Fact check: Did the Abbott Government cut $1 billion from child care?
Child care is shaping up to be a key area of Federal Government reform in coming months, with Social Services Minister Scott Morrison nominating it as a priority.
The Productivity Commission released a report into child care and early childhood learning on February 20, 2015 which said that despite Australian Government funding in this area tripling to almost $7 billion in the past decade, parents are still struggling to find quality and affordable child care.
Opposition Leader Bill Shorten criticised the Government for "savagely" cutting childcare funding.
"When Labor was last in office we put in a lot of extra resources for child care. Tony Abbott and the Liberal National Government in Canberra cut $1 billion from child care," he told reporters on February 17, 2015.
Has the Government cut $1 billion from child care? ABC Fact Check investigates.
What is the basis of Labor's claim?
Mr Shorten's office referred Fact Check to the office of Opposition spokeswoman for early childhood Kate Ellis, who provided a list of budget cuts Labor says the Coalition Government has made.
They fall into three broad categories - extra childcare places, fee assistance for parents, and career development for childcare workers.
Fact Check looked at each of these programs.
Extra childcare places
Outside school hours care:* The largest cut Labor claims the Government has made is taking $450 million from the Outside School Hours Care program.
This policy was announced by the then prime minister Kevin Rudd on August 5, 2013, the day after he named September 7 as the date for the 2013 election.
The pre-election economic and fiscal outlook, released on August 13, 2013 showed that Labor had included funding for this policy as part of a measure called "Building Stronger Communities" that was allocated $475 million over four years in the economic statement released on August 2, 2013.
The measure was not identified in the August 2 economic statement, but the pre-election document said the funding had been included as a "decision taken but not yet announced".
The new Coalition Government's mid-year economic and fiscal outlook released four months later showed it had redirected the money allocated for "Building Stronger Communities" away from child care into schools funding.
Family day care:* The Government announced in the 2014-15 budget released in May 2014 that it would tighten the criteria for providers who care for children in their own homes from July 2015 (and for new providers from 2014).
The new rules mean family day care providers must be the only service in their local area and the Government expects to save $157 million over three years as a result of this change. But the budget also included an extra $169 million to meet existing commitments until June 2015.
The Government also allocated $13 million to reinstate the Neighbourhood Model Occasional Care for emergency or late-notice situations.
Indigenous children and family centres:* Labor also claimed that the Government had cancelled funding to all Indigenous Children and Family Centres, totalling $78 million per year. The 2014-15 budget papers show that $78 million was allocated to these centres in 2013-14 but no funds have been allocated for future years.
The program, a Council of Australian Governments initiative to Close the Gap in Indigenous Disadvantage, was part of a national partnership agreement that expired in June 2014.
A 2013 report by the Australian National Audit Office described the agreement as "the first stage of a multi stage reform program". The report noted that the funding of the centres beyond the expiry of the agreement could be achieved by children and family centre operators accessing existing childcare program funding, but warned that not all centres are eligible for this funding.
Labor's budgets did not include any funding for this measure beyond 2013-14.
Fee assistance for parents
The Government provides fee assistance to parents in the form of the childcare rebate (CCR) and the childcare benefit (CCB).
Childcare rebate:* The childcare rebate is paid to all parents with children in approved child care and covers 50 per cent of out-of-pocket expenses up to a maximum of $7,500 per child per year.
The CCR was normally indexed at the start of each financial year in line with the consumer price index, but Labor froze it in 2011 at $7,500 per year until July 1, 2014.
The Labor Government proposed to freeze the CCR limit indexation for a further three years in the 2013-14 budget and this measure was opposed by the Coalition while in opposition. But when it came to office, the Abbott Government proposed a three-year freeze on the CCR limit indexation.
In introducing the change in the Family Assistance Legislation Amendment (Child Care Measures) Bill 2014, the Government estimated that the freeze would deliver net savings of $106 million over three years.
This change to the CCR was legislated and will deliver these savings for the Government.
Childcare benefit:* The childcare benefit was introduced in 2000 and gives low and middle income parents fee relief in the form of payments to approved childcare services, or a lump sum, and is income-tested.
The maximum amount is paid to families with taxable incomes under $41,902, with an upper income threshold of $97,632 for families with more than one child.
The income test thresholds are indexed to the consumer price index and calculated at the start of each financial year. The thresholds have never yet been frozen.
The Abbott Government also proposed that the CCB income test thresholds be frozen for three years in the 2014-15 budget and the change was included in the same bill that legislated the CCR freeze. However, Labor refused to pass the measure and the Government promised to reintroduce it in a separate bill, which is now before the House of Representatives.
