Chapter 2Key issues
2.1The benefits of early childhood education and care (ECEC) are well established. As noted by Per Capita, three decades of research has shown that the early years are a crucial to building a foundation for future success:
Children who have attended early childhood education experience benefits later in life. For example, a longer duration in preschool is linked to enhanced intellectual development, as well as improved independence, concentration, and sociability; and improved literacy and numeracy from receiving quality early years education directly leads to improved educational achievement later in life, resulting in higher lifetime earnings.
2.2Per Capita also highlighted the broader societal benefits created by ECEC, including a stronger economy, and higher tax revenue as a result of parents who are able to work more and the higher lifetime earnings of their children. In addition, ECEC reduces public expenditure by lowering rates of school repetition, and lessening pressure on the health and criminal justice systems.
2.3Similar views were expressed by other participants such as Goodstart Early Learning (Goodstart), KU Children's Services (KU), The Parenthood, and the Early Learning and Care Council of Australia (ELACCA).
2.4Despite the value of ECEC to Australian society, various submitters noted that its workforce remains 'undervalued and underpaid'. According to KU, the historical undervaluing of the ECEC workforce is based on 'assumptions based on gender and a lack of community awareness and value for the training and sophisticated skills needed to satisfy requirements of the National Quality Framework and the Early Years Learning Framework'.
2.5Multiple participants also highlighted the workforce shortages facing the ECEC sector, with a significant increase in workforce levels needed to meet current and future demand. Community Child Care (CCC) and Community Early Learning Australia (CELA) described workforce shortages as 'the number one issue for the sector', while the United Workers Union (UWU) described the sector as being in 'crisis', with 'as many as 30–48 per cent of educators' leaving the sector each year.
2.6According to Jobs and Skills Australia's (JSA's) The Future of the Early Childhood Education Profession:Early Childhood Education and Care Workforce Capacity Study (Workforce Capacity Study), the current workforce would need to grow by eightpercent to meet current unmet demand for ECEC services and another eightpercent to meet unmet demand for qualified workers to ensure workers do not work overtime, and have two days a year set aside for professional development.
2.7However, the demand for ECEC workers is not evenly spread across Australia. The JSA Workforce Capacity Study found that vacancy rates for child carers and early childhood teachers have been consistently higher in capital cities than in regional and remote Australia. However, there are also differences by state, with both capital city and regional areas in Western Australia and Queensland featuring in the regions with the highest vacancy rates, alongside regional Victorian areas.
2.8As noted by Goodstart, these workforce shortages affect the accessibility, cost, viability and quality of ECEC services. This was also reflected in the JSA Capacity Study, which found that the shortages create workload stress for existing staff and increase services' reliance on trainees, which 'impacts the quality and amount of contact time that can be provided by the trainees and the experienced staff supervising them'.
2.9Other participants concurred, including UWU, which stated that excessive workloads are compromising care, with the 'staggering number' of staffing waivers currently in place 'putting the safety of children and educators at risk and indeed risking compliance with the long-fought for National Quality Standards (NQS) which are internationally recognised as a world-class part of Australia's early learning system'.
2.10According to JSA's Workforce Capacity Study, low wages act as both a disincentive to entry as well as a reason for attrition.
2.11Many submitters also linked workforce shortages with low wages in the sector. For example, Goodstart cited the findings of multiple reviews which found that 'low wages are a major driver of workforce shortages' and pointed to the pay disparity between similarly qualified educators in the ECEC and school sectors:
ECEC professionals are paid well below their similarly qualified counterparts in the school system. For example a Certificate III qualified educator would be paid an award rate of $49,095 in the ECEC sector, but up to $65,406 if employed in the government school system. For teachers this gap is more pronounced – teachers in the ECEC sector receive an award rate of $90,283 but up to $122,100 in the government school system.
2.12The Isolated Children's Parents' Association of Australia (ICPA) argued that this wage disparity can be even greater in some rural and remote areas, with educators in the school sector eligible for a number of allowances and benefits not available to educators in ECEC settings.
