Australian Politics Live – child care

Saturday, 24 October 2020

KATHARINE MURPHY, HOST: Hello lovely people of podcasts and welcome to another episode of Australian Politics Live. You are with Katharine Murphy who is the political editor of Guardian Australia and delightfully in the studio with me I have Amanda Rishworth, who is the Shadow Minister for Early Childhood – Amanda help me out –

AMANDA RISHWORTH, SHADOW MINISTER FOR EARLY CHILDHOOD EDUCATION AND DEVELOPMENT: Early Childhood Education Development, we’ll go with that.

MURPHY: Thank you, I was going to say child care, but it doesn’t really encompass the range of your responsibilities. Anyway, so I’ve brought Amanda in this week, because very recently, people will know that Labor outlined the first significant child care policy since the last federal election. That happened in the Budget Reply week a couple of weeks ago. And there’s lots to talk about with that policy and with the issues more generally surrounding child care and women’s participation in the labour market, and recovery strategies from COVID. There’s a bunch of things anyway that I wanted to kick around. But I won’t assume that everybody listening is across Labor’s child care policy to begin with. So Amanda, why don’t we start there love? What’s the offer,.

RISHWORTH: So what we really offered was two parts. First is kind of an immediate boost for families and that has a couple of elements to it. First, we’re going to raise the highest level of Child Care Subsidy for the lowest income earners to 90 per cent. At the moment it sits at 85 per cent, but we want to raise that. The second thing we’re going to do though is smooth the subsidy tapering. So at the moment as you earn more you actually get a reduced subsidy, and that varies depending on your income. It’s very lumpy so you have these big cliffs that as women earn more, the subsidy drops really quickly. So what we’re suggesting is lifting the subsidy for everyone, tapering it more slowly, and also removing the annual cap. At the moment, if a family combined income is more than $189,000 then they actually have a cap on how much Child Care Subsidy they get in a year, which is just over $10,000. That is seen, along with the other sort of tapering issues, as the really big workforce disincentives. So that’s what we’re suggesting in the first three years.

But then we really want to look at a pathway to 90 per cent universal subsidy for families. Now that’s hard to design from Opposition, so we are going to get the Productivity Commission to work on a pathway towards that. What would that look like? How would we get there? So they’re the key elements. One other element of our policy, because of course one of the concerns always with providing higher government subsidies like we are is, especially in the area of child care and other areas of government service where the private sector runs it, is how do you keep a lid on it. And so what we’ve said is, we’re not going to wait for the Productivity Commission to do the work, we’re going to get the ACCC to do that work basically on our election if we are successful, to actually look at how we do price regulation in the child care area.

MURPHY: And is that price regulation and I presume making sure that when you up the subsidy, the child care centres just don’t trouser it right?

RISHWORTH: That’s correct. And making sure that they don’t just take the increase in subsidy, that it goes into families pockets, but importantly, some transparency around this stuff. I mean when you talk sometimes to some providers, you get a whole range of different answers, and there is no transparency. And the ACCC has the powers for some of that transparency and that’s what we want to work towards. So making sure parents get the immediate subsidy, getting some transparency, but also looking at price regulation.

MURPHY: Okay. And it begs an obvious question this policy because Labor took a quite ambitious child care policy to the last federal election as well. And we had a similar sort of dynamic I mean, in the politics more broadly, right, where the government was sort of on brand Liberals and Labor was on brand Labor in terms of, you know, we’ve got a view that it’s an appropriate role for government to kind of invest more substantially in services for a bunch of reasons. Didn’t work at the last election, why do you think it might work this time?

RISHWORTH: I think this time we’ve done some very detailed policy analysis. We’ve built the momentum within the community, so I think families more than ever are feeling it as they are looking to perhaps take up more work in the COVID recovery. I think families are looking at this and thinking, I need to get this to work. I think businesses are really, as they recover as well want the most productive workers, they want the best workers and don’t want the affordability of child care to get in the way, and there’s been increasing calls there, there’s been more research come out as well, more economic modelling, most recently by KPMG as well as the Grattan Institute, just demonstrating this workforce disincentive that has been built into the system. So I think we’ve really crystallised the problems a lot better with the current system, and now what we’ve done is proposed a solution. So you know in politics you really do have to crystallise the problem, and I think we’ve done a good job of doing that this time and providing a solution in response to that.