The Government estimated that freezing the CCB income threshold would save $230 million over three years but this measure is yet to be legislated.
Fact Check has previously considered the distinction between budget savings and budget cuts.
The education portfolio statement in the 2014-15 budget shows that combined spending on the CCR and the CCB is expected to increase from $6.3 billion in 2014-15 to $8 billion in 2017-18 as the number of eligible families rises.
The freezes on indexation will deliver savings for the Government, but cannot be considered cuts because overall spending on these measures will continue to increase.
While the freeze represents less money per family in real terms (taking inflation into account), Mr Shorten made his claim in the context of the Government's overall childcare budget.
Career development for childcare workers
The Government announced a range of funding cuts in the 2014-15 budget that affected programs designed to help staff increase their skills. These programs are designed to address the shortage of childcare workers in Australia, and changes to the level of skills now required under the National Quality Framework for child care introduced in 2012.
Staff career development:* The 2014-15 budget papers show cuts to career development programs totalling $39 million.
These included a $12 million cut from the Inclusion and Professional Support Program, which educates carers and provides extra care for disadvantaged children, and $3.7 million over three years by suspending funding for professional development of staff in Budget Based Funded childcare services, which operate predominantly in regional, remote and Indigenous communities.
However, the Government redirected the $39 million - most to the Jobs, Education and Training Child Care Fee Assistance, which provides childcare fee assistance to parents undertaking education, and the rest to the Community Support Programme, which supports family day care, with net additional funding of $4 million.
TAFE fee waivers:* Labor also said the Government had cut $17 million from child care by removing the TAFE fee waiver for childcare study. An agreement to waive TAFE fees and for the Commonwealth to reimburse the States, was made by the Commonwealth and the States and Territories on January 1, 2010, and expired on December 31, 2014.
Labor has based this estimate on the amount allocated in its last budget for TAFE waivers in 2013-14.
The 2014-15 budget papers show that $21 million was spent in 2013-14 and $12 million was allocated in 2014-15, to cover the last six months of the agreement in 2014.
Labor's budgets did not include any funding for this measure beyond December 2014.
HECS-HELP benefit:* The Higher Education Contribution Scheme and Higher Education Loan Program (HECS-HELP) benefit provided incentives for graduates of particular courses to take up related occupations or work in specified locations, by reducing their HELP payments.
But the program includes those studying maths, statistics or science; education, nursing or midwifery; and early childhood education, so only a portion of the $87 million saved from this program applies to childcare graduates.
The budget said the program had been cut because there was little evidence it had addressed skills shortages.
Overall effect on childcare funding
The list of cuts to childcare provided to Fact Check by the ALP fall into three categories:
Cuts that Labor is entitled to claim the Government has made.
Cuts that are better described as budget savings.
Cuts that Labor cannot fairly claim against the Government because the spending was subject to agreements with state and territory governments that were due to expire.
In addition, the Government has also provided extra funding to child care.
This table summarises the status of cuts to childcare programs:
The verdict
While Labor did provide a list of cuts to child care that totalled $1.164 billion, the list includes $336 million in programs where overall spending is increasing and $95 million in programs due to expire.
In addition, some of the money has been redirected into other childcare programs and Labor has ignored new funding that has been announced by the Government.
Mr Shorten's claim that the Government has cut $1 billion from childcare funding is overreach.
Source
Productivity Commission, Childcare and early childhood learning inquiry report, February 20, 2015
Bill Shorten, transcript of media conference, February 20, 2015
Kevin Rudd, Better schools: before and after, press release, August 5, 2013
Pre-economic and Fiscal Outlook 2013
Mid-Year Economic and Fiscal Outlook 2013-14
Budget 2014-15, budget paper No. 2
Budget 2014-15, budget paper No. 3
Auditor-General's report, May 23, 2013
Child Care Rebate, Department of Human Services230
Child Care Benefit, Department of Human Services
Family Assistance Legislation Amendment (Child Care Measures) Bill 2014 Bills Digest, June 18, 2014
Family Assistance Legislation Amendment (Child Care Measures) Bill 2014, explanatory memorandum
Family Assistance Legislation Amendment (Child Care Measures) Bill 2014
Family Assistance Legislation Amendment (Child Care Measures) Bill (No.2) 2014
Inclusion and professional support program, Education Department
Budget Based Funded Programme
Kate Ellis press release, June 21, 2013
Budget 2014-15, budget paper No. 3, part 2
National Parnership Agreement on TAFE waiver fees for childcare qualifications, December 2009
HECS-HELP benefit
Pre-election economic and fiscal outlook 2013
Education portfolio budget statements 2014-15
