Sunday, October 21, 2007

DAY SEVEN: A 50% Child Care Tax Rebate

From Labor:

A Rudd Labor Government will slash parents’ child care costs by lifting the Child Care Tax Rebate from 30 per cent to 50 per cent and paying it every three months rather than once a year.

Labor’s Affordable Child Care Plan is a $1.5 billion investment in the future of Australian families and in Australia’s future economic prosperity.

Federal Labor understands the financial pressure Australian families are facing...

The cost of child care has spiralled and is compounding the financial pressure families are under, due to high petrol prices and mortgage repayments and the cost of groceries.

That is why Federal Labor wants to help all Australian families meet the spiralling cost of child care.

Sending a little one to child care is one of the toughest decisions that parents have to make. When they do, they want to make sure child care is high quality and affordable.

Federal Labor’s Affordable Child Care Plan will:

. Increase the Childcare Tax Rebate to 50 per cent – covering up to $7,500 of out-of-pocket costs per child; and

. Pay the 50% Child Care Tax Rebate quarterly – so parents no longer have to wait one or two years to receive their money.

By making it easier for mums and dads to return to work after the birth of a child, Federal Labor’s Affordable Child Care Plan will help get more people back into the workforce, boosting workforce participation and productivity.

The spiralling cost of child care

Parents have a right to challenge Mr Howard’s Families Minister, Mr Mal Brough’s comments on child care when he said:

There is no crisis – I have been saying long and hard there are no crises.” (April 19, 2007 – Canberra press conference)

After 11 years, the Howard Government has lost touch with the financial pressures facing Australian families.

· Child care costs in Australia have doubled in the last 11 years under the Howard Government.

· For each of the last five years, child care costs have increased by more than 12 per cent a year.

Working families deserve financial support from the Federal Government to help pay for the spiralling cost of Child Care, not a lecture from Mr Howard that they “have never been better off.”

That’s why Federal Labor has listened to the concerns of working families and developed its Affordable Child Care Plan.

A 50 per cent Child Care Tax Rebate

Under Federal Labor’s Affordable Child Care Plan the existing 30 per cent Child Care Tax Rebate will be increased to 50 per cent.

The total amount that families would be eligible to receive for each child will increase from $4,354 to $7,500 a child.

At 50 per cent, the new rebate level is higher than the top marginal tax rate – and increases the current rebate rate of 30 per cent by more than 65 per cent.

This means that all families will receive a higher rate of assistance than if child care was tax deductible.

Under Federal Labor’s Affordable Child Care Plan the combination of Child Care Benefit and Labor’s 50% Child Care Tax Rebate means that:

A family with income of $80,000 and one child in long day care for 40 hours a week will receive almost $1,500 of additional assistance each year – 66 per cent of their total child care costs will be covered by a Rudd Labor Government.
A family with income of $50,000 and one child in long day care for 40 hours a week will receive more than $1,000 of additional assistance each year – 76 per cent of their total child care costs will be covered by a Rudd Labor Government.
A family with income of $35,000 and one child in long day care for 20 hours a week will receive $330 of additional assistance each year – 85 per cent of their total child care costs will be covered by a Rudd Labor Government.

Eligibility for the Child Care Tax Rebate will remain the same. It currently applies for children in approved care which can include: Long Day Care, Family Day Care, In-Home Care, Outside School Hours Care, Vacation Care and Occasional Care.

Quarterly payments

A Rudd Labor Government will also make sure that working families are reimbursed every three months for their out-of-pocket child care costs.

In office, Federal Labor will fast track the introduction of the Child Care Management System with the goal, subject the development of delivery mechanisms, of paying the rebate to parents every fortnight at the same time as their Child Care Benefit.

Delivering child care help to families sooner was one of the first commitments made by Federal Labor Leader, Kevin Rudd, in December 2006 when he embarked on his listening tour after being elected leader.

Financial pressure on working families means that they need their child care costs to be reimbursed more quickly.

It is unfair that parents have had to wait up to two years to be reimbursed. This was the case under the Howard Government’s 2004 Election commitment.