MURPHY: Does it give you the shits, not to put too fine a point on it, you’re a working mom yourself, and your husband has given you a lot of support in your career, we have a universal health system, we have a universal education system, no one sits around sort of stroking their chins saying “oh my how absurd”, but with child care you always get into this welfare trap. That it’s sort of like that somehow this is sort of doing a favour for women or, you know, put whatever construction you want around it. It’s sort of taken a while, and just picking up what you said about sort of laying the groundwork better and identifying the problem better. It has taken I think quite a long time to start having a conversation with any gravity around the idea of this being a productivity and participation issue. It just seems to have taken ages to get there.

RISHWORTH: Absolutely.

MURPHY: Do you know why?

RISHWORTH: People have asked me that. I’ve had journalists that for the first time are looking at this and they’ve actually scratched their head and said why are we having a debate about this? We don’t have a debate about the construction of roads, it’s a bipartisan thing. Why is there a debate about this? And I think society has sort of seen caring historically as a women’s issue and historically, children as a family issue. But I think more and more the evidence has been very clear that we’ve got to take responsibility as a society. And that argument was made for things like Medicare – obviously, there’s an individual benefit of having good health, but there’s also a societal benefit from having a healthy society. And the same argument is for higher education, for public schooling. So it has taken a while to recognise little children as being in the same boat. And I think it’s a combination of women’s caring and their responsibility, but also we haven’t always seen little children as people in their own right actually, and their right to have an early education as well. So I think there’s two things happening here. There’s more response for the children themselves, but also more recognition that there is public benefit for that education, public good there.

MURPHY: But like sticking with universality, which is where you’re going in a policy sense, right? You haven’t committed to doing that, you’re saying, you know, let’s get the Productivity Commission to have a look at it. The main barrier to entry there is cost. Now, I mean, let’s not have this conversation absent the benefit. All the modelling I’ve seen suggests that there’s a big GDP boost to the enhanced female participation in the labour market, it’s not all cost. But it’s big bucks right? So where do the big bucks come from Amanda?

RISHWORTH: Well I guess in terms of Labor’s plan, I mean just our first three years, Grattan has modelled it and looks at an 11 per cent participation boost. Now I know those in the Budget don’t count the extra taxes that come from that into necessarily offsetting that, but you know we are spending a lot of money at the moment on things that are meant to grow our economy. And the return from this early investment, there’s different numbers around, but effectively for every dollar you invest, you get a $2 return for the economy.

MURPOHY: So you’re saying yes it’s big bucks, but that’s the big bucks coming into the Commonwealth as well. So maybe the big bucks are not quite as big as we think they are.

RISHWORTH: Well obviously we’re going to get the Productivity Commission to do that work, but we’re not offsetting at the moment, the government isn’t offsetting every new spend because they say it’s for the good of the economy. What I’m saying is can you find something that they’ve announced that has as good a returns as this, and I haven’t been able to identify anything that has as good a returns as this. And we are spending a lot.

MURPHY: What do you think – this is just something, I’ve got a bunch of more specific questions about this policy versus other things we might be able to do, which we’ll get to in a minute. But I’m just genuinely interested in what you think about this. I obviously had my kids, my oldest now is 21 and my baby is 18. When I came back to work after having them, I absolutely spent every dollar that I earned in child care arrangements. Because of the nature of my work, centre based child care was not a viable option. We had to, you know, have them looked after at home. It’s just I’m getting to expectations, few long preambles here love. But anyway, so it’s sort of like I went back to work, fully expecting that I would actually spend every dollar that I earned, like that that was just the price women paid 20 years ago for daring to have a job. But I think expectations are different now. It’s kind of like now, and we’ll get into this in a tick, the sort of combination of the benefits, the cost of child care totally eats into your income, all that sort of stuff. I mean, all the evidence suggests that this is an active barrier to women going back to work, whereas I don’t I mean, maybe I’m weird, but I don’t think it was 20 years ago, I think people just accepted that that was a lot. So what’s happened?

