Interview - ABC Capital Hill

HERNY BELOT: One of the biggest cost‑of‑living expenses families face is childcare and today the Government’s plan to make it cheaper has been introduced into Parliament. From July next year, the subsidy rate for a child in childcare will increase to 90 per cent for the first child, and all families earning less than $530,000 a year will benefit in some way. The package will cost $5 billion in coming years, but the Education Minister is framing this as an investment in the economy as well as families.

JASON CLARE: This is an investment, because what it means is it helps Australians to get back to work and particularly for children who are four – we’ve got a lot of four‑year‑old kids here today – analysis by PwC indicates that if you invest in preschool for four‑year‑olds, every dollar you invest creates two dollars for the economy. And I mention the Treasury analysis that shows that if you can make childcare cheaper it helps more Australian parents, in particular mums, to be able to get back to work, and the extra hours that they’ll be able to work because of this policy equates to up to 37,000 extra workers in the workforce.

BELOT: To discuss the details of how this will work, I spoke to the Minister for Early Childhood Education a short time ago.

Anne Aly, thank you for joining Capital Hill.

ANNE ALY: Pleasure, thank you so much for having me.

BELOT: This is legislation that’s going to help families with the cost of living and, as we’ve heard as well, it’s going to boost productivity. If that’s the case on both counts, why aren’t we bringing this forward and introducing it earlier?

ALY: Well, Labor went to the election with this as a key part of our election campaign to make the cost of early childhood education and care cheaper for families, alleviate that cost for families, and we said we’d introduce it next year, and there are a number of reasons why we can’t do it earlier and they’re mainly logistical. We deal with 23 private providers around the IT space here and to give you an example, the last time the previous Government introduced any changes to the Child Care Subsidy, it took 50 weeks to get the system up and ready to be able to cope with that. So, as much as we would like to introduce it earlier, we need that time to get the system ready.

BELOT: Okay, so there’s some administrative challenges there?

ALY: Very much administrative.

BELOT: But I assume staffing as well, because by increasing the subsidies, that would increase demand on a sector that’s already struggling with some staff shortages. How many additional staff are you going to need?

ALY: Well, the estimation of how many additional staff varies. Right now, we know that there are around 7,000 extra staff needed in the early childhood education and care sector. This is not an issue that’s new. The sector has been bleeding staff for a number of years now, primarily because it’s an undervalued sector and, so, we’re very cognisant of the fact that this is not about looking after children. It’s not about babysitting children. They are, the people who care for our most precious asset, are early childhood educators, so that’s one thing; but we’ve got a national workforce plan that we’re implementing. We’re working with states and territories on retaining, attracting and training more people in the sector.

BELOT: Pay is one of the best, I guess, examples of how many we value this work. How are you going to try and increase the wages for early childhood workers?

ALY: Well, we’ve already done some work on that, so when Labor went to the Fair Work Commission and argued the case for a rise in the minimum wage, that helped part of the sector. The other thing that we’re doing is looking at how the Fair Work Commission can look at pay equity. Most people who work in early childhood education are women. It is a very feminised workforce and so looking at pay equity, looking at how we can raise the pay for those industries that are predominantly female is also going to help the sector.

BELOT: Is this an example of a part of the economy where you would be encouraging multi‑employer bargaining to try and bring up those wages?

ALY: Very much so and we’ve got a really great example of that in Victoria where we had 70 centres – because most centres, or privately‑owned centres are people who are, they’re small to medium businesses; they own one or two centres. So, in Victoria, 70 of them got together and did multi‑employer bargaining and were able to lift the wages of their employees. So multi‑employer bargaining certainly is going to also help in other jurisdictions those businesses to come together and raise their award wages.

BELOT: Okay, so while this may be welcomed by many families who are struggling to afford it, at the end of the day this is just an increase to the subsidy. It doesn’t do anything really to restructure the systemic problems around childcare and cost does it?

ALY: I would argue that this is actually huge reform – reform that we haven’t seen before. Early childhood education costs have increased by 41 per cent over the last eight years. You know, it’s not just about productivity. It’s not just about helping women to re-enter the workforce or to increase their hours; it’s also about children’s education. We know that those first five years are formative years in a child’s development, and we know that children who access early childhood education actually do better and have better outcomes later. But your question around the out‑of‑pocket costs for families, that’s why Minister Clare and the Treasurer announced earlier this week the ACCC inquiry into the pricing mechanism and looking at the sector and how we can keep the costs down for families.

BELOT: If that inquiry comes back and says that by raising the subsidies, you’re pumping more money into this sector which may in turn increase the costs again because childcare centres may be pushing up those rates, would you consider your policy?

ALY: Well, we’ve already had some examples of this. So, the previous Government introduced a very small, like tinkering around the edges, reform, where they increased the Child Care Subsidy and the results from that have shown that it hasn’t increased prices for families; it hasn’t increased out‑of‑pocket costs for families. So, we’ll wait and see what the ACCC comes back with.

BELOT: Is lowering the cap that childcare centres can place on fees, is that an option that you are willing to consider?

ALY: Well, the cap currently is at around $10.85 per hour and 85 per cent of centres actually charge either at the cap or below the cap, so it could be an option; but this again is something that we’ll task the ACCC with looking at.

BELOT: So administrative delays, staffing, that’s one reason for not bringing this forward; so, this would apply from mid‑next year. There is a real demand from the Australian public for some relief on cost-of-living. What are you going to be doing in the short term to help that?

ALY: Well, there are a number of things we are doing in the short ‑term for relieving cost-of-living, and the Treasurer will have more to announce when we put forward the Budget in October. But certainly, this is – there’s no silver‑bullet measure to reduce cost‑of‑living measures on families at the moment. You know, we know it’s not just about early childhood education costs; it’s also about the cost of groceries. Anyone who’s done their shopping just in the last two days will tell you just how much more it costs to fill a trolley of groceries. It’s the cost of petrol. It’s a whole range of things, so we have a number of things in train for that.

But the key to reducing costs is increasing productivity, and our cheaper childcare policy actually does increase productivity and goes straight directly to that because it enables women who want to work more, women – I say women because they are normally the primary caregivers – who want to work more hours to be able to do that.

BELOT: Anne Aly, thanks for your time.

ALY: Thank you so much

END