Subjects: Jobs for Families child care package; the Coalition’s plan for more accessible, affordable and flexible child care.
E&OE……………………….……………………………………………………………
PRIME MINISTER:
Happy Mother’s Day to everyone and thank you for giving up some of your Mother’s Day to be here for this important announcement. It is an important announcement. It’s the latest in a series of pre-budget announcements that build up to the budget itself on Tuesday night and it’s the Jobs for Families package. It is a very important economic reform, as well as a very important social reform. What we’re doing as part of the Jobs for Families package is replacing three benefits with one more generous benefit, in conjunction with the safety net package and the nannies trial that’s already announced. What the Jobs for Families package means, is it will have a child care system which is more flexible, more affordable, more accessible and very importantly simpler – let me repeat that – more flexible, more accessible, more affordable and simpler which is what the families of Australia want and need.
We estimate that for families, working families, with incomes between $65,000 and $170,000 a year they will be $30 a week on average better off. So this is a generous package. But it’s not just about being generous to families, it’s about building a more productive economy – that’s why I stress this is an economic reform as well as a social reform. The survey work that’s been done by the Department of Social Services suggests that some 240,000 families will work or work more as a result of these improvements to child care and if we do get 240,000 families working more, that is a very significant boost to our economy – that’s why I say it is an economic reform, not just a social reform.
I stress that this budget is going to be measured, responsible and fair. All along we’ve been saying that new spending in this budget had to be offset by savings – so while we’re very committed to this improved Jobs for Families child care package – there will need to be savings in the family tax benefit area to fund it. What we are essentially doing is reprioritising our funding in this area to ensure that we have a more productive society. I’ve got to say that families where there is a little more work happening are very often happier as well as more productive families, more fulfilled as well as more productive families, so I’m very pleased with this Jobs for Families package and I want to say how well all of the team, but particularly the Minister for Social Services Scott Morrison has done in this area. We said before the election that we would have a Productivity Commission review of the child care system to make it more affordable and accessible. We got an excellent report from the Productivity Commission. We have consulted over the report and I believe that this package actually improves on the Productivity Commission’s recommendations. It takes a very good set of recommendations; it takes a very good report and it is built on that. So Scott over to you and well done.
SOCIAL SERVICES MINISTER:
Thank you Prime Minister and thank you for your support of this package and that of the team. Happy Mother’s Day also to all the mothers and we all know that all mothers work hard but there’re also an increasing majority of mothers who are also in paid employment and having two parents in paid employment, especially – one if it’s a solo parent family – this is incredibly important for those families to stay ahead, keep ahead, get ahead with what they’re trying to do, to have the choices that they want for their families and that’s what this package is very much aimed at achieving.
Changing the way we make quality child care available in an affordable and accessible and flexible way, this gives families more choices, choices that they do not have today. The Prime Minister has already referred to the packages that have been announced – an in-home nannies trial which is making available support to families that can’t currently access mainstream child care services, the package we released on Friday which was extending a hand to disadvantaged and vulnerable families and ensuring that they had the safety net that they need – so this package with what we’re announcing today with the mainstream subsidy means the additional investment, some $3.5 billion over the budget and forward estimates, is all going into those low to middle income families and vulnerable and disadvantaged families – that’s where the top up is going.
The Productivity Commission said that we needed to focus the investment on low to middle income families and that’s where this package is really delivering the extra support. To take you through the initiatives, in addition to the measures that we’ve already announced from the 1 July 2017 we’ll be abolishing the current child care benefit, child care rebate and the jobs education and training child care fee assistance programmes, we’ll be introducing a single means tested child care subsidy – just one – for all families, subject to a new activity test for up to 100 hours of subsidised care per child per fortnight, that will be directly to approved care service providers to make it easier for families and service providers.
For families this is in 2017-18 of up to approximately $65,000, the child care subsidy will be 85 per cent per child of the actual fee or a benchmark price –so the subsidy will be based on what you’re paying or a benchmark price which is ever the lower. And that will reduce to 50 per cent for family incomes of approximately $170,000 and above at the time of implementation. Families on incomes at that time of $185,000 and over will no longer have a cap on the amount of subsidy they receive….sorry I should say, families on incomes under $185,000 will no longer have any cap on the amount of subsidy they receive, a cap of $10,000 per child will be applied at the time of introduction for the total value of subsidies for family incomes above $185,000. So no cap under $185,000 and a cap above $185,000 of $10,000.