RISHWORTH: I think what families do is they sit down and they crunch the numbers now. This workforce disincentive that’s built into the interaction between the tax system and the Child Care Subsidy is quite profound. I think families crunch the numbers and they work out what works for them. And I think more and more, we’ve got two people working, but more and more, we have people not wanting to work for nothing. And so there’s this big financial decision that gets made. I mean I know people that have sat around the kitchen table with the numbers, others that have done spreadsheets to work out, you know, where the cost is –

MURPHY: Maybe it’s because I can’t do spreadsheets.

RISHWORTH: Maybe it’s no spreadsheets. But it’s sort of this expectation that life is really hard when you’re balancing work and family, you’ve got to get home, cook the dinner, juggle the schoolbooks and all the rest. And I think people sort of say it’s hard enough as it is, if I’m not getting any more in wages, why would I bother? Why would I put all that pressure on myself, or pressure on our family, when I’m not getting any economic return? Now, of course, I meet women that kind of question whether they made the right decision, because in a few years time when they do try and re-enter that frustrated about their career progression, a whole range of things, but I think it’s this thing of if I’m going to bust my gut, why am I going to do it for not no economic return? I think that’s what families are doing now is sort of saying, life’s pretty complex, why are we going to do this, if we’re not going to get a decent pay for it?

MURPHY: I think you’re being polite, I think the actual answer to my question is that women are more rational than they were. Anyway, so you referenced a second ago the participation barriers, one of which is the tax and transfer system. So another part of the picture, obviously, if we’re talking about labour market participation and incentives is what some of those things do, right? So, for example, why not look at abolishing Family Tax Benefit Part B for couples while maintaining a payment for single parents, for example? It’s sort of like, this is probably a crook analogy, but it’s kind of like you working at the subsidy in which is kind of like the front room. Where there’s a bunch of stuff happening at the backroom, which is not so visible to people. So is that something you’re open to looking at tax and transfer? Or is it or you only got a look at the front end of this?

RISHWORTH: Well we’re looking at all the benefits that come with early childhood education. So if the threshold question is how do you encourage people back to work, providing high quality early education, and the combination that comes from that, the easiest way to do it is directly improving the subsidy. And I think when you have a look at the disincentives, I mentioned the annual cap that kicks in, parents look at that and they average it, and they average it and they say okay how many days can I work before I hit that cap? And I think that is a really simple way. I guess when you start fiddling with Family Tax Benefit, you do get winners and losers, you do at times hurt low income families, and we don’t want to do that. And we don’t want to ruin choice, either. We don’t want to, you know, we’re not forcing people back to work.

MURPHY: Well, that’s another issue, of course, because well they haven’t said this because it’s dicey territory, but perhaps your opponents could mount an argument why are you forcing women to go to work when some women just want to stay home?

RISHWORTH: Absolutely and that’s why by providing higher subsidies that go directly to the child care centre, so it is in a sense like a Medicare system, if you use child care then you get the subsidy and you pay a gap fee. And I think, if you think of the service like that, that you use it if you need it, if you don’t need it, you don’t, this isn’t akin to tax cuts that everyone gets and some miss out. I think sometimes that’s how the child care subsidy has been looked at, but we need to start thinking about it like a service that’s there, parents pay a gap fee at the moment, but that gap fee and the cap on what type of support you can get is the real disincentive. And so if we look at it like that and look at the other benefits that come, certainly this will push up demand for early childhood education services, we know that’s predominantly women, if we’re looking at a stimulation of jobs into the future, then we’ve got more educators, a demand for more educators, but we’ve also got the benefits for children. So that’s why I think directly attacking the subsidy , removing those disincentives, and if people need that service, it’s there for them, is that is a much easier way to look at it. And it doesn’t, you know, when you start tackling this stuff can provide some perverse difficulties, as opposed to really looking at this from a service perspective.