Last month, just weeks out from election, the Howard Government switched the Child Care Tax Rebate to an annual payment – but parents still have to wait at least a year to receive the benefit.

It is a mark of how much the Howard Government has lost touch that they think parents can wait more than a year to be reimbursed for their out-of-pocket child care costs.

It is a fact that the Child Care Tax Rebate could have been delivered faster to parents from the very beginning. It’s just that Mr Howard and Mr Costello refused to do so.

Federal Labor will put payments back into parents’ pockets and into the family budget sooner.

The payment in the final quarter of each financial year will take into account each family’s actual income to determine their final out-of-pocket child care costs.

More affordable AND more accessible

Federal Labor recognises that child care needs to be affordable and available close to where parents work and live. That is why Federal Labor has already pledged:

· Up to 260 new child care centres around Australia on primary school and community grounds; and

· To invest $450 million to give every Australian four-year old the right to fifteen hours of high quality preschool every week, for forty weeks a year, delivered by a qualified teacher.

With Federal Labor’s 50% Child Care Tax Rebate and 50% Education Tax Refund, working parents will now receive a 50 per cent reduction on eligible out of pocket costs up to the relevant limit from the time their children start child care through to the time they graduate from school.
An investment in Australia’s future

Federal Labor’s Affordable Child Care Plan will also boost workforce participation and productivity in the economy.

It will help thousands of parents to get back into the workforce – and those already in the workforce to work a few more hours extra if they wish.

Independent economic modelling by the Melbourne Institute shows that Federal Labor’s Affordable Child Care Plan will help over 34,000 Australians re-enter the workforce over the next five years, including many skilled workers.

This includes over 16,000 single parents, and 15,000 mums with partners.


RUDD: Well it’s good to be here today with Jenny Macklin and also with our candidate for Eden Monaro, Mike Kelly, and our candidate for Bennelong, Maxine McKew, and of course Bob McMullan and Senator Kate Lundy. Have I missed anybody? I don’t think so.

Today I want to announce a major new initiative to help working families with the cost of child care. Today what we’re announcing is a $1.5 billion initiative to assist working families who are dealing with the explosion in child care costs. Specifically what we’re putting forward is this, that the Child Care Tax Rebate be increased from 30 per cent to 50 per cent. That the cap of payments for the child care tax rebate be increased to $7,500 and thirdly that this child care tax rebate be paid, not once a year, but is paid quarterly. A really important addition for working families.

There are hundreds of thousands of children across Australia, and their parents, depending on affordable child care and the problem we’ve got is that child care affordability is becoming a real challenge. In the last year alone child care costs went up by 12.8 per cent. So we need to do something to help ease the pain, lift the burden with working families.

The other thing is this, working families are facing a whole series of other cost pressures as well. You’ve got the pressures from mortgage interest rate increases, five in a row since the last election when Mr Howard said they’d never go up again, he said that he’d keep them at record low levels, rents going through the roof, petrol, groceries and, of course, the impact of Workchoices, stripping away penalty rates and overtime.

Child care adds to that burden for working families. Mr Howard, of course, says that working families have never been better off. What I know from working families is that they are doing it tough on child care. Therefore this is a practical initiative to assist with the future. We believe that this will assist enormously in making it more possible, not just for working families to make ends meet, but critically to increase workforce participation. We have so many qualified people out there, women in particular, who are effectively prevented from returning to the workplace, if that’s what they choose, because child care is either not available or not affordable. This makes a huge addition to that.

I now ask Jenny to add, to go through how this will impact on a given set of working families. Over to you Jenny.

MACKLIN: Thanks very much Kevin. Well the number one message I’m getting from working parents and particularly from working mothers is that they wonder whether or not it’s worthwhile going back to work, or if they’re at work, wondering whether or not it’s worth staying at work.

Just this week in Brisbane a mother said to me that she had two children in child care, she was considering giving up full-time work because it just wasn’t worth her while. This is a mother in Brisbane.

In Adelaide this week at a child care centre that child care centre operator said to me that parents are so sensitive to the cost of child care it can come down to a dollar or two a week to decide whether or not parents will, in fact, continue to work and continue to have their children in child care.