2.13As noted by the Ms Jo Briskey of UWU, the chronic undervaluing of the ECEC workforce and low wages in the sector work mean that early educators simply cannot afford to stay in the sector:
… early education should be seen as a vocation, a profession that attracts individuals who want and are able to build a long career. Due to the sustained undervaluation of this profession, largely because it is work undertaken predominantly by women, it has long attracted low wages, forcing educators to leave due to stress and lack of respect. With the increased cost of living, many now simply cannot afford to stay.
2.14A similar sentiment was expressed by Ms Elizabeth Death of ELACCA, who told the committee that the sector would:
… like to reframe the narrative for early childhood as the profession that it is: a wonderful place to work and a wonderful career. But, unfortunately, we're losing people because they can't afford to stay in the sector.
2.15In response to workforce challenges in the ECEC sector, the bill would establish a special account to fund grants that support wage increases for ECEC workers. As stated by the Hon Jason Clare MP, Minister for Education, the bill would provide a 15 per cent pay rise for up to 200 000 ECEC workers, thereby encouraging more people to enter the ECEC sector and remain there.
2.16This reflects the findings of the Productivity Commission, which found that resolving ongoing workforce issues will be central to any ECEC reforms and that 'higher remuneration and better conditions are likely to lower attrition rates and attract more staff to the sector'.
2.17As acknowledged by multiple submitters, the bill would also represent the next step in delivering on the Australian Government's commitment to building a universal early education system, which will not be possible 'unless significant and persistent ECEC workforce shortages are addressed'.
General views on the bill
2.18There was broad support for the objectives of the bill and its delivery of an 'historic' 15 per cent wage increase for ECEC workers. For example, the Y in Australia (the Y) highlighted its prior advocacy for action to address low wages in the sector and stated it was 'delighted with the Government's 15 per cent wage announcement'.
2.19While continuing to advocate for a higher wage increase, a number of participants, such as Early Childhood Australia (ECA) and the Australian Education Union described the 15 per cent rise as a good start.
2.20Similarly, the UWU called it 'an important step in the Federal Government's reform of the sector' and stressed that this reform 'could not come soon enough given the extent to which the sector is in crisis'.
2.21The Parenthood celebrated the bill as 'historic in addressing the persistent challenges facing the ECEC workforce' and a fundamental step towards recognition and fair remuneration for ECEC workers:
The legislation makes progress in remedying the historic wage injustice experienced by this female-dominated employment sector. We believe it is a fundamental step towards ensuring ECEC professionals are recognised and fairly remunerated for the invaluable role they play in families and children's lives, and in the communities they serve.
2.22Participants such as the Minderoo Foundation (Minderoo), CCC and CELA, and The Parenthood contended that the wage increase would attract and retain workers, including those who had previously left the sector. As noted by the Hon Jay Weatherill AO of Minderoo:
That's why we strongly support the bill. It's an investment in the quality of the workforce, ensuring longevity and ensuring that those workers remain in those roles consistently. That's how they acquire skills and capability and how they form relationships with families within these communities.
This is a really important foundation for the broader ambitions we have, which are to create an early childhood development system and the framework—or the arrowhead, if you like—for that broader reform of the early childhood education and care system …
2.23In support of this view, ELACCA and Goodstart highlighted the success of the wage increase for aged care workers in addressing workforce issues:
We are confident that this wage increase will attract workers to the sector, including those who have left to come back to the sector, just as we saw in aged care – the announcement by the Fair Work Commission of a 15 per cent wage increase in November 2022 for aged and disability carers was followed by a fall in vacancies in this sector of 13.3 per cent.
2.24The Front Project noted the importance of a strong ECEC workforce to both quality early learning and future ECEC reform:
The Front Project is highly supportive of wage increases for [ECEC] workers, recognising that improved wages and conditions are crucial for addressing the sector's immediate challenges related to workforce attraction and retention.
Higher wages help ensure that quality educators remain in the field, fostering strong, lasting relationships with children, which are essential for early development.