MURPHY: And what about another thought bubble? If you want to, going back to the participation incentives, if that’s an overarching objective, as well as obviously health and well being and development of kids. But talking about participation, why not make the income calculation based on the second income, rather than on the family?

RISHWORTH: Yeah that’s something that has been discussed. I guess where we want to go, though, is this universal access, we want to transition it. We didn’t means test the NDIS for really good reasons, there was the private and the public benefit. We don’t means test Medicare, of course, in Medicare, in other systems, we do have a safety net that catches our most vulnerable, there is a gap fee with a service component to it. But I think we really need, in my view, we need to switch our thinking much more to this being about a service that is good for children, but also enables participation.

MURPHY: And what, well you’ve sort of addressed it I think, implicitly, but let’s make it more explicit. Another thing that opponents will say to you is why would you give a subsidy to wealthy people who can afford to pay child care, and this issue of sitting there with your spreadsheet, it’s just a non issue. So what why subsidise people who don’t need a subsidy?

RISHWORTH: Well, when we talk to a whole range of different families, child care is really expensive. We’re talking out of pocket costs of up to $20,000, $30,000. So the first thing I’d say is that there are lots of combinations of families that do need this support, number one. Number two, we are talking about an economic productivity measure. And so when people say, and the evidence shows that it is second wage earners, predominantly women, on all incomes, that lift the benefit. And this is why business has been so on board with this. If you think about it, and you are a business, and you’ve got a worker that is just absolutely fabulous, and you say could you work more hours and they say I’d love to, but that’s going to cost me too much. That’s not good for the business as well. So I think there is this sense that it’s welfare, it’s sense that this is not about economic productivity as well. And that’s the argument I’ve been making is that if our economy grows, then that’s good for everyone. I tell you, not everyone has a business, not everyone’s going to benefit from the business tax write off that the government’s proposed. When roads are built, not everyone drives on those roads.

MURPHY: Women do, the Prime Minister said so.

RISHWORTH: Some women do. But you know, we build a road in area. There’ll be a lot of people in this country that won’t benefit from Sydney’s second airport, but they are doing it because it’s about economic benefit for the country. And we’ve got to get out of seeing this as just something an individual benefit and an economic benefit.

MURPHY: Well, that’s the broad point you’re making that we’ve got a track towards a universal system, and that involves changing mindsets, like why give wealthy people subsidies. But it’s still I guess, like, equity is not a minor issue though. Well, I guess it’s, you know, the trade offs, as you say, it’s kind of like you can rationalise to yourself, we’re perhaps giving a subsidy to people who don’t necessarily need it, for the universal good of providing the service universally.

RISHWORTH: We never ask people when they turn up in a car accident at a public hospital, how much do you earn and that will determine how much we’re going to make you pay. We don’t do it when you turn up at a doctor’s surgery, and we don’t say only certain kids get support at public schools. I mean, this is the type of mind shift we have to make. There are some services that are seen as universally important, and there’s individual benefit to those and there’s external benefit. We don’t when we look at the Commonwealth contribution to higher education, say well let’s means test you and your family before we work out what that subsidy is. And I have to say, apart from the public good, there’s the simplicity. I mean, every time you go to the doctor’s surgery they’re not somehow working out on a chart –

MURPHY: Getting your tax return.

RISHWORTH: Working out what percentage they’re going to give you because it’s a simple system. And when you have a think about that, a simple universal – and at the moment there are a lot of resources put into Services Australia to get your tax return to match it with the subsidy, to check your activity, to see where you’re at. We accept that children from all backgrounds will go to a public school and yes, there’s a safety net, like the school card if you really are very vulnerable and you can’t pay a cent, but the rest of the families are all treated equally. And when you think about that, rather than thinking of this is akin to tax cuts, you start to have a different viewpoint.

