THE HON DR ANNE ALY MP

Minister for Early Childhood Education

Minister for Youth

PATRICIA KARVELAS, HOST: Well, we've been covering this morning a very important story. The Productivity Commission is recommending substantial changes to Australia's childcare system, which could make daycare effectively free for those on lower incomes. Four in five families would benefit from a lift in childcare subsidies if the changes were adopted. Anne Aly, the Minister for Early Childhood Education, joins me now from Perth. Welcome back to Breakfast.

MINISTER ANNE ALY: Thank you, Patricia.

KARVELAS: Universal childcare is the stated ambition of the Federal Government, but you didn't get that as your chief recommendation out of this. Instead, it calls for more of the funding to go to the lower end and then not be as universal as perhaps you'd wanted. The Prime Minister has left the door open earlier for going down the Labor road still, how do you see it?

ALY: Look, I think it comes down to what is our definition of universal, and I think that was what we were looking to get out of the Productivity Commission Review, but also what we've been formulating for the last couple of years as we've been going down this pathway. When I say universal, I was qualify to mean, you know, early childhood education that is affordable, that is accessible and that is inclusive. And when I speak with the sector, when I speak with early childhood educators, professionals, academics, there seems to be - we are on the same page and there is an agreement that that's what universal means. I guess the detail that we were looking, the reason why we had the Productivity Commission Review was looking at, how do we chart that path? How do we get there? What does universal mean and how do we get there? That's what the Productivity Commission Review, as you said, has recommended. Free for under 80,000, tapering after that, and free for under 140,000 if you've got two or more children in early childhood education and care. And we'll consider what they've said, we'll consider what their recommendation is, and we'll continue to go through all the recommendations that they have. But I guess it's that vision of universal being affordable, accessible and inclusive.

KARVELAS: That's the real conundrum, right, about how far to go. And that's what you'll be grappling with. I'm well aware that you can't possibly come on the show and give us the ultimate answer, but I suppose, in a broader sense, I'm trying to get an indication about the level of ambition the government has on this and whether the primary recommendation of the Productivity Commission would be the preference or not. Because in the Labor policy, it's quite clearly articulated that this 90 per cent subsidy for all families is the preferred option. Is it still your preference?

ALY: Right. So, let me start with the ambition. And I think the ambition is very clear. The Prime Minister has articulated that ambition several times. The ambition for universal early learning, the ambition for quality, the ambition to actually reform a system and a sector that currently works for some parents and some children but doesn't work for all parents and doesn't work for all children. The 90 per cent was an option and it was an option that we put to the Productivity Commission. The Productivity Commission has also given us an option, a different option of free for low-income earners, tapering after that. Both are options to consider. Both are options that look at the current kind of funding model, which is the childcare subsidy. But since taking on this portfolio, one of the things that I've come to really understand, and very early on understand, is that the early childhood education and care system is such an ecosystem, that where you pull the lever in one area, it has impact on other areas. So, if you increase or decrease the childcare subsidy here, if you tinker with something there, it has impacts on other areas. There really has to be a staged and holistic approach to reform in this sector.

KARVELAS: One of the recommendations, and this appears to be very loud and clear, not just from the Productivity Commission, but beyond, is that you need to get rid of the activity test. You can do that straight away. Why not just do it?

ALY: Several reasons. So, the activity test, as your listeners would know, basically says that if you're not working or if you're not studying, then you're not entitled to the Child Care Subsidy. We relaxed the activity test for First Nations children when we introduced the Cheaper Child Care Bill back in 2022. That's resulted in more First Nations children accessing early childhood education and care and has made a significant difference to Closing the Gap. The recommendation to remove the activity test entirely, however, like I've said in the last answer, when you pull one lever, it has ramifications on other levers. So, when you pull the lever of relaxing or removing the activity test, you also need to consider demand. Right now, one of the issues that we have is we really have to get the workforce, improve the workforce, increase the workforce. That's why we have committed to a 15 per cent pay increase to early childhood educators and teachers. We have to have more early childhood educators and teachers in the workforce. We need more services, and we need more places. There has been a significant improvement in those things since we came into office, particularly with our fee-free TAFE. We've got more early childhood educators coming through the pipeline, but every report and every recommendation also says we need to get the workforce to a level that is needed to ensure that every child has access to early childhood education.

KARVELAS: Thank you so much for joining us this morning, Minister.

ALY: My absolute pleasure, thank you so much, Patricia.

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