Second Reading Speech
Mr TUDGE (Aston - Minister for Education and Youth)I move:
That this bill be now read a second time.
Today I am introducing the Family Assistance Legislation Amendment (Child Care Subsidy) Bill 2021.
Affordable and accessible child care supports social and early learning outcomes for children, and helps families to participate in the workforce.
This bill implements the government's changes to the childcare subsidy announced in the 2021-22 budget, building on the success of the government's Child Care Package implemented in July 2018.
Three years on, our childcare system continues to deliver a single childcare subsidy for all families in Australia, with higher subsidies to those that earn the least and no subsidies for those earning more than around $353,000.
The hourly fee cap introduced in 2018 continues to keep downward pressure on fees.
These changes will maintain the integrity of the existing childcare subsidy, ensuring the reduction of out-of-pocket childcare expenses for families and targeting additional support for those families who currently pay the most - those with multiple children aged under six.
It is anticipated that the changes will add up to 300,000 hours of work per week, or the equivalent of around 40,000 parents who will be able to work an extra day per week. It will boost GDP by up to $1.5 billion per year.
Strong participation in the labour market has never been more critical than it is now, as Australia moves into the recovery phase of our COVID-19 pandemic response.
Thanks to our strong economy, women's workforce participation reached an all-time high of 61.8 per cent in March 2021.
The first element of this bill removes the annual cap of $10,560 for all families earning over $189,390 from 1 July 2022 so that no family has an annual cap on childcare subsidies.
Removing the annual cap ensures families maximise the extra benefit generated by the increased subsidy. Removing the annual cap also means we will remove a structural disincentive to take on additional days of work for many families. This will encourage parents, especially second income earners who are more often women, to get back to work or to work more.
The second element in the bill will increase the maximum subsidy rate for second and subsequent children where a family has more than one child under six, from 11 July 2022.
Under this element, families will receive an increased subsidy of 30 percentage points, up to a maximum subsidy rate of 95 per cent, for second and subsequent children aged under six accessing childcare.
This ensures support for the families who need it most and who face the biggest barriers to participation in the labour market - those with multiple young children in care at the same time.
It also ensures that families on the lowest incomes, who may already be close to the generous maximum subsidy, benefit from these changes and continue to receive the highest rate of subsidy.
These changes will benefit around 250,000 families in Australia each year.
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- Around 50 per cent of families who benefit from the measure (those earning less than around $130,000) will receive the maximum 95 per cent subsidy for their second and subsequent children. These families will pay on average $21 a day for two children in child care.
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- Around 95 per cent of families who benefit from the measure (those earning less than around $250,000) will receive a subsidy of at least 80 per cent for their second and subsequent children (paying on average $73 a day or less for two children in child care).
Taken together, these changes will put more money in the hands of Australian families, especially those who need it most, while also maintaining parental co-contribution, which also helps to keep downwards pressure on childcare fees. Our activity test remains in place to ensure families must be undertaking activity, such as working, training or studying, to be eligible for childcare subsidies. These are core principles of the government's childcare subsidy.
Implementation of these changes will require changes to the system administering the childcare subsidy, including complex IT and other system build alterations.
The government is working to implement this across two phases. A two-phased approach will ensure Services Australia has time to complete the necessary system build to give effect to the government's commitment without jeopardising implementation at the earliest possible date.
It is anticipated we will be able commence implementation by July 2022. Should it be possible to bring the commencement of the measure forward, we will do this so that families can benefit sooner. That is why the bill makes it possible for earlier implementation, with the date to be set by proclamation.
We are working hard to make sure this investment puts more money in the pockets of everyday Australian families as soon as possible.
I commend this bill.
Debate adjourned.