income earners there ought to be an opportunity for further discussion and further consideration in respect of that change to the childcare benefit. Frankly, it is a ridiculous indictment of this government's policies that they are refusing to reconsider their ridiculous paid parental leave scheme where the more you earn the more you get, while at the same time making it harder for families to afford child care.