So this is a very significant announcement that we’re making today to make sure that those parents, particularly those mothers who want to go back to work either full-time or part-time, after having their babies they will be more able to do so. They will be able to afford to do so.

For a family with an income on $80,000 this new measure that we’re announcing today will make child care costs 66 per cent more coverable. For a family with an income of $50,000 a year, 76 per cent of their child care costs will now be covered and a family with an income of $35,000 where their child is only in part-time care, they in fact will have 85 per cent of their child care costs covered. So this is a substantial announcement to make sure that child care is more affordable for those parents who do choose to go back to work after their babies are born.

RUDD: Ok, thanks Jenny. Before I take a question I’ll just say this adds to what we announced on Friday in terms of Labor’s education tax refund. Under that tax refund you have the ability to claim 50 per cent of education expenses, up to $1,500 a year if you’ve got a kid in secondary school and of course up to $750 a year if you’ve got a kid in primary school. Put all that together, then you’ve got an additional benefit, if you’ve got two kids, one at each, of somewhere north of $1,100 a year. Add that to what we’re seeking now to do for child care, for kids who haven’t got to school yet, we see this as a practical helping hand for working families with very little children, before they go to school, and of course once kids go to school through the education tax refund we announced on Friday.

This is designed to help working families under financial pressure because we believe the next Government of Australia needs to extend a helping hand rather than simply tell working families they’ve never been better off. Over to you.

JOURNALIST: Will this actually heighten the child care shortage, does it do anything to increase the number of places?

RUDD: What we’ve done is looking at the supply side as two things. Labor has a policy to increase the number of centres nationwide by 260 – that’s already announced policy.

Secondly, when it comes to the other supply side challenge which is available workers, we’ve done two things. We’ve announced funding already for an additional 1,500 tertiary place for those who are working as early childhood education specialists and we’ve also a policy which promises that for TAFE fees, for those studying for child care diplomas at TAFE, that they will pay no TAFE fees. That is two concrete measures to boost the overall supply of places and those who work in centres.

JOURNALIST: Mr Rudd, what’s the earliest that funds will flow to families under this plan? And secondly, does it apply to people who have nannies or use family day care or other forms, rather than the formal long day care?

RUDD: Sure, this proposal of ours to increase the Child Care Tax rebate to 50 per cent of out of pocket child care costs and to increase the cap to $7,500 becomes applicable as of 1 July 2008, that’s the first point. And your second question was?

JOURNALIST: Does it apply to people…

RUDD: What we are doing, this applies to approved child care services. And what’s the definition of that? It includes long day-care centres, it includes family day-care centres, it includes out of school hours care programs and the subsets of that, before school hours care, after school hours care and vacation care and in addition to that specified in-home care which has a specific set of categories, particularly with kids who have particular illnesses. It does not apply to nannies.

JOURNALIST: How do you feel about tonight? Are you nervous?

RUDD: Well look, I see today as probably day 300-odd of a very long campaign which began in January this year and today, frankly, is not much different to any other day. It’s a day to get Labor’s alternative plan for Australia’s future out there. Friday we put out a new policy for education tax refunds to help working families. Today we’re putting out a new policy – 50 per cent on child care tax rebates both designed to help working families. I’m proud of our policies. They are a good plan for the country and a good plan for families.

JOURNALIST: Mr Rudd, you’ve been attacking John Howard as out of touch, you say that Peter Costello’s never been in touch. You, by a dint of your circumstances are a wealthy man. Why should anybody believe you’re in touch?

RUDD: Well, I began life growing up on a farm. W hen I married my wife Therese we didn’t have a brass razoo and when we went out to, when she went out to set up a business, I think in her late 20s, we went down the Commonwealth Bank and got a $10,000 bank loan and like many good Australians who went out there and built up a business, and I’m proud of everything that she has done, and all the way through, I’ve got to say, particularly in the early years, guess what we had to struggle with like everyone else? Child care and family day care and long day care and all those sort of things, making ends meet. So, these are important things.

But the question really is one of where government policy stands. When the Prime Minister of the country says firstly, working families have never been better off and when the Treasurer says there is no housing affordability crisis and when the Families Minister says there’s no child care crisis – they together represent a government which has lost touch with working families.