Attraction and retention of the early childhood workforce will also be crucial to delivering future reforms as mapped out by the Productivity Commission's inquiry into ECEC, with the workforce the cornerstone of delivering a universal system.
2.25This view was reinforced by Mrs Chathuri Mawanahanewa, a centre director and UWU workplace delegate:
The recent wage increase for early childhood educators is crucial. What I hear and see from my staff is that they are both mentally and physically exhausted. The challenges in our sector are increasing, and inflation is making it harder for educators to make ends meet. Research shows a significant rise in developmental delays among young children in Australia, adding to the pressure on our workforce. While the demand of early childhood educators continues to rise, the sector struggles with retention, as many leave due to the emotional and physical toll, seeking better paying jobs with less stress. Attracting and retaining skilled workers is essential, and fair wages play a huge part in that.
2.26A number of submitters, including The Front Project, the IEU, Goodstart, CCC and CELA, Minderoo, Per Capita and The Parenthood were also supportive of the bill's intent to prevent families from being subjected to higher fees at a time when many are experiencing cost of living pressures.
2.27While supportive of the wage increase, some witnesses expressed a desire for more information in relation to about the formula that would be used to calculate grant funding.
2.28Other participants questioned aspects of the grant program's implementation, in particular the short-term nature of the funding, the operation of the fee-growth cap, and the requirement for services to have compliant workplace agreements in place.
2.29In line with this, some participants such as ECA and P&Cs Queensland advocated for ongoing consultation to support implementation of the grant program, while Per Capita, Minderoo and The Parenthood suggested that the bill be amended to require evaluation of the impact of the legislation.
2.30To this end, the Department of Education (department) noted it was working closely with the sector to provide additional assurance about the funding to be provided under the grants:
We're working very closely with the sector and the peaks, and, where people do have questions and need additional assurance, we're able to run cameos for them. Those cameos have been a really useful exercise to provide assurance that the vast majority of the sector will receive sufficient funding to cover the wage increase plus the on costs. Where the cameos are providing that that's not the case, we're working actively with those services.
2.31Reflecting this, some participants, such as the Outside School Hours Council of Australia (OSHCA) and ECA highlighted their positive engagement with the government to date regarding implementation of the grant program.
2.32In addition, the need to monitor implementation has been reflected in the Early Childhood Education and Care Worker Retention Payment Grant Opportunity Guidelines (grant guidelines), which state that the department will evaluate the program to understand how the grant affected services and how effective it was in achieving its outcomes.
2.33While they provided comments on various aspects of the bill, multiple submitters, including the UWU, still encouraged Parliament to pass the bill. For example, Uniting NSW.ACT stated that Parliament should 'pass it promptly'. Similarly, CCC and CELA argued that following this inquiry, the bill 'should be passed in its entirety at the earliest sitting week … to ensure that the fund is legislated in time for the first instalment of the wage increase' in December 2024.
2.34In addition, while urging the Government to provide the sector with further details on the implementation of the grant program, the Australian Childcare Alliance (ACA) supported passage of the bill.
2.35In a similar vein, ECA argued for 'swift carriage' of the bill to allow operational matters to be clarified. ECA also expressed hope that 'bipartisan support is received for the bill and ongoing commitment to funded and appropriately indexed wage increases for the early childhood workforce'.
2.36Bipartisan support for the bill was also urged by Big Fat Smile:
Big Fat Smile urges all sides of Parliament to back this important reform and work towards the next critical step of securing ongoing support to increase wages for ECEC professionals, recognising the vital role of the ECEC workforce in supporting families and children, and ultimately contributing to the nation's economic productivity.
Comments on specific aspects of the bill
2.37While participants provided feedback on various aspects of the bill, commentary focused primarily on:
the two-year grant funding period;
operation of the fee growth cap; and
the requirement for compliant workplace agreements.
Two-year grant funding
2.38While supportive of the wage increase, some participants queried the proposed two-year grant funding period. For example, while the Front Project called the interim payment 'a sensible approach' in light of the FWC's gender undervaluation review, it stressed that any award-based increases need 'to be funded in a way that addresses workforce issues, maintains service viability and ensures affordable access for families'.
