Early childhood

Budget Review 2014–15 Index

Marilyn Harrington and Michael Klapdor

The future of Australian Government support for child care and early childhood education is dependent on the outcomes from reviews of early childhood national partnerships (NPs) and the Productivity Commission’s Inquiry into Child Care and Early Childhood Learning. These are scheduled for completion this year.

The 2014–15 budget measures for early childhood mostly ‘redirect’ funds to meet existing child care commitments and change eligibility criteria of existing programs to achieve savings. The Budget provides funding for only one new program—the reinstatement of the Neighbourhood Model Occasional Care Program.

Early childhood national partnerships

The major NPs are Universal Access to Early Childhood Education and the National Quality Agenda for Early Childhood Education (ECE) and Care.[1] These NPs established the national reform framework for the provision of early childhood education and child care.

Under the NPs, the federal government provides funding to support the implementation of the NPs’ reforms. Since 2009, it has provided $1.6 billion to the states and territories to assist with the implementation of the ECE universal access commitment and $61.3 million for the implementation of the quality agenda for ECE and child care.[2]

Prior to the Budget, there was speculation about the future of the Universal Access initiative in particular, with some states indicating that they may have to cut ECE program hours.[3] While the Budget has not provided further funding for these two NPs, provision has been made in the Contingency Reserve for continued funding, subject to negotiations with the states and territories.[4]

Child care measures

Changed eligibility criteria for the Community Support Programme

The Community Support Programme (CSP) provides funding to child care providers offering services in areas where they might not otherwise be viable, or which meet the unique needs of a particular community.

Under previously announced measures, family day care providers’ eligibility for CSP was tightened for new applicants from 1 April 2014. [5] The same conditions will now apply to existing providers from 1 July 2015.[6] These measures will provide savings of $157.1 million over three years.[7]

The new criteria mean that an applicant for CSP funding is eligible only if they are the sole provider of family day care in an area, and if they can demonstrate there is unmet demand for child care. Similar eligibility restrictions currently apply to long day care and outside school hours care services. An annual cap of $250,000 will apply to operational support funding for CSP family day care providers from 1 July 2015.

The Budget also provides an additional $168.5 million in 2013–14 and 2014–15 to meet existing CSP commitments and a recent increase in demand for funding for family day care services. The Government justifies its CSP savings measures on the basis that ‘this level of additional funding is not sustainable’.[8] Providers have warned that the proposed changes will result in higher fees for parents.[9]

Changes to the Jobs, Education and Training Child Care Fee Assistance (JETCCFA) program

The Budget provides an additional $54.3 million for the JETCCFA program to meet existing commitments and anticipated demand. However, the Budget proposes to cap the funding at $8 per hour of care per child for a maximum 36 hours per week. This measure is expected to save $22.8 million over two years from 2015–16. Additional funding of $12.0 million will be provided to the Department of Human Services to implement the measure. The combined measures result in a net expenditure increase of $43.5 million over the forward estimates.

The JETCCFA program is open to recipients of eligible income support payments, including Newstart Allowance, Youth Allowance (Other), Parenting Payment and Carer Payment. It covers the difference between fees charged by child care providers and assistance covered by Child Care Benefit (CCB), though parents must also contribute a $1 per hour co-payment. JETCCFA is available for child care used while undertaking work, training or study. The $8 hourly cap will apply to the difference between the hourly fee and CCB. This will mainly affect those parents using child care which charges fees in the upper range. However, the 36 hour cap could have a significant impact on those income support recipients whose work and study commitments require them to seek further hours of care.

Neighbourhood Model Occasional Care

The Budget provides $12.6 million over four years to the states and territories to reinstate the Neighbourhood Model Occasional Care (NMOC) program.

The NMOC program supported small non-approved occasional care services that were not eligible to receive funding under the Commonwealth’s other child care programs. Funding for these services was previously shared between the Commonwealth and state and territory governments. The Labor Government defunded the Commonwealth’s share in the 2010–11 Budget because the funding was not tied to service delivery and services were not subject to quality controls or learning outcomes.[10] Approved occasional care services remained eligible for Commonwealth funding under other programs.

Redirected funding

The Budget proposes to shift $39.3 million in funding to the CSP and the JETCCFA program over five years by reducing funding for a number of other child care programs.

The savings primarily affect programs related to workforce development in the child care sector and will provide for temporary boosts in funding for CSP providers and the JETCCFA program.

Child care fee assistance indexation freeze

As part of a broader tightening of eligibility for social security and family assistance benefits, the Government will maintain the current Child Care Benefit (CCB) income test limits and the $7,500 annual limit on Child Care Rebate (CCR) for three years from 1 July 2014.[11] This will result in lower rates of CCB for those whose earnings increase over time and increased child care expenditure for those who reach the CCR limit due to increased fees or hours of child care.

[1].           For further information, see: M Harrington, Universal access to early childhood education: a quick guide, Research paper series, 2013–14, Parliamentary Library, Canberra, 1 May 2014, accessed 20 May 2014.

[2].           Ibid. and COAG, National Partnership Agreement on the National Quality Agenda for Early Childhood Education and Care, COAG, 2009, pp. 13–14, accessed 21 May 2014.

[3].           M Harrington, op. cit.

[4].           Australian Government, Federal financial relations: budget paper no. 3: 2014–15, 2014, pp. 39 and 42, accessed 20 May 2014.

[5].           Department of Education, Community Support Programme (CSP)—additional funding and amended eligibility criteria, Fact sheet, Department of Education, 14 May 2014, accessed 20 May 2014.

[6].           Ibid.

[7].           The budget figures in this article have been taken from the following document unless otherwise sourced: Australian Government, Budget measures: budget paper no. 2: 2014–15, 2014, pp. 81–83, accessed 20 May 2014.

[8].           Department of Education, op. cit.

[9].           M Wade and S Nixon, ‘Parents warned budget cuts will put family day care in danger’, The Sydney Morning Herald, 19 May 2014, accessed 20 May 2014.

[10].         Australian Government, Budget measures: budget paper no. 2: 2010–11, 2010, p. 147, accessed 19 May 2014.

[11].         See the separate article in this Budget Review: ‘Changed indexation of pensions and tightened eligibility for all benefits’.


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