JOURNALIST: What about mums and dads who choose to stay home and look after their children? How will they benefit from this?

RUDD: Well, obviously this is about child care itself and what you do for those who use approved child care services. We believe that this is an important measure of support for families who choose to use child care and mothers in particular who are looking towards returning to the workforce. Choices at the end of the day about how you want to look after your kids, whether you want to stay at home ultimately are made by people in their individual family circumstances, we understand that.

JOURNALIST: Mr Rudd can I ask your candidate for Eden Monaro, Mike Kelly, to tell us what his view is of the capital punishment question and could I ask you how comfortable you are, as Labor Leader, that he holds that view being what it is?

RUDD: Well, I actually know it, but I’ll let him speak.

KELLY: My view on capital punishment and the death penalty has always been the same. My comments that were replicated in that article recently were on two issues, one my personal feelings about Gutaale, the mass murderer, and secondly about the matter of principle on the death penalty.

I’ve always opposed the death penalty, the Government and Labor have exactly the same policy on that matter and I support that policy.

JOURNALIST: Mr Rudd what do you say about Peter Costello’s claim that there is a big hole in your tax proposal and that he’s going to expose it? Are you worried about him exposing that?

RUDD: Well if Mr Costello was fair dinkum about his debate about thresholds why didn’t Mr Costello put out thresholds when he released his goal for the future of the taxation system? He didn’t do so.

JOURNALIST: But, is there a hole or isn’t there? Don’t worry about him.

RUDD: Well, no. He’s making a claim in relation to thresholds which he did not announce when he put his policy out against the thresholds that we’ve indicated.

JOURNALIST: But will you move your thresholds to match that 45 per cent of taxpayers only paying 15 per cent?

RUDD: Our thresholds were announced with our policy and we propose to stick with them. Next question.

JOURNALIST: Mr Rudd, how many working, or how many mothers, do you anticipate will be brought back into the workforce under your plans? Thousands, tens of thousands, do you have an estimate?

RUDD: I’ll turn to Jenny on that because we’ll be looking at some of those numbers again this morning.

MACKLIN: We’ve had some work done for us, it’s in the back of the policy if you’re looking for it, by the Institute of Applied Economic and Social Research in Melbourne and they estimate about 34,000 women will return to the workforce with this encouragement. There’s no question that affordable child care is going to provide an incentive for, particularly mothers, to consider returning to work, either full-time or part-time and there’s other evidence from the Productivity Commission and from the OECD demonstrating that particularly women don’t return to work because child care is so expensive.

JOURNALIST: Mr Rudd, talking about child care the other day, the Prime Minister said that your policy was to means-test Tax Benefit B and ratchet down to benefit. How do you respond to that?

RUDD: Look, I think Mr Howard’s playing negative politics here. Look, we’ve got a very practical plan here to help working families under financial pressure. What’s the platform here? The platform here of course is the child care benefit. That’s means tested and it’s a substantial assistance out there to working families depending on their financial circumstances. It’s at its peak around about an income level of $33-$37,000 and it flattens down and tapers out at about $108,000 and then remains static, from memory, to about 53 cents an hour, is that right?

MACKLIN: That’s right, 56 cents.

RUDD: 53 cents an hour, 56 cents an hour. So that’s your platform, if you like. Over and above that you’ve got out of pocket child care costs and expenses and what we’re doing today by a massively significant addition to the child care tax rebate is providing that additional assistance.

As Jenny went through those cameos before, when you’re looking at, therefore, a family with an income of $50,000 with one child in long day-care for 40 hours a week, receiving more than $1,000 additional assistance a year and that representing 76 per cent of their total child care costs, I think that is actually direct, substantial, real help for working families on $50,000 so that’s my answer to Mr Howard, we have a very good policy, understands the base which is means tested, adds this in terms of out of pocket expenses and we think, helps the problem. Mr Brough says there is no family and there is no child care crisis.

JOURNALIST: Mr Rudd, are you concerned you’ve had to sideline another union candidate in Shane Guley?