2.39Per Capita acknowledged the rationale behind the two-year grant period but suggested that uncertainty over longer-term funding arrangements could reduce the number of providers opting in to the grant program. Likewise, the ICPA stated that the 'short-term grant based interim measure does not instil confidence in the sector that there is a solid and valued future in this industry'. Similar views were expressed by G8 Education Limited (G8) and Uniting NSW.ACT.
2.40In a similar vein, the AEU questioned whether a two-year funding period would help to secure employment and wage rates and suggested that it may not be enough to 'encourage providers to engage in collective and good faith bargaining for an enterprise agreement of a longer duration'.
2.41Further, the Business Council of Australia contended that the two-year funding period may pose a commercial risk if providers enter into enterprise agreements that lock in wage increases beyond the funding window.
2.42To this end, ELACCA proposed removal of the sunset clause and urged the Australian Government to provide 'an ongoing commitment to invest in wages' for the ECEC workforce. Similarly, Big Fat Smile highlighted the importance of a 'long-term funding mechanism … to sustain and improve pay and conditions for the ECEC workforce beyond 2028'.
2.43While ECA understood the need for the interim funding program, it underscored the need for sustained investment to ensure the long-term sustainability of the wage increase. For G8, an ongoing commitment to invest in wages would 'provide much needed certainty' and enable it to 'confidently plan beyond the next two years'.
2.44The ICPA also stressed the importance of long-term solutions to addressing pay parity between ECEC educators and school-based educators in rural and remote locations. The issue of pay parity with the school sector was also raised by ELACCA.
2.45In addition, SNAICC noted that the grant program is only open to providers that are approved for the Child Care Subsidy (CCS) and deliver Centre Based Day Care or Outside School Hours Care. It asked that consideration be given to expanding eligibility for the grant program to Aboriginal and Torres Strait Islander Community Controlled Organisations (ACCO) preschools to 'ensure that Aboriginal and Torres Strait Islander ECEC workers and organisations have the opportunity to achieve wage equity through the grant'.
2.46Concerns about the exclusion of ECEC workers in state and territory funded preschool and kindergarten services was also raised by KU, which employs staff in both state-funded and Commonwealth Child Care Subsidy approved services.
2.47To this end, the Explanatory Memorandum explains that the Government will be considering longer-term funding arrangements for the sector as part of its response to the ACCC and PC reports.
2.48In addition, the Explanatory Memorandum notes that the sunset provision in the bill provides time for the Parliament to consider an amendment to the 30June 2028 end date 'should this be the intention at a later point in time'.
2.49The commitment to longer-term funding reform was acknowledged by Goodstart, which expressed its support for the proposed process:
Goodstart commends this historic investment and stands ready to support the Government to make ongoing support for wage increases in the ECEC sector a central part of its response to the PC Final report, ACCC Child Care Inquiry Final Report, and JSA Capacity Study.
Fee growth cap
2.50As described previously, there was support for the fee growth cap, which is designed to limit fee increases for families. For example, The Front Project stated that the cap would prevent the wage increase from burdening families 'especially as cost-of-living pressures are felt by many in the community and true universal access should mean cost is no barrier to access'.
2.51The effect of the fee cap in limiting fee increases was also seen as contributing to the goal of achieving economic equality for women:
In particular, it means that mothers, who still face the biggest barrier of going back to work with young children or in having more hours when they would like them, which is childcare costs, are able to participate more in the workforce in the way that they would like to.
As it is, this measure is a really big step towards the goals of achieving economic equality for women. What the cap does is expands the cohort of women who may be able to benefit from that. It goes [past] just women who work in early child care and education to women that work in all different industries, and they are now able to both pay for child care and return to the workforce in the way that they would like to.
