Topics: New child care package
Warwick Long: The Federal Government’s new child care package starts soon but the minister in charge seems to be warning that families aren’t signing up to be part of it. The new Child Care Subsidy starts on 2 July. The Coalition claims one million people will be better off under the changes, but families are not automatically registered for the new scheme and many are yet to transfer their details meaning they could see their regular payments cut off in the coming weeks. Is that you? Have you not updated your details? I’d love you to tell me why. 1300 222 774 is the number. 0437 774 774 to text.
Simon Birmingham is the Minister for Education and Training and he’ll join us now. Welcome to Drive.
Simon Birmingham: G’day Warwick. Great to be with you.
Warwick Long: Simply, what are the changes and what do they mean for families?
Simon Birmingham: So at present many families would be aware they might receive the Child Care Benefit payment or they might receive the Child Care Rebate payment. What we’re doing is collapsing those different payments into one single new Child Care Subsidy and in doing that we’re putting an extra $2.5 billion of support in to help families meet the cost of child care so that it’s less of a drain on their household budgets and so that they are better able to choose to work the hours and days that suit their family without child care being a restriction in relation to them working, and how we’re doing that is by a few things. Not just combining those payments into one simple payment, but currently the Child Care Rebate has a $7500 annual cap. We’re abolishing that cap for all families earning less than around $186,000 a year, so families at this time of year might often or even a couple of months ago have run out of support in terms of the Child Care Rebate during the year and so suddenly they’re paying full tote odds on their child care costs. Now they might cut back on work so they don’t have to spend as much money on child care. We’re getting rid of that cliff, which means families on low and middle incomes are going to have an unlimited amount of support. We’re putting in place some restrictions to make sure child care providers can’t gouge that with a new efficient price mechanism. And we’re also increasing the rate of subsidy for many families. So for the lowest income families that will go from around 72 cents in the dollar up to 85 cents in the dollar, but also increases for many others who could find themselves hundreds or even thousands of dollars a year better off.
Warwick Long: So without the cap there’s no limit then on the amounts that can be claimed, but there’s a limit on the means test of how much can be claimed say each week or fortnight?
Simon Birmingham: So families will get a percentage of their fees back up to an hourly rate that providers are allowed to charge against. If providers charge above that, well that becomes a matter between the provider and the family. But we’ve set that hourly rate at a level where, overwhelmingly, child care providers across the country operate below that. This is about providing more support to more families and what our estimates are that around one million Australian families will be better off, and indeed around 209,000 families across Victoria we estimate will benefit as a result of these changes.
Warwick Long: You’ve written in papers today and you’ve also published some media on social media almost pleading for families to actually sign up to this new system. Why aren’t they doing that in droves yet?
Simon Birmingham: Well families are doing so, and in fact more than 750,000 families across Australia have made the switch already and I want to thank those people who’ve done so. It’s very simple. I’ve done it myself sitting at home on the couch one exciting Saturday night with the iPad on my lap and it took all of about 10 minutes just to go through and update the family details.
Warwick Long: 48 per cent of families in Victoria according to your figures haven’t, though.
Simon Birmingham: Well, that figure is from last week. I’m pleased to say that our current estimate now is that 38 per cent or up to 38 per cent haven’t. And even there, we’re counting any family who’s had any interaction with the child care system over the last 12 months. Now, of course, many people might have had children in child care last year. They’ve gone off to school or their family circumstances have changed and they won’t make the switch. So we don’t anticipate that we’ll ever get to that 100 per cent target because we are communicating and identifying families who may not have a need to make the switch but we’re very pleased that to date, 750,000 people plus have done so. There’s still basically four weeks to go until the new system comes in, and I’m sure that most families will do so. But the key message today is if you haven’t done so yet, then when you get a chance tonight or over the course of the next week you should log on through education.gov.au/childcare, follow the links through from there, update your details on myGov. All it takes is an average of four hours per week to meet the activity test requirements for people to then get onto the first step of support.
Warwick Long: That’s the voice of Simon Birmingham, who is the Minister for Education and Training speaking to us about child care system changes that are coming on 2 July. I wonder what your child care charges are. How much are you paying at the moment for child care? 1300 222 774. Do you think these changes will help you? 1300 222 774 is the number, or text 0437 774 774.
In terms of this system, Minister, do you think there is a frustration from people who have to deal with it? It’s complex. The questions on the forms are not always clear. The meaning behind the questions being asked can be frustrating to some people being involved and the need to go back into a system like this and re-register can be frustrating for people. Any time we take talkback that is the message that can come through, loud and clear, on this issue. Is that something you’re prepared to look at as Minister?
Simon Birmingham: I appreciate, nobody likes dealing with government bureaucracy, but of course, we’re administering billions of dollars a year in terms of support for Australian families in subsidising child care and we have to make sure that it goes to the people to whom it’s entitled and we want to ensure that every single cent that Australian families are entitled to they receive, which is why we urge people to update the details. I have two children who are aged five and seven. We’re essentially out of the child care system ourselves, but I made sure that I personally went through the step of updating our details because I wanted to see how simple it was and what it was like. And really, it is only about a 10 minute exercise for Australians to go on there, update their estimated family income, update and provide information about the estimated number of hours on average that family members work, study, volunteer, train et cetera over a period of time. That's all that's required. The government will then come back to you and tell you precisely what your estimated child care subsidy will be, the number of hours of subsidised care that you'll be entitled to.
Warwick Long: Are you ready for the changes on July 2? Will it be seamless?
Simon Birmingham: Look, we expect so. We've been doing a lot of work in preparation to ensure that families make the switch, providers make the switch in terms of their IT systems and their support services, and I would like to give a big shout out to all of those child care providers across Australia who have put time and effort into helping us with the development of this policy and its implementation. There’s a safety net provision if families don't get it done by July 2, but we don't want to see those disruptions or hassles happen to anybody.
Warwick Long: On your estimates, the government estimates, how many families do you think will be cut off on 2 July for not changing?
Simon Birmingham: Well look, we won't be cutting anybody off in that sense. There's a three month safety window that is there where people can be back-paid in essence for services they use if they haven't updated their details. Of course, we don't yet know how many will get the job done by then. We anticipate …
Warwick Long: Do you have an estimate?
Simon Birmingham: We don't have any estimate as such, Warwick. What we've identified is the vast majority have made the switch already. We're seeing thousands more do so day after day. So we're quite confident that we're going to capture nearly everybody and we have then clear processes in place to support those that we don't capture so that it gets fixed quickly and that their payments then continue as they should.
Warwick Long: Minister, thanks for your time on Drive.
Simon Birmingham: Absolute pleasure.
Warwick Long: That’s Senator Simon Birmingham, the Federal Education Minister, joining you on Drive this afternoon.