Omnibus Savings and Childcare Reform Bill 2017
E&OE
SABRA LANE:
The Federal Government, today, is unveiling a major reworking of its policy to cut family benefits payments and end, so-called double dipping, of its paid parental leave scheme, in order to win Senate support for it.
Previous planned cuts to both have been rejected by the Senate crossbench, with Labor opposed to the measures.
The Government’s tried to soften the impact of some of the cuts, there are still some winners and losers, but the Social Services Minister, Christian Porter hopes that with fewer losers now the package will pass Parliament.
He joins me now. Minister, good morning and welcome to AM.
MINISTER PORTER:
Good to be here – and far more winners as well, I might add. But we’ll get into that no doubt.
SABRA LANE:
Exactly. Some of these savings were supposed to pay for the new childcare package, and with the crossbenchers previous objections to everything that been in the past – do you think the package will pass now?
MINISTER PORTER:
Nothing is sure in the Senate, and with the crossbench, until you actually get down to the vote.
But what we’ve done is gone back to the basic principles, and we’ve modified some essential positions to try and give the package of measures the best possible chance of success.
And I guess where we were at when the matter had stalled, and it had stalled, was that everyone seems to agree that the childcare reform package is highly desirable. Everyone out there wants to not have another year where they don’t have the benefits of accessible and affordable childcare. And so there’s great support for the childcare reforms which Simon Birmingham and the Prime Minister will be talking about in more detail later today.
But our position has always been that they must be paid for, because that’s a very, very significant investment. So, we need to find savings elsewhere in the federal budget, and it was those savings that we were having difficulties with the Senate. So, we’ve made some reconfigurations around FTB and, of course, paid parental leave, although that paid parental leave are not the savings being used for childcare.
SABRA LANE:
No. OK. Look, let’s look at some of the details here. So, the governments pushing ahead with axing the end-of-year supplements for those who get the Part B payment, but you’re increasing payments for those who get Family Tax Benefit Part A. Is that right?
MINISTER PORTER:
That’s essentially right. And just a little bit of history to this matter that’s relevant is that we have achieved some savings in this area with the agreement of Labor in the first omnibus savings bill.
And in effect, what the Labor Party did was agree that the supplement should end for those families with incomes above $80,000. Now, for a very consistent period of time, they opposed, Labor, any change, but then agreed to that change.
And what we’re saying now is that the supplements should be ended in stages, in a fair and reasonable way, but that the fortnightly payments that families receive through Family Tax Benefit A should be increased by $20 a fortnight, which obviously is a very substantial increase. So, the idea is that you will get more on a fortnightly basis to help you with that cycle of bills and the fortnightly cycle of the cost of living, but we will end the end-of-year supplements in stages, and it’s that savings, from ceasing the end-of-year supplements, that will be reinvested to create affordable, accessible, simple childcare.
SABRA LANE:
How many families will lose out as a consequence though?
MINISTER PORTER:
Well, all the families who remain on FTB A will have their supplements ended, and that’s, you know, many hundreds of thousands of families, but, of course, many of those families, a very large number, also have children in childcare or will have children in childcare.
And so, for instance, the example that I can use with respect to childcare is that a working family on $60,000 a year would end up paying around $15 per child a day for childcare. Now, that’s a very significant improvement. And it’s a benefit to families on lower incomes who are engaged in the workforce, trying to make ends meet and need to use childcare as part of that process.
SABRA LANE:
OK. And on paid parental leave, will expectant mothers be affected by the changes you’re introducing today, and when will it start?
MINISTER PORTER:
Well, one of the changes to the bill, amongst several, is that a start date wouldn’t be until nine months after assent, royal assent of the bill.
So that would allow, you know, potentially plenty of planning time. And that’s something that we’ve agreed with several crossbenchers and that’s a very fair and reasonable amendment that they’ve suggested to our original position.
SABRA LANE:
And you’re extending the government scheme by two weeks to 20 weeks?
MINISTER PORTER:
Correct.
SABRA LANE:
And women who get a private, you know, receive a payment from a private company? How does…?
MINISTER PORTER:
Well, the reason for reform in this area is, there are several reasons. The first is we obviously want to make the system sustainable, but we also want to make it fairer.
So, each year there are around about 170,000-odd mums who access paid parental leave. The difficulty has been is there is no real alignment to the amount of taxpayer-funded childcare that a mother would get, and their income or their family income.
Now, there’s a cut-off at $150,000, so anyone who earns over $150,000 can’t access the scheme. But if I can give you this example of some of the inequities that exist in the system at the moment – one person, mother, might earn $105,000 and have a generous superannuation scheme with the public sector, and their employer, the public sector, might give them access to 14 weeks of employer-provided paid maternity leave.
Now, that would be about a $28,000 amount of paid maternity leave from their employer. They would also be able to access, in its entirety, the $12,000 from government. So, that person can end up accessing nearly $45,000-worth of paid maternity leave, which is more than some mums earn in a year.