The benchmark price, you’ll recall perhaps that the Productivity Commission recommended a median price, these prices will be based on what is projected to be the mean price plus an increment – depending on which type of fee you’re talking about – and that will be for long day care $11.55 per hour, $10.70 for family day care and $10.10 for out of school hours care. The in-home nannies trial which begins in January, that will be based on seven dollars as the benchmark price.
A new activity test will be introduced and that will apply right across the board. You will be required to be involved in activity which is work, looking for work, study or registered volunteering behaviour which is currently the requirement of between eight and 16 hours to qualify for up to 36 hours per fortnight – so eight to 16 hours per fortnight for up to 36 hours per fortnight. Seventeen to 48 hours for up to 72 hours and 49 hours for up to 100 hours.
For those on low incomes of less than $65,000 a year at that time, we’ll be ensuring that they will continue to get access to early childhood education for a total of 12 hours per week – that’s the equivalent of two school days a week – but we will be leaving it to the sector as to how they deliver that 12 hours per week within their existing models. All child care subsidies and support will remain linked to immunisation requirements the Prime Minister announced a few weeks ago. We’ll maintain support for the national quality framework and continue to work with states and territories to ensure that this does not become too onerous a burden on families and on centres and the costs in the future. The new programme will be supported by new card based technology to ensure better monitoring of the system and more efficient payment processes and reducing red tape for families and service providers alike.
The July 2017 start date has been chosen to give families and service providers time to adjust to the new model and to support a seamless introduction of new systems and arrangements. These processes and timings have been worked up over many months in consultation both with families and with the service providers themselves.
Finally, as the Prime Minister said, this package is fully offset by savings in family tax benefit. All of the proposals we’re putting forward here wash their own face fiscally, that’s important, we are not going to tax Peter, Paul and Mary to support this increased investment. It’s important that where we invest in new initiatives – which we are here – then we need to ensure that we’re taking funds that we already have available to us, to apply it to a use in this case which will support families into work and give those families greater choice. Thank you.
QUESTION:
Does last year’s announced cut to Family Tax Benefit B have to be passed to get this or are you open to alternatives savings?
PRIME MINISTER:
We need to offset this new spending, that’s what we need to do. Now, we realise that we have to talk to the crossbench and indeed the Labor party as well – if the Labor Party is prepared to talk to us on this – the point I make is that there will be no new spending in this budget that is not offset – so we need to offset the spend here.
QUESTION:
Just to clarify Prime Minister, what are the offsets? Are these getting rid of the existing benefits or are there more cuts that you have to make elsewhere to fund this billion dollar package?
PRIME MINISTER:
We’ve got a whole series of savings measures which are in the Parliament at the moment. We want them all passed. We accept that we will have to talk to the crossbench and to the Labor party in the Senate in order to get any of them passed but the fact is unless we offset this new spending it cannot go ahead. So if you think that this is a good package, and I believe that it is a very good package, it’s simpler, it’s more affordable, it’s more accessible, it’s a very, very good package, but in order to have this important child care reform, we do need to fund it and that means sufficient savings from the savings that are already there before the Senate.
QUESTION:
How much will current spending on child care subsidies total after you’ve done these changes, compared to now?
MINISTER FOR SOCIAL SERVICES:
As we said in the introduction there’s an additional $3.5 billion in investment over the budget and forward estimates.
QUESTION:
Over four years….
MINISTER FOR SOCIAL SERVICES:
Over four years, that’s right.
QUESTION:
You said you’ll have to talk to the crossbench, but what leads you to believe that you’ll have any more chance of getting those cuts through than you’ve had in the past 12 months?
PRIME MINISTER:
Because this is not simply us going to the Senate and saying we want to save money, this is us saying we need to save money in order to improve the system in ways which will be good for families, good for working families and good for our economy. So there is I think a sensible trade-off here between savings in the social security area, savings in the family tax benefit area which then are reinvested in child care. So we’ll be reprioritising spending towards trying to ensure that there is higher involvement in our economy, that there is a more realistic choice for parents in the workforce.
QUESTION:
Some might say that this package is, given the financial restrictions that you’re under, actually an overly generous package, particularly with some of the higher income earners, you’re raising one cap and from $7,500 to $10,000, removing it under $185,000…but $185,000 is not a bad family income. What do you say to the suggestion that you’ve been overly generous?
PRIME MINISTER:
Well, I’ll ask Scott to add to my observations but this is very much a package which is focused fairly and squarely on low and middle income families. I think, in a city like Sydney, a $185,000 family income is not especially high, certainly it’s going to give you a particularly lavish life by any means, so the benefits, the additional benefits in this package are very much targeted to low and middle income families. We want low and middle income families to have more incentive to get ahead and this package gives it to them. Yes, we’ve raised the cap from $7,500 to $10,000 but for a whole host of reasons, including the price of child care in many of the suburbs where wealthier people are, we think that basically the position of the better-off people is essentially maintained.