MURPHY: What about though you’ve acknowledged obviously the more universal the system gets, the greater the demand will be. That’s just a logical and obvious point. But then that has implications, has workforce implications, obviously you’ve got to be able to train sufficient workers, have sufficient centres, all of that sort of stuff. So again, the costs, sort of, again acknowledging the benefits, which I want to foreground in this context because I’m completely persuaded by the economic logic of it. But there are costs then associated with training workers, takes time, takes money, building premises, etc, etc. Also, a policy Labor took to the last federal election included a wage subsidy or I don’t think you guys called it a wage subsidy, but it was like that. So first question is, is that still on the table, a subsidy for topping up child care workers? Given we should acknowledge that the people who look after our kids are some of the worst paid people in the country despite the importance of the work. So first question is subsidy there or not? And also, then, how do you deal with those other costs that inevitably present themselves in this sort of a model?

RISHWORTH: So in terms of supporting our early educators, there’s no doubt that our early educators do not get paid adequately for the work they do. I think that can be said across the care economy, you’ve got aged care workers. So you know our policy work is still continuing. But I think there is, in my view, a systemic problem. Disability workers, aged care workers, and early educators as an example. Early educators are professionals, but so our aged care workers. They all have, for example, most are required to do a Certificate 3 or above. So they are required to be qualified and get less than what unqualified workers in our economy do. So I think there was a big piece of work to be done about how we actually value those workers better in our economy. So look, that’s my personal view. At the moment, we don’t have a specific policy on early educators, but I think it is a systemic problem across the care economy that we will need to look at. And my colleagues and I are certainly discussing that. I think when it comes to the cost, I mean we need to train a lot of people in a lot of different jobs. And you know in terms of centres, it is a privatised market to some extent. When I say that there are large not-for-profit players, as well as for profit players in the market. They’ve responded quite quickly around demand, although sometimes there’s been oversupply in some areas and sometimes under supply. So that’s certainly something we need the Productivity Commission to look at, is how we transition when it comes to physical buildings. But the second is workforce, there’s no doubt about it. So that’s something we do need the Productivity Commission to look at. But when it comes to cost, we’re training people in lots of different areas –

MURPHY: Oh sure, we don’t sit around agonising about what it costs to train people in the STEM industry or brain surgeons, we don’t have these sorts of conversations, which again, is really deeply frustrating, I’m sure to both you and I.

RISHWORTH: Yes absolutely.

MURPHY: With that acknowledgement, the whole frame of the conversation gives us both the shit, right, fair enough. But still like all of this has got to add up. Now I know, obviously, we are in a different conversation both in terms of just the crude politics of it and also the lived reality in terms of debt deficit and other things. Obviously, that whole conversation has been reframed a bit because of the fiscal intervention during the crisisand because we are in this persistent low growth, low inflation environment. So now people were talking about debt oh well as long as the economy grows faster than your interest bill, then we’re all good. So acknowledging all that. But again, these are big investments. So I mean, is what you’re heralding that Labor will go to the next election, and it’s not as binary as I’m about to put it to you, but you can’t avoid the question in this way. This is a big services investment here that generates benefits for the economy. The government will basically say, well, we’re for tax cuts, you’re for government in everyone’s loungeroom.

RISHWORTH: I think the COVID crisis has showed there is a role for government and I think Anthony Albanese and certainly myself have not wanted to actually shy away from that. I’m not embarrassed about that to be quite frank. When people come to me, when my constituents come to me for a whole myriad of reasons, they’re asking me for help. They are asking for government intervention. Now, of course, I don’t want a nanny state where everyone is completely government –

MURPHY:  You don’t want to get in everyone’s loungeroom.

