ABC The Business – Labor’s Working Family Child Care Boost

Monday, 12 October 2020

ELYSSE MORGAN, HOST: Amanda Rishworth Labor wants to remove caps on families earning more than $180,000 and lift the subsidy cut off to families on more than half a million dollars. Why should wealthy families get more and support for child care?

AMANDA RISHWORTH, SHADOW MINISTER FOR EARLY CHILDHOOD EDUCATION AND DEVELOPMENT: What we are suggesting is that the subsidy is lifted for all families, indeed Labor’s policy covers 97 per cent of families. But the other element of Labor’s policy importantly is to remove the disincentive for the second income earner going to work. At the moment you have many families, looking at whether or not the second income earner, which is predominantly the woman, can afford to go back to work. The interaction of the child care subsidy system and the tax system actually means that some of those women are having an effective tax rate of 95 per cent. Indeed in some cases those women are actually paying to go to work. So if we want to boost womens workforce participation, which is good for the economy as a whole, then we need to get rid of this perverse disincentive.

MORGAN: Even for families earning more than half a million dollars or couples earning more than half a million dollars?

RISHWORTH: The question is do we want to support women getting back into work? Do we want to boost our economy? That is the question here. What we have seen is the government spend on a whole lot of programs to boost the economy, but the question is what gets you bigger bang for your buck? Economists in many reports have said it’s actually investment in child care that gives you a bigger bang for your buck. In programs like Medicare and others that are good for individuals as well as good for the economy and society, we would argue that government subsidises these things and everyone gets the benefit. Child care should be seen like that, it should be seen as an essential service, and it should be subsidised for the vast majority of Australian families. That’s what Labor is doing. This isn’t a welfare measure, this is a participation measure.

MORGAN: So why stop where you have? The Grattan Institute, backed by a lot of powerful business lobbies including Chief Executive Women, called for more than 60 per cent of families pay less than $20 a day. Labor’s policy puts it closer to 50 per cent of families paying less than $20. If it’s so important, why not go the whole hog?

RISHWORTH: What we’ve announced is the immediate action we will take if elected, and then we’re looking at getting the Productivity Commission to look at how we phase in a 90 per cent subsidy for all families, a universal subsidy of 90 per cent. We feel there’s some work to be done on that which is why we’ll be asking the Productivity Commission how we transition, but we also recognise investment needs to happen immediately. So that is why we’ve announced Labor’s Working Family Child Care Boost, which will be in place for three years to boost the level of support that 97 per cent of families get, with the idea to phase in a 90 per cent universal subsidy. But there are things to be worked out, important things about how we make sure that this benefit does get passed on to families, and we’ve tasked the ACCC with looking at a price regulation mechanism because we want this benefit to go to families. So there’s a number of things we need to make sure happen, but we see this as vitally important in boosting our economy, boosting economic growth, and getting women back into the workforce.
MORGAN: On that 90 per cent universal subsidy, the Government believes that will cost taxpayers around $30,000 a year per child if they go in and have 50 hours of care a week. Do you agree with that figure and what’s the payback to the economy do you think?

RISHWORTH: I can’t verify that figure and of course we’ll get the Productivity Commission to have a good look. One of the critical parts of this is that for high income earners, the second wage earner does have to work to get the support, while at the lower end there is a safety net. I think when you look at what the Grattan Institute has reported on, what KPMG has, the overall benefit could vary from between $7 billion and $11 billion to our GDP. I would challenge the government to point to any of their spending that would deliver long-term economic benefit like this. This is a good investment that is good for the whole economy. That’s why there are many things that we invest in and subsidise, like university degrees, because we see there’s both an individual benefit and a public benefit to have more skilled people. And this should be the way that we look at child care as well, as an essential service that boosts economy.

MORGAN: It has been reported that the Prime Minister’s offices believes a campaign will have to be run to build electorate support for any bigger spend in the child care sector. What does Labor’s focus groups tell you about what kind of support in the electorate there is for this? Only one in nine voters actually use child care.

RISHWORTH: Scott Morrison might be doing his focus groups to work out what policies to sell, but for me I have been convinced on the economic merits, I have been convinced on the stories that families tell me.

MORGAN: But you also need voter support in order to get this policy across the line. You need to get in government and you can only do this with voter support. Are there enough people in the electorate who will support such a spend?

RISHWORTH: I believe that we do have a case to prosecute and I will continue to prosecute it. But I think the important message here is anyone who has lived the experience understands that this is an important issue. And I think it’s not just an important issue for the zero to five age bracket, it also applies to out of hours school care. So for families that are trying to juggle the school runs and pick ups and drop offs, this will relieve the cost of living pressures on those programs as well. But I think this is widely recognised as an important issue that voters understand, and it’s not just families that are affected. Grandparents understand because they see their children struggling with this juggle, often offering to give up their own work to help so that the cost is not passed on to families. So I think this is a lived experience for many people. In my view this is good for the economy, good for women and importantly good for those families who rely on it.

MORGAN: So what do you say to voters who gave us feedback like “if you don’t want to pay for child care don’t have children” and “these taxpayer subsidies don’t go to child care they go to support these predominantly women to take holidays and go on nights out”?

RISHWORTH: Well first I’d make the point that this is a service, you don’t get the benefit unless you’re paying for child care. And the payments go directly to the provider, it’s a bit like Medicare, you get a rebate that goes to your doctor and you pay a gap fee, and that’s what happens with child care. So it is nonsense and ridiculous to suggest that this somehow is going towards dinners out and those sorts of things, this is about a workforce participation measure that is good for everyone. In terms of the cost of children I think we’ve accepted long ago, both sides of parliament, that there’s a role for government to support women’s workforce participation. In fact the Prime Minister brags that he does spend money on child care, but what they haven’t done is remove the disincentives to go to work, remove those disincentives that if removed would boost women’s’ workforce participation. So equally we could say there shouldn’t be schools because people have chosen to have children, that they shouldn’t get free immunisations. There is a public good in supporting little children, in helping families get back to work and making sure those children get the best opportunities and families get to balance these things. So I would disagree. And there’s plenty of evidence of government programs that have been made universal because there both a private and public good.

MORGAN: Amanda Rishworth thanks so much for your time.

ENDS

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