The Turnbull government plans to pressure Labor to support its $3bn childcare package, saying that is the next substantial policy package that ought to pass parliament.
Fresh from its compromise deal with Labor on its “omnibus” savings bill last month, which delivered $6.3bn in budget savings over four years, the government has turned its attention to its $3bn childcare package.
The office of the treasurer, Scott Morrison, says the childcare package is a great combination of economic and fiscal outcomes because it will boost productivity and be largely revenue-neutral. The government plans to pay for the childcare spending with $2.8bn in family tax benefit cuts.
Christian Porter, the minister for social services, introduced the legislation to parliament last month as part of his early childhood education and care policy.
He said the package would deliver more affordable and fairer childcare, with targeted support for families on low incomes and for those working the most hours. Vulnerable children would get access to the system through a $1bn childcare safety net.
Part of the package includes abolishing the $7,500 cap for families with incomes of $185,710 or less, so they are not limited by a cap on the amount of childcare they can access. It would increase the cap to $10,000 for families earning more than $185,710.
“Australians know the current childcare system isn’t working for them and is in need of significant reform but we must pay for the additional $3bn we want to invest,” Porter said last month.
Reports on Thursday said the Turnbull government feared the midyear budget update could be a catalyst for Australia losing its AAA credit rating at Standard & Poor’s ratings agency.
S&P put the government on notice in July, saying it would give the government six to 12 months after the election to prove it could get budget savings and spending measures through parliament.
“Whether we maintain our AAA rating or not partly rests on the government’s willingness and ability to enact new budget savings or revenue measures to reduce fiscal deficits materially over the next few years,” the S&P director Craig Michaels said this week.
Jim Chalmers, the shadow minister for finance, said on Thursday there was a “very real prospect” Australia could lose its AAA rating, saying there had been a substantial deterioration in the budget under the Turnbull government’s watch.
He said Labor was up for a serious discussion about budget repair but it would not support the government’s $50bn tax cut plan because that would put the budget in a worse position.
“They should abandon that,” he said. “They should come out today and say they won’t proceed with that ram raid on the budget, with that gift to multinational corporations. That would be a good step.”
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