RUDD: I understand he’s resigned in Queensland and I’m not actually fully across the circumstances concerning that in Maranoa.

JOURNALIST: He’s one of your candidates, why weren’t you across it?

RUDD: Well, we’ve always had an aspiration to win the seat of Maranoa, but it’s a little difficult for us and we should not give up on any particular seat, but Maranoa has always been a challenge and we’ll be out there fighting hard, but he’s resigned and I understand a statement’s been made the by organisation about that.

JOURNALIST: What do you want to be the focus of tonight’s debate and what do you think Mr Howard will focus on?

RUDD: I have one single focus tonight, it’s what is my plan for Australia’s future and what is Mr Howard’s? Mr Howard so far has been on about a barrage of negative fear campaigning with three themes, unions, unions and unions. I’ve got a positive plan for the country’s future. I want to debate that. I want to debate the future of building prosperity beyond the mining boom, I want to debate how we help working families under financial pressure, for example, with housing affordability assistance, and for example, with child care, for example, with education tax refunds. I want to debate our future plan for hospitals, I don’t know what Mr Howard’s is, by the way.

We have a plan for an Education Revolution, Mr Howard has a plan for an education counter-revolution it seems to me by disinvesting in the system. Climate change and water and on top of that the industrial relations system. Us restoring fairness and balance, Mr Howard maintaining the most extreme system of IR this country’s ever seen.

Now they are part of my plan for the country’s future. I’ve got clear-cut, stated policies in each of those areas and here we are a week into this campaign and I don’t really have any idea where Mr Howard stands, by way of his alternative policies.

JOURNALIST: Mr Rudd, how will you ensure that child care operators don’t simply whack up their fees and make this whole exercise inflationary?

RUDD: Yeah, yeah, we’ve been thinking about all of that as well in terms of how you ensure that this is best done. Part of the answer to that lies on the fact that the out of pocket tax rebate is capped and the cap is there in clear-cut terms, that’s $7,500. Secondly on the supply side you’ve got the measures I referred to before which is additional child care centres and thirdly, the additional supply of the child care workers through the initiatives we’ve got in relation to TAFE and University places.

Finally, in terms of the child care hotline, this is a really important measure. When you ring up the child care hotline at the moment, I’m advised that what they can do is provide you with information about where centres are in your area, but I’m advised there are constraints in terms of the amount of information which can be provided in terms of relative costs per centre. We intend to make that information transparently available to individual consumers when they ring up and families so that they can make that choice. You put all those together, they are the best set of constraints to make sure that, any, benefit is still retained at the end of the day by working families themselves. Two more, then we’ve got to zip.

JOURNALIST: Mr Rudd, how can you explain Labor’s approval of the Gunn work in Tasmania, particularly when the locals who are concerned about tourism there have said that the odour wasn’t even discussed in the inquiry and how safe is the environment in Labor’s hands?

RUDD: Well on the question of Tasmania and the pulp mill, we’ve said right from the very beginning that we would only support a pulp mill in that location if it met world class environmental standards. We actually adhered, ourselves, to the process which was outlined under the various Environmental Impact Statements. When that matter then went to the Chief Scientist for final report, his conclusion was that the project could only proceed if a large number of conditions were met and it was on that basis, and those conditionalities that we expressed our support for that project. Tim, this will be the last one.

JOURNALIST: Mr Rudd where you aware of the case in Brisbane in the electorate of Lilley apparently where a local Council has shut down a political discussion between a Labor Councillor and local constituent and is causing some controversy, I understand, and what concerns do you have on the limits on political discussion of that type.

RUDD: I have concerns about limits on any political discussion, that’s my first point and you’ve heard what I’ve had to say about that this week and secondly, I don’t know any of the details of the matter you’re referring to. I’ll get myself briefed up and I’ll come back to you.

JOURNALIST: Mr Rudd are you pumped for tonight? Are you?

RUDD: Look, I’ve been campaigning all year and this election campaign is not much different to what I’ve been doing all year. Putting out a positive plan for the country’s future. Tonight is one further opportunity to put out a positive plan for the country’s future and I hope Mr Howard elects to remain positive and having said that, I should go back and do some preparation.