2.52The Parenthood concurred and described the wage cap as appropriate and informed by ACCC analysis:
We believe the funding of this grant being dependent on providers not increasing fees above the 4.4% cap is appropriate. This wage increase needs to land directly in the pockets of early educators and a reasonable fee cap, informed by the ACCC's analysis of increases in labour costs higher than CPI, represents an efficient and effective investment to that end.
2.53The rigour of the fee cap was also highlighted by Mrs Myra Geddes of Goodstart:
The fee cap of 4.4 per cent was informed by the really rigorous work done by the ACCC, which demonstrated that the core costs in early childhood education and care—the first being our staffing costs and the second-largest costs being our property costs—had both been increasing significantly above inflation. So, from our perspective, we recognise that a cap and a limit are a reasonable approach.
2.54In addition, both The Parenthood and Minderoo supported the measure as a form of price cap, which is a central part of supply-side funding models, which both organisations advocate for as part of ECEC sector reforms.
2.55Other submitters such as KU, suggested that the fee growth cap may not be sufficient to cover rising overheads, including the cost of leases, insurances and previous wage increases.
2.56However, Dr Caroline Croser-Barlow of The Front Project suggested that the fee cap would be less likely to be an issue as long as the full cost of the pay increase was covered—given wage costs represent 60 to 70 per cent of services' costs.
2.57This sentiment was echoed in evidence from the department, which noted that the 4.4 per cent cap 'reflects a 70 per cent wage cost index and the 30 per cent general CPI figure' that is 'intended to really show that, in this particular sector, wages have a much bigger proportion of costs'.
2.58Further, the department noted the index being calculated by the Australian Bureau of Statistics (which would underpin the fee cap in year two), would reflect a weighted range of the costs borne by services, including rent, property, general costs, utilities, labour, and other costs. It expected a paper on the calculation of the index to be published in November this year.
2.59Although not averse to the fee cap, submitters such as ECA and ACA highlighted the importance of knowing the cap for the second year of grant funding as soon as possible, while others such as Gowrie SA noted the importance of flexibility in application of the cap in recognition of different service models within the ECEC sector.
2.60To this end, CCC and CELA, while supportive of the objective of the fee growth cap, proposed that it be 'based on the relevant hourly rate cap, rather than an overall figure, to ensure this does not become a barrier to smaller low fee providers', particularly 'small, regional and community managed services'. Gowrie SA suggested that 'a fee cap range' may be an appropriate way to balance flexibility for services and affordability for families.
2.61In a similar vein, Mr Tim Watts of the Early Learning Association of Australia, who suggested that the fee cap be re-envisaged as a maximum hourly fee for parents. According to Mr Watts, this would better support the community-managed, not-for-profit sector, which has been 'desperately trying to keep their fees for parents down over recent years'.
2.62The OSHCA raised particular concerns about the impact on the outside school hours care (OSHC) sector given its lower net margins—compared to the long day care sector—lower flexibility in price setting and greater revenue volatility. While acknowledging the department's work in this regard, it also urged consideration of a specific price index for the OSHC sector that recognised its 'distinct operating conditions'.
2.63However, as explained on the department's website, provision has been made in the grant guidelines for providers to request an alternative fee growth cap, where providers can show that the standard fee growth cap would seriously impact their financial viability. Where this is the case, the department is able to apply a less restrictive fee growth cap. Ms Michele Arcaro of the department's Evidence and Reforms Division explained:
We want to make sure that families are not going to be facing higher fees than they need to, but there is a process there to ensure those providers who haven't increased for a number of years and potentially may need to now at a rate higher than that 4.4 have a mechanism to come to the department, explain the rationale or the evidence behind why that increase is necessary, and then we'll consider whether that 4.4 per cent is the right number or whether it needs to be adjusted for that particular service.
2.64Further, according to the grant guidelines, there is also the ability for the alternative fee growth cap process to 'be streamlined should there be a sector-wide event impacting viability for a large number of services'.
