House of Representatives

Second Reading Speech

Mr Brough (Minister for Families, Community Services and Indigenous Affairs and Minister Assisting the Prime Minister for Indigenous Affairs)

I move:

That this bill be now read a second time.

The primary purpose of this bill is to give effect to the government's two key childcare measures from the 2007 budget. These measures are a substantial part of the extra $2.1 billion investment which focuses on helping Australian families with their childcare costs. The extra investment will take the total projected expenditure in child care over the next four years to $11 billion. Parents will have more choice about participating in the workforce and children will have more opportunities for quality child care.

The first measure provides for a 10 per cent increase in the rate of childcare benefit from 1 July 2007, over and above the normal CPI indexation increase that will also apply from that date. The total increase for families eligible for childcare benefit will be more than 13 per cent of their current rate. Depending on families' incomes, this means up to an extra $20.50 per child per week towards childcare fees.

Over 730,000 families should benefit from the increase, and the Family Assistance Office will adjust families' entitlements automatically. If a family receives childcare benefit as a fee discount, their childcare service will pass the increase on through reduced fees. A family that receives the benefit as a lump sum will get a bigger payment after lodging their 2007-08 tax return.

The second childcare measure in this bill will improve and speed up families' access to the childcare tax rebate by converting it to a direct payment by the Family Assistance Office.

The childcare tax rebate is currently delivered through the tax system as a reduction in a family's tax liability. It allows families to claim up to 30 per cent of their out-of-pocket childcare expenses, up to a value of $4,000 per child per year, also indexed annually. However, to ensure families received an accurate payment, they have had to wait up to two years to claim their rebate through the tax system. In addition, families with low or no tax liability may not have been able to claim their full childcare tax rebate entitlement and in some cases, due to having no tax liability, were not able to benefit at all from this measure.

From 1 July 2007, the rebate will be delivered to families directly by the Family Assistance Office. At the end of each financial year in which the families have incurred the childcare expenses and following lodgement of tax returns, and to all families who are eligible for the childcare tax rebate, regardless of tax liability will receive this assistance.

If a family paid for child care in both the 2005-06 and 2006-07 financial years, they could receive two childcare tax rebate payments after 1 July 2007-one through the tax system and one from the Family Assistance Office, potentially up to $8,000 assistance from the Howard government per child. For 2005-06 childcare costs, families will still need to keep receipts for incurred costs. However, for any childcare costs incurred after 1 July 2006, the Family Assistance Office will pay the childcare tax rebate annually directly into bank accounts after tax returns have been lodged.

The new arrangements will make a big difference to families in managing their childcare expenses.

The final measure in this budget bill is to help young people with disabilities and severe medical conditions, by extending to them the benefits of the health care card. About 25,000 full-time students aged between 16 and 25, who used to be carer allowance (child) care receivers, may now be eligible for a health care card in their own right.

Carer allowance (child) provides a health care card in the name of the young care receiver. However, access to the health care card stops when the young person turns 16 and, unless they qualify for a low income health care card, or they have access to a concession card through their qualification for an income support payment such as disability support pension, they will no longer have a concession card.

This $19.3 million initiative will help students with a disability or medical condition and their families in managing their ongoing medical costs. This, in turn, will help them to continue their education, enhancing the future contributions they can make to the Australian economy in the long term.

The new health care card will be valid for 12 months and young people will need to reapply for it each year, confirming their full-time student status.

Debate (on motion by Mr Edwards) adjourned.