SKY NEWS WITH PATRICIA KARVELAS
SUNDAY, 5 JUNE 2016
SUBJECT/S: Labor’s childcare package; Transition to Retirement changes
PATRICIA KARVELAS: Our next guest tonight is Labor's Andrew Leigh. Welcome to the program.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER & SHADOW MINISTER FOR COMPETITION: Thanks Patricia, great to be with you.
KARVELAS: On your childcare policy; your policy is very, very generous to the rich. The Prime Minister's policy has a new means test for the childcare rebate that will reduce assistance when families earn $180,000. Yours is a basically a no-losers policy on childcare reforms. Why shouldn't families earning up to a million dollars be means tested?
LEIGH: As you know, with families you can have a situation where the household income is high but where the secondary earner – which is most commonly the woman – faces a strong disincentive to move into paid work. One of the reasons why we have traditionally provided childcare support right through the income spectrum is because if you have the situation of a low-wage spouse married to a high-wage spouse you don't want one of them to be deterred from entering the labour market.
As you say, the Coalition’s package has a lot of losers. The Australian National University’s analysis suggests one-in-three families will be worse-off under the Coalition’s package. Whereas under Labor's package, nearly a million families benefit. And that's low-income, middle-income and families further up the spectrum.
KARVELAS: Sure Andrew Leigh. But back to your policy - because I'm going to speak to Alan Tudge in a moment and don't worry I plan to drill him on their policy - but on your policy, you think it’s justifiable that really rich families get $10,000 for each child. How is that sustainable when we see the budget as it is?
LEIGH: Patricia, our policy is in two parts. Firstly, a 15 per cent increase in Child Care Benefit which as you know is a means tested benefit going to low and middle-income households. They'll be up to $31 a week better off. And then we've also increased the cap – currently $7500 – up to $10,000. And many of your viewers will be families that are currently getting caught by that cap. It used to be just 3% of households getting caught. Now it’s probably closer to one in ten households getting caught. That doesn't just generate an increase in childcare fees. Many families say that causes a real chaos towards the end of the financial year in terms of planning the household budgets, where suddenly they're paying not for half the cost of childcare, but for all of the cost of childcare. And the change just happens overnight and unexpectedly for many households. We don't want to see househ olds caught in that trap.
KARVELAS: OK. How will you fund the policy without the links to the cuts in the family tax benefit system? Because I've really looked very closely at the statements from your side of politics today and I can't see how you're going to fund this.
LEIGH: We've supported around $9 billion worth of savings in the social security and family payments space, three times the value of the current package.
KARVELAS: Yes previously. And you've spent it all, haven't you? Haven't you spent all of that on all of your other initiatives?
LEIGH: No Patricia, that's not correct. We've been supporting savings, even in some cases savings that were put forward in a way that we wouldn't have put forward as a Labor Party. There's also the $1.2 billion the Coalition wants to spend on reintroducing the baby-bonus. One of John Howard's worst policy decisions as I am sure you recall and the Coalition wants to bring it back. Simply because it's a deal that Malcolm Turnbull had to do with the National Party in order to become Prime Minister. That’s terrible policy. Labor won't go ahead with it.
Instead we're focused on improving accessibility to childcare which is important for kids because we know that learning starts at the very early ages, but also important for labour force participation. If we could get up to Canada's labour force participation rates for women we'd be a more economically productive country but also our workplaces would benefit from the influx of talented women who in some cases are finding childcare is holding them back from paid work.
KARVELAS: OK is this $10,000 per child, that as I say millionaires can get under your policy, is this $10,000 indexed? Because if not, won't we see the same problem of people hitting the cap in two or three years’ time?
LEIGH: Many of the figures in our family payments and education space aren't indexed. This is one which we’re increasing significantly and that reflects that childcare costs have gone up 20 per cent under the Coalition. And as you made the point in your introduction one of the key things about Labor's policy is it begins to help families from 1 January next year. The Coalition's policy is still over two years away from helping anyone. So as you pointed out so pithily, a child who was born when Malcolm Turnbull was promising to take childcare pressure off families would be in school before those families saw any benefit. They've promised a lot this Government on childcare, but they've done so little.
