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It's not explicitly stated in the film but the parents told the children that they had another brother who broke the rules and left the house before he was ready. This explains the scene where the brother is talking to the fence about how he washes the car better and where the older sister throws cake over the fence. They think they are helping their absconded brother.
When the brother kills the cat the parents see this as an opportunity to reinforce the children's fear of the outside by making like the cat killed their brother. Edit