2.65To this end, the Y, which supported the goal of the fee cap, explained that the application of the alternative cap will be critical to the viability of services and the affordability and accessibility of ECEC—particularly in the OSHC sector, where schools are the 'key price setters' for services:
Fee cap exemptions will also need to factor in systemic issues in the OSHC sector. Schools are the key price setters for OSHC services. The ACCC recently found that OSHC delivery is generally governed by licence agreements, that sets out the "fees paid to the school for the use of their premises, fees charged to parents, the length of the agreement and renewal options".
The ACCC also observed that "most agreements are for a period of 2 to 5 years" locking in OSHC providers to fee increases set by schools in licence agreements. Fee cap exemptions will need to recognise fee increases in pre-existing licence agreements.
2.66The alternative cap provision was also supported by SNAICC, which underscored its importance to the sustainability of some ACCO ECEC services, which generally charge much lower fees than mainstream services:
In the event an ACCO ECEC service increased their fees by more than 4.4%, the cost to the family would still be considerably lower than mainstream service rates. The inability to raise fees beyond the cap leaves ACCO ECEC services at risk of limiting the support and care they are able to provide to their community. This example is exacerbated in regional and remote areas where the cost of living and service expenditure is higher.
SNAICC is supportive of the proposed approach from the Australian Government to allow for providers to request an alternative fee growth cap if the standard restriction on fee growth would seriously impact the financial viability of the service. Without this exemption, there is a risk to the viability of ACCO ECEC services.
2.67Overall, Goodstart noted the sound basis for the proposed fee growth cap in the first year and stated that the cap was an appropriate condition of government funding. It also argued that the government's approach would ensure that providers who had already prioritised workforce investments would not be disadvantaged:
This Bill and the approach by Government … strikes the right balance between directing Government investment to improved pay … with a reasonable expectation on … 'capping' fee growth while services are in receipt of this funding. … We are supportive of the constraint on service fee increases in the period as a condition of receiving this significant funding from Government. We also recognise the fee increase limits were informed by the analysis of increases in labour costs which were identified as being higher than CPI by the ACCC. The approach adopted by Government also ensures that investments in above award pay and conditions made by providers like Goodstart to date are retained. This approach is essential to ensure providers that have prioritised investments in their workforce in the past are not disadvantaged.
Compliant workplace agreements
2.68There was significant commentary about grant payments being conditional on providers engaging workers under a legally enforceable workplace agreement that includes an obligation to pay workers at or above the relevant minimum rates set out in grant guidelines.
2.69According to the department, this condition would provide assurance that the grant funding is being used to increase wages. It would also encourage good faith bargaining and complement workplace relations reforms under the Fair Work Legislation Amendment (Secure Jobs, Better Pay) Act 2022, whichamended the Fair Work Act 2009 to introduce a supported bargaining stream to provide greater access to bargaining for lower-paid sectors or the workforce.
2.70This view was also reflected in evidence from Ms Sarah McKenzie of Per Capita:
Historically, small businesses, part-time workers and workers in feminised sectors have all had really limited access to bargaining. ECEC fits into all of these categories. Changes to the Fair Work Act in 2022 have created a pathway for this cohort. The workplace instrument eligibility requirement, in our opinion, ensures not only that public money actually reaches the workers that it's aimed at but that it will help this workforce that has traditionally depended on awards enter into workplace agreements, which benefits both employers and employees.
2.71A number of participants pointed to the importance of the supported bargaining stream to achieving wage increases in the ECEC sector. For example, CCC and CELA noted 'the important role that multi-employer bargaining has played in this process and will continue to play for the life of this bill'.
2.72A similar view was expressed by the IEU, which argued that it was the introduction of the supported bargaining model that would enable delivery of the 15 per cent pay rise:
It is the supported bargaining model that will deliver the 2024 government funded remuneration increase of 15% to ECEC workers. Teachers and educators in the female dominated ECEC sector were, until the 2023 industrial relations reforms, denied the possibility of wage justice due to major difficulties in accessing collective bargaining. The special stream of bargaining for multi-enterprise agreements available to low-paid workers is essential if the federal government is to achieve its objective of universal ECEC, and if it is to make further progress in closing the gender pay gap and delivering wage justice for ECEC workers.