And then another mum who might work casually in the private sector and have no access to paid maternity leave from their employer only gets access to the taxpayer-funded $12,000. So, you’ve got one mum getting $45,000 for the 18-week period and another mum getting $12,000.
So, what we think is there needs to be a rebalancing here. What we’ve done is we’ve said that those families on lower incomes with no generous employer-provided paid parental leave, they will get a guaranteed two extra weeks, from 18 up to 20. So, that’s 96,000 families who will get more weeks at home with their baby after childbirth, and the extra two weeks at minimum wage.
SABRA LANE:
But 68,000 women will get nothing. Is that right?
MINISTER PORTER:
No, no. That’s not the case. So, those other 68,000 families, which is about 40 per cent of the total, will have a top-up system. So, let’s say that their employer gives them 12 weeks paid maternity leave, they will get topped up, not to 18, but to 20. So, 12 weeks from the employer, plus eight weeks from the government – a guaranteed 20 weeks at home.
Now, that might mean a limitation to the amount of money from the taxpayer, that $12,000 amount, but you’re still guaranteed that 20 weeks. And that group, I might say, Sabra, they have average family incomes of around $140,000.
So, what we’re doing is making sure that the low income families get more weeks and more financial support. There are reasonable limitations to other families who have greater means and greater income, and we think that’s a very fair rebalancing.
SABRA LANE:
Ultimately though, that means that you won’t reach the $1.8 billion in savings overall that you’re hoping to achieve. It’s only something like $400 million now.
MINISTER PORTER:
That’s quite correct, yeah.
It costs a lot of money to give, sort of, 96,000 families an extra two weeks at home with their baby, but that’s what we’re prepared to do. And that’s just part of the negotiations.
SABRA LANE:
A lot of our listeners would be really confused. Now, why has it taken the crossbench objections to make the government more pragmatic and reasonable about this?
MINISTER PORTER:
Well, we thought our original position was fairly reasonable. We…
SABRA LANE:
But this indicates that it wasn’t.
MINISTER PORTER:
Well, we’re dealing with the landscape in the Senate that exists, and that landscape changes at every election. As you’ve seen, sometimes it changes overnight, and people change their views and their mind and they’re persuaded against one thing or for another.
So, it’s not the easiest of landscapes, necessarily, to deal with, but the fact that you change your position doesn’t mean that the original position was somehow unreasonable, it’s just a matter of pure pragmatic negotiation to try and work out a compromise position.
And you’ll accept, I think, Sabra, the views that a Derryn Hinch might have compared to One Nation. I mean, they argue in the corridors. And then the views of Nick Xenophon’s team are different. So, what we are trying to do is find a way to make a system like Paid Parental Leave more sustainable, where there are some reasonable savings to the taxpayer that are going to help us as a nation return to surplus, also ensure that it meets the basic requirements of a system of welfare payments, and that is that the people with less benefit more.
SABRA LANE:
That’s right. But also, just on the politics of it though, you say it’s, you know, the first package was reasonable. But the crossbenchers brought you to this position, and if Newspoll’s correct, people are rewarding them for that.
Their vote is going up. Vote for ‘Other’ is now at 20 per cent, and they’re saying they like what they see on that crossbench.
MINISTER PORTER:
But there’s a longer game here also, I think, Sabra, which is that most Australians instinctively in their heart believe that our nation will benefit not running perpetual deficits and returning to a circumstance of surplus where we’re not in this situation that we’re spending more than we bring in in revenue every year. I think most Australians believe that.
And I think that a government, and we are that government, who actually shows that we are moving to that position by taking what are sometimes challenging decisions, by being able to engage constructively in the graft of negotiations with the Senate and move savings bills through both houses of Parliament, that there is a long-term electoral reward in maintaining a proper financial position that buttresses Australia against any adverse international movements in a very uncertain world.
SABRA LANE:
So, it’s accept the cuts or lose our AAA credit rating? In short, that’s what you’re saying.
MINISTER PORTER:
Well, the AAA credit rating is one measure of a nation’s economic health, but the bottom line is that all nations have to live within their means, and governments cannot perpetually spend more than they raise in taxation. And if you do that, all you’re doing is pushing today’s expenditure off onto the next generation of Australians, and they will have to pay back today’s expenditure when they hit the tax system with higher taxes, and that’s not fair.
And I think most Australian parents wouldn’t consider that to be fair. So, I think that the type of negotiations that we enter into with the Senate, so long as they bring about constructive, reasonable measures which have some savings in them to help us get back to surplus, but savings in a fair way, like this PPL position which we’ve now modified, I think there are long term rewards for a government in that.
SABRA LANE:
OK, Minister, thank you. That’s all we’ve got time for.
MINISTER PORTER:
Thank you very much.