Radio National James Carleton
SUBJECT/S: Productivity Commission’s draft report into Child Care
JAMES CARLETON: And on RN, it’s time to look at child care, because the first major review of child care since the 1990s is underway. The Federal Government has commissioned the Productivity Commission to look at how to make child care more affordable, flexible, and accessible, and today the commission releases a draft report. It recommends a single child care payment with the introduction of means testing and the benefit paid directly to the provider, not the parents, and nannies would be included as eligible for the Government payment. Sussan Ley is the Federal Assistant Minister for Education with responsibility for these matters. Welcome to RN Breakfast, Minister.
SUSSAN LEY: Thank you for having me, James. Good morning.
JAMES CARLETON: Good morning. Before we get to the recommendations, can you, because it’s so confusing, briefly explain the current payments that parents receive?
SUSSAN LEY: Well, it’s actually impossible to briefly explain the current payments because they are so complicated, but there’s Child Care Benefit, which is a means tested payment, and there’s Child Care Rebate, which is 50 per cent of your out of pocket costs. And that sort of sounds simple, but when you come to apply for these benefits through the family tax system, fill out the paperwork, you put the child care centre in the mix, you put the family assistance office, and the fact that you as a parent only get to choose your options for payment for rebate once a year and your circumstances as well and you may move centres, it actually adds up to an incredibly complex picture. And that’s one of the things that really has come back to us through this PC report and I’ve observed it in my travels around the country; administratively complex and a nightmare for parents.
JAMES CARLETON: So there are two payments. One means tested, one not. One’s a tax benefit. Are you attracted to the Productivity Commission’s recommendation of a single means tested payment?
SUSSAN LEY: Look, I think a single payment is important. Whether it’s means tested or not, we have no plans for that right now. This is about the PC’s recommendations and ideas at the draft stage. Everything will be on the table until they make their final report in October. And by the way, it’s then down to Government to decide what we do with the new policy. But we do want to simplify the system and we want to make it affordable. So for me, because I meet so many parents who say this system isn’t affordability and they say I should be able to design my child care around my working life, but what I find myself doing is designing my working life around my child care and they throw up their hands in despair. It’s that sense of frustration and just the affordability or the unaffordability that is a problem that’s front and centre of my mind as we go through this important process.
JAMES CARLETON: And as a result of fixing that, if it can be done, the Productivity Commission says it will free up 47,000 parents to enter the workforce full time, all paying taxes. That’s obviously an attractive proposition for Government.
SUSSAN LEY: It is, and just remember that that estimate number, and it’s only an estimate, will increase over time. So the economic modelling that the PC has used suggests that as a starting point and then it builds. I actually asked them, have you modelled the parent who’s doing the two or three days part time in the workforce now, probably at a job that they’re not – that they didn’t leave the workforce doing, for example, they may have been an accountant and they’re now doing some part time bookwork, and if they jump back in and do four or five days a week, that will considerably add to employment, to workforce participation, and to economic output. And the PC actually hasn’t included that, so there’s, if you like, a pent up demand for working more hours in different jobs that isn’t happening now. I see that, again, everywhere I go and I want women to contribute to the workforce to the extent that they want to and we value their contributions and we don’t want to lose them, and this is part of – this is all in the mix as well.
JAMES CARLETON: And at the moment the child care payments are quite blunt. You get half your child care costs met by the Government regardless of how rich or poor you are. So roughly, for argument’s sake, it means that a $100 a day fee becomes a $50 a day fee. That’s obviously still much too expensive for someone on minimum wage, and for someone who’s well off, they would have paid it at $100 in any case.
SUSSAN LEY: Well, the rebate is capped, actually, at $7500 a year, so you don’t get the entire out of – 50 per cent of your entire out of pocket costs, but I think you make a good point, because what we need to find is what is the real cost of child care. Yes, there are premium products in the market. The PC pointed to Zumba lessons and I think European linen on the costs, I’m not sure.
JAMES CARLETON: No, no, no, no, but non…
SUSSAN LEY: But, I mean, we need to find…
JAMES CARLETON: But child care’s $100 a day even if you’re not at a boutique child care centre.
SUSSAN LEY: Absolutely. Well, in the eastern suburbs of Sydney it’s $130, in the western suburbs it’s anywhere between $85 and $110, in rural Australia it’s a little bit less expensive, but the question for us, I think, within the framework of what’s affordable to Government, is what is the real cost and how best we assist parents meet – well, assist them with meeting those costs.
JAMES CARLETON: Well, what’s affordable to Government, perhaps, is not paying it to, to put it bluntly, millionaires.
SUSSAN LEY: Look, that’s an easy point to make, can I say? And what…
JAMES CARLETON: And a low hanging fruit for the Government.
SUSSAN LEY: Well, look, what the PC’s done is put out their cost model, but they’ve actually also said can you, the Australian public and anyone else, tell us what you think of our cost model. So I don’t want a cost model that is less affordable for families and I want the average family…
JAMES CARLETON: Any family.
SUSSAN LEY: Well, I mean, I want the average family with two children working shift work, let’s say, commuting to work, unable to find child care now because their hours of work don’t match the long day care centre that’s near them and they can’t find family day care, I want them to be looked after. So not just the costing…
JAMES CARLETON: Well, right now at this minute, at this very minute, that family of which you’re speaking of is paying for my child care. I’ve had three kids in child care. One’s already there. I get more than average wage, my wife get’s more than average wage, and the family of which you speak can’t afford to get into child care and yet their taxes are paying half my costs.
SUSSAN LEY: And the Productivity Commission is one – I mean, referring this to the PC to look at all of those possibilities and parameters and opportunities and challenges within the system. I mean, that’s why we’ve got the PC in the mix. I’m not going to pre-empt what they might say in their final report or what we might do in response to that. And you do make good points about cost, but can I tell you it’s also about time? There are so many shift workers who cannot go back to work doing the frontline role that they did…
JAMES CARLETON: [Interrupts] And that’s why this nanny recommendation is so interesting.
SUSSAN LEY: It is, and we asked the PC to look at in-home care or – I mean, people call it nannies, but that makes sense. If you’ve got three children under five, you pack them all up in the morning, you drive or you catch the train, as I’ve seen some mums do, to childcare, you worry all day that your boss is going to ask you to stay back, and then you’ve got to have to make the long trip home and get everybody fed and ready for bed, and it’s absolutely exhausting. I’ve been there, I’ve done it myself.
JAMES CARLETON: And it’ll be very important to make the distinction if the subsidies to this section of the providing community that au pairs are excluded. We don’t want taxpayers going to laundry and household cleaning, but to get people into work who are in, especially shift work, that kind of thing.
SUSSAN LEY: Correct, and as I’ve said, if we have a form of in-home care, it will be within the existing regulated system, which, by the way, is overburdened with red tape and I’m working to fix that, but the integrity of it is strong. The framework that we have will work for whatever types of childcare come out to solve people’s family flexibility issues. So we won’t be paying for au pairs to unstack the dishwasher, we will be focused on early education and care and women’s workforce parti… well, it’s usually women, but parents’ workforce participation.
JAMES CARLETON: Sussan Ley, thank you very much indeed.
SUSSAN LEY: My pleasure, thank you.
JAMES CARLETON: Sussan Ley, the Federal Assistant Minister for Education. And the draft report can be found on the Productivity Commission’s web page. It’s open for comment until 5 September this year. If you’re doing a bit of browsing, log on. I have it bookmarked, the Productivity Commission. One of my daily go-to sites.