MINISTER FOR SOCIAL SERVICES:
This is a jobs package, not a welfare package. This is a package which is encouraging people to be in work, stay in work, get in work because when families are in work they’re less dependent on welfare. That’s why this is an important economic reform as the Prime Minister said before. In terms of where the new money is going; the new money is going into low and middle income earners and vulnerable and disadvantaged families. Those on higher incomes will receive the same support they have been. It was the Rudd Government that increased the subsidies for high income earners, from 30 per cent to 50 per cent and that was based on whatever price was being charged by the centre. That practice will end. There will be a cap on the price upon which you can claim a subsidy and that is balanced out with changes to the level of the cap of $10,000 into the future. So those on higher incomes will continue to receive the same support they were given by Kevin Rudd and what we are doing is investing in the low to middle income families to change their kitchen table conversation – their kitchen table conversation is how do I stay in work? How do I get in work? How do I be in work? And that is heavily dependent on the economics and this Jobs for Families package changes those economics for those families.
QUESTION:
Minister can I just clarify one point and it’s the question on whether it’s fair, if you’re earning $165,000 as a household but if one parent does not work you lose all child care benefits?
MINISTER FOR SOCIAL SERVICES:
No, for those under $65,000….I’ll explain the current system to you first, under the current system under the child care benefit, you can get up to 48 hours a fortnight, 24 hours of child care, free child care a week, on the subsidy and that can go up to incomes of over $150,000 and more if you have more children. What we’re saying is, $65,000 and under, you will continue to get 12 hours a week, and that’s the same as two school days per week – we acknowledge the importance that early childhood education can have to young children from disadvantaged families and low income families, we’re going to maintain that and they’ll get two days equivalent a week – but only for those under $65,000. The something for nothing bus for those above $65,000 on child care where there’s no activity test, that will stop running on 1 July 2017.
PRIME MINISTER:
And again Ean, I want to stress, this measure, as with all the measures in this budget, is about fairness. I keep saying that what we want this budget to be is measured, responsible and fair and by targeting this Jobs for Families package towards low and middle income families and by saying that if the family income is above $65,000 there has to be some kind of economic activity or socially useful volunteering for people to get the child care assistance, again, that reinforces the fairness dimension of this package.
QUESTION:
Prime Minister, how many parents do you estimate will be affected by Mr Hockey’s decision to stop what he called double dipping on tax payer employer parental leave schemes?
PRIME MINISTER:
Well again, I just want to stress the fairness element. If you have a generous employer provided paid parental leave scheme, that’s good, I think that’s much to be encouraged, I am a strong believer in paid parental leave and over time I hope that more and more working mums will have access to a proper paid parental leave scheme. If you’ve got a generous employer provided scheme, that’s what you should get. If you don’t have any employer provided scheme, you’ve got the Government’s scheme – which has been in place now for several years – and if the employer provided scheme doesn’t give you as much as the Government scheme, well then you’ll be topped up. Now again, I think this is a fair system and I’d put it to the crossbench in the Senate, to the Labor party, if you are serious about fairness, you should support this change.
QUESTION:
Are you considering improving the Government scheme?
PRIME MINISTER:
Well not in this budget and we don’t have any plans to. As you know I’m a big supporter of paid parental leave. My support for paid parental leave has been a bit contentious over the years. I am a big supporter but for a whole host of reasons we decided that the time was not right for the fullness of the policy that we took to the last election but one of the elements of the policy that we took to the last election was to end the double dipping and that’s effectively what we’ve announced today does.
QUESTION:
That 1 July 2017 start date, you said that was made in consultation with providers and families, the union today also with families and providers said they’d like to see it start sooner. Is there any movement in that that we could see?
MINISTER FOR SOCIAL SERVICES:
Well no, I think it’s important that when you introduce a new scheme that you transition properly and in child care there is a natural flow through of families through the system, as they go through child care into school. So if you’ve got a child who’s currently three in the system now, well they’ll be moving onto school by the time these measures come into place but those families coming through will have the certainty of this system. One of the things we’ll be changing fairly significantly is the administration and technology support for this. Apps that will allow families to better update their work details and update the hours that are being used which can really support the system to work more effectively. So this isn’t just about changing subsidies, this is about changing how the whole system works and it’s really important that we make the system simpler –the Prime Minister emphasised this and so did the Productivity Commission – at the moment it is a very complicated system and that complexity actually makes it harder for people engage it and for the country to get the benefit out of it and so by making it more simple then we can introduce these changes effectively and properly and I think with everything you do you’ve got to get the implementation right. The previous government made a dog’s breakfast of almost every implementation of every policy they had, even when they had the occasional good idea, they mucked it up on the implementation. We’re not going to make those mistakes. We’ll take our time. We’ll get it right and we’ll communicate clearly and consistently to families.