RISHWORTH: Well I don’t have time to be in everyone’s loungeroom. But I don’t think any of us are shying away from the Labor perspective that there’s a role for government. Now, in terms of the cost and the taxes, I mean the government is spending a lot of money, they’re not just doing tax cuts, they are spending a lot of money. They’re doing wage subsidies. So I think this is going to be a debate, I think the debate is going to be probably framed more about who gets better bang for your buck. I hope that’s how the debate is framed. And I think when it’s framed like that, I feel confident we’ll be able to demonstrate that we can get bigger bang for your buck. But when I talk to people, I mean the government might cage it like that, but when I talk to people, they’re coming to government for help. They want us to be able to provide it. Now that’s not to run their businesses and take over their businesses and all the rest, but it is about enabling them to get on with living a better quality of life.

MURPHY: Do you think it’s easier to run that argument, as you say, it’s coming to you, it’s s not that’s your perception of it that people are looking to governments to be a positive catalyst in their existence. Do you think it’s easier to run that more present government line in terms of your offering, your policy offering, you’re set of values, during or hopefully on slightly on the other side of the pandemic than it was in 2019.

RISHWORTH: I do think that people are definitely looking at government for help at the moment. They’ve seen how important it is that governments take action, not just on the health, but the health obviously aspect has been big, but on the economy as well. And I think people do look to governments. I mean, I must say, people have been talking to me about child care for a long time. Child care has, over the years, been an election commitment on a regular basis because I think it has been a long term problem. But I think more than ever, as people are trying to step out of their difficult circumstances, to take a step up, they do want government there to be side by side with them. And it is certainly the time I think now when people are looking at government, not you know ruling the show or controlling everything, but being alongside them to support them.

MURPHY: Just one last question. You’re a psychologist, aren’t you by professional training?

RISHWORTH: Yes, I’m registered but not practising. I need to put that on the record.

MURPHY: Fairly strong clientele around the building if you were, I’m including me in that. But anyway, look, jokes aside, they’ll be I confidently predict at least one or two women listening to this conversation, who are wracked by guilt about their participation in the labour market versus looking after their kids. Like I said to you 20 years ago I was willing and able and did spend every cent I earned in order to keep myself in a job, but I am still constantly wracked with guilt about whether or not I’m sufficiently present for my kids. That being the most important thing in my life. So there’d be lots of people listening to this who are thinking about child care, not only through the prism of can I afford it, but is it genuinely good for my kids? Am I a terrible mother by sending my kid off to child care? You are a professional, you have some training in this area, what’s your view?

RISHWORTH: The evidence is really clear about the beneficial aspects of child care, but also the beneficial aspects of parenting. The truth is that parents are the best judge of what’s good for their kids, and you’ve got to have confidence in that. Certainly the evidence about the importance of early education is there, there is plenty of evidence out there, it’s good for their social connection, it’s good for a whole range of things. That’s not to say you can outsource parenting, but it is beneficial. But I think, you know, if you’re worried about that, have a look at the literature, have a look at the information. But I think whatever we do, there are many, many women out there that are constantly guilty. I feel guilty coming to work sometimes, I feel guilty about not being present enough at home. I feel am I good enough role model? You know, those questions are always on all of our minds. So I think the first thing to say is you’d be normal to feel guilty. But the evidence really shows that there is really good benefits. And actually the quality standards that were brought in under Labor, you can go on to the My Child website and actually check how they’re doing and all those critical areas of development if you’re looking for a child care centre. And I’d definitely recommend, not a lot of parents do that, but I would definitely recommend go on and have a look. The evidence really does show that there are a lot of benefits for children and their education.

MURPHY: And I should say I framed that question very poorly. I mean, I did it through a personal lens. But I also want to acknowledge that there are a number of blokes listening to this conversation who are also wracked by guilt.

RISHWORTH: Absolutely.

MURPHY: And many blokes who are turning up for their families and doing more than their fair share of child raising and all of that.

RISHWORTH: And I think that’s why this policy – some people have said this debate is all about women. I mean, it is about women’s workforce participation. But it is also about the families that sit around and they juggle things together and it’s a partnership and so supporting women to go back to work, actually, it’s something that a lot of men really support.

MURPHY: Yeah, exactly. And are increasingly participant in all of that stuff. So anyway, just wanted to acknowledge that. Thank you everyone so much for listening. We really do appreciate it.

ENDS

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