KARVELAS: Kate Ellis, the Minister responsible, conceded Labor's last effort to change childcare was effectively inflationary. Without the fee caps the Coalition is proposing, how will you stop providers from just taking this extra money and raising fees?
LEIGH: Look, it's a great question. What we're intending to do is provide more powers to crack down on fee gouging, make sure that parents aren't paying too much for childcare. We're also proposing to make sure that we explore other areas of childcare which aren't talked about so much. Investing in family daycare and investing in the budget-based services which are absolutely critical in a range of Indigenous communities. And making sure too that we invest in a workforce strategy so that early childhood educators have that ongoing professional development. Labor believes that early childhood isn't just babysitting, it's education. So we've got to invest in the educators as well in order to make sure our kids get first-class care.
KARVELAS: OK, so I just want to return to this means testing which you could probably see I'm quite interested in, given I read every word of the Productivity Commission report and I find it odd that a lot of those ideas, including making one single childcare payment, haven’t been adopted by Labor. But just going back to the idea of not means testing such a generous payment of $10,000 for each child. Are you saying that in very wealthy households that women genuinely look at how much money they get from going back to work? Because I'm talking about families earning a million dollars a year – is that the scenario you're painting here? That they would stop working when they're on those kinds of incomes as a family?
LEIGH: Patricia, I think in any household people are looking at the benefits of going back to work and whether the cost of childcare is outweighed by the wage. So, if you want to think about this philosophically, the question as to whether or not to means test childcare rebates is ‘household inequality meets gender inequality’. The way in which we've traditionally regarded it, both side of politics over the last decade have chosen not to means test childcare rebates, because we recognise that doing so would deter low-earning spouses in high household income couples from entering the labour market. That then costs Australia in terms of productivity.
KARVELAS: Do you have any evidence for that though? What's the evidence that you point to that that's the case?
LEIGH: Patricia, there's a spate of evidence right across the economics literature on the high impact on female labour supply of childcare costs. A range of my colleagues were working on this when I was an the Australian National University and their estimate was that childcare costs had acted as an even bigger deterrent to women entering the paid workforce than tax rates. They are extremely important – you look, for example, at the changes in Canada over childcare costs, the changes that Quebec made, and you see big increases in female labour force participation accompanying those changes in childcare costs. It's probably the most important lever we can pull in making sure that we've got high female labour force participation. We know that's vital in terms of increasing economic output but also, as I mentioned before, workplaces work better if we don't have half the population priced out of com ing back into the labour market and sharing their skills with their workplace.
KARVELAS: Just before I let you go, the CFMEU wants you to rule out any changes to the Transition to Retirement rules, saying they don't want any changes to that. Can you rule that out?
LEIGH: Patricia, we're looking very carefully at what the Government has proposed. We're doing the consultations that they didn't do before announced this.
KARVELAS: Can you rule out any changes?
LEIGH: We're engaged in the consultation which the Government...
KARVELAS: You can't rule out any changes?
LEIGH: Patricia, I'm answering your question with the detail it deserves. The Government's claim that only 100,000 Australians are affected by these Transition to Retirement changes. The industry has said it is more like half a million. We need to get to the bottom of this by having the conversations with the sector that the government didn't do before the Budget. It's not just Julie Bishop that doesn't understand this policy – it's that many in the community are concerned about the impact that the government's Transition to Retirement changes will have. You'll have Labor's clear position on a range of these superannuation issues before the election. But we need to engage in that consultation because the government just didn't do it. It's why we were out with our superannuation policy over a year ago. To give people time to digest it, to engage with it, to work through it .
KARVELAS: Andrew Leigh, many thanks for your time tonight.
LEIGH: Thank you, Patricia.