QUESTION:
Can you be specific about the economic benefits that you would expect from these changes?
PRIME MINISTER:
Well, again, Scott might like to add to this answer, but we’ve all been part of those family dinner table conversations where one partner says to the other, now that the kids are a little bit older I would like to go back to work. But when you do the sums, what you’re earning, what the child care is costing, what it is costing you to get to and from work, it’s hardly worth it. We are changing the economics of going back to work so that we will get more work, so that families will have more opportunity to increase their income and that’s the whole point of this, that’s why we’re calling it the Jobs for Families package because we understand that the best form of welfare is work and if we want to help families to get ahead, nine times out of 10 the best way to do that anytime soon is to allow one or other of the partners to increase hours of work and more work or work from the beginning is what this is all about. As I said we’ve all been part of these conservations around the dinner table where one or other partner says, I’d like to work more but the cost of childcare makes it uneconomic, this changes the economics of work very significantly – particularly for low and middle income families.
QUESTION:
Prime Minister did you feel sorry for the Treasurer that he had to go on national television unable to talk about billions of dollars worth of savings from today’s child care package?
PRIME MINISTER:
Well, I am delighted that the Treasurer is going to have a really good and significant budget to bring down on Tuesday night. I think this is a great budget and the Treasurer has the lead in putting this budget together, as you’d expect, but it is a budget that belongs to the whole Government. It is a product of the whole Government and in the end it’s about the whole of the Australian people. It’s about a better life for the Australian people. It’s about a stronger and more secure society and economy and that’s what this budget will do and sure, the Treasurer wanted to leave today’s announcement to myself and Minister Morrison but he brings it altogether and I know he’ll do it in a really fine way on Tuesday night.
QUESTION:
Minister you say you’re going to have to talk to the backbenchers and…..the crossbench about this and the Labor party, but have you done an advance, any sort of testing of the waters, have you had any discussions with the crossbenchers before announcing this policy today?
MINISTER FOR SOCIAL SERVICES:
Well I’ve had discussions with all of the groups that you’ve mentioned – the Labor Party, the crossbenchers and our own Government backbenchers at various stages of this process over a long time – the overall structure of what we’re talking about here today and the nature of the subsidy model itself has been the subject of quite a bit of discussion and equally I’ve made no secret over the fact, over months now, including in responses to questions in the Parliament that in order to invest more in this area then we are going to have to see saves passed in the Senate on those other measures. So there’s no surprise about that, there’s been no secret about that, we’ve been totally upfront about it. I think there’s a broad area of commonality around a lot of the changes that are here – both with the sector, with families and others in the Parliament. The issue here is always how you pay for it and that will be an ongoing negotiation discussion as the Prime Minister has said, but the rules for the Government are the same for the Opposition and anyone else, you’ve got to be able to pay for your policies. We know how we’re paying for this increase in investment, for low and middle income families and for vulnerable and disadvantaged families who we believe need this support – that’s why we’ve prioritised putting the money that is available from the saves that are generated into this important initiative that gives families choice.
QUESTION:
On the issue of affordability, the sector has been saying for a while now, if you want to make child care more affordable don’t bring in these staffing requirements from next year that will see they believe costs passed on in three states, including New South Wales. Have you given any consideration to not bringing those staffing changes in?
MINISTER FOR SOCIAL SERVICES:
Well I should stress that all of that regulation, all of that legislation on the staffing requirements all sits in state and territory legislation. None of it sits in federal legislation. That was what was put in place by the previous government and they locked all of those regulations up and compliance in the states and that’s why I said in my opening comments that while we support the national quality framework, which we do, we also want to make sure that the compliance burden of that does not become unwieldy and continue to drive up prices, as it already has and I suspect it will continue to add to the costs of quality in this important sector. But that conversation is with the states and the territories, it is not within the federal government’s gift, in the Commonwealth Government’s gift to change those measures, they have to be changed by the states and territories and so I will engage with my state and territory counterparts to make sure that we can work to ensure that that quality framework sustains, but sustains in a practical way.
PRIME MINISTER:
Thank you.
MINISTER FOR SOCIAL SERVICES:
Thank you.
[ends]