2.73To ensure providers can meet this requirement, ECA advocated for support to help providers decide on, and enter into, compliant workplace agreements.
2.74In a similar vein, SNAICC explained the difficulties facing regional and remote services, which may lack access to support and advice regarding workplace instruments and for whom language may present an additional barrier. SNAICC argued that ACCO services would require tailored support and proposed that discrete funding be provided 'to ensure appropriate support can be provided to the ACCO ECEC sector to fulfil the eligibility requirements of the grant'.
2.75In response, the department indicated it was working with SNAICC around the specific requirements of the ACCO sector to 'make sure that sector can participate in the grant itself and then does receive the adequate level of funding'.
2.76Some participants questioned whether enterprise agreements are appropriate for all providers, particularly those with small numbers of staff. For example, while the BCA expressed support for workplace-level enterprise bargaining and multi-employer agreements, it argued that providers should decide the employment model most appropriate for their business:
It should be the decision of the ECEC provider as to what is the most appropriate employment model for their own business and employees. The complex and time-consuming process of bargaining and agreement making may not always be appropriate. In some instances, individual employment agreements are likely to be both compliant with the Fair Work Act 2009 (Cth) and appropriate to the businesses' context.
2.77Similarly, SNAICC contended that the requirement 'prevents ECEC workers and services from determining whether a workplace instrument is wanted or beneficial to their individual circumstances'.
2.78Other submitters, such as the Y, asserted the government's right to 'encourage bargaining through policy delivery in support [of] ECEC services'. However, it encouraged close monitoring of the sector's transition to compliant workplace agreements—both in terms of timeliness and cost—and proposed that other options be made available if the 'sought after outcomes' are not delivered.
2.79While it was accepted that the cost of agreement-making could be a barrier for services, CCC and CELA explained that multi-employer bargaining enables small services 'to pool resources to reduce the overall costs of making workplace agreements'. Further, as bargaining representatives in negotiations for the national long day care multi-employer agreement, CCC and CELA described the process as 'positive and collaborative between all the parties' and noted that:
Addressing workforce shortages and improving the recognition and value of the ECEC sector is a shared objective across both employers and unions.
2.80This was also reflected in evidence from G8, which stated that it had 'entered voluntarily into the first supported Multi-Employer Bargaining process with other likeminded ECEC employers and Unions'.
2.81Further, while the Y noted that only some centre-based day care providers are a party to the above-mentioned agreement (and that the agreement does not cover OSHC services), it remains open to other providers to 'seek to be joined, or "roped in" to the agreement in the future'.
2.82In addition, as noted by submitters such as KU, compliant workplace agreements are not limited to enterprise agreements but can also include individual flexibility agreements (IFAs). The inclusion of IFAs was welcomed by OSHCA, which indicated that this would allow the OSHC sector to enrol its educators 'as quickly as possible so that they can immediately benefit from the pay rise from this December'.
Committee view
2.83Accessible, affordable and high-quality early childhood education lays the foundations for our children's success later in life. It also contributes significantly to the social and economic fabric of Australian society by reducing the impact of inequality and intergenerational disadvantage and by supporting parents' workforce participation—particularly for women.
2.84The Labor Government's Cheaper Child Care policy has already delivered cost of living relief for more than one million families by reducing out of pocket costs for child care. Indeed, following introduction of the policy, average out of pocket costs decreased by more than 13 per cent between the June 2023 and June 2024 quarters.
2.85Nonetheless, the committee recognises that continued delivery of accessible, affordable and quality early education and care (ECEC) also depends on a strong, stable and experienced workforce. Attracting and retaining skilled ECEC workers will also be crucial to realising the Australian Government's vision for universal ECEC.
2.86Currently, however, Australia faces a shortage of ECEC workers, with high rates of staff burnout and turnover in the sector, unfillable job vacancies and long wait lists. While there are now 860 more early education services and around 30000 more early educators working in the sector than when the Labor Government was first elected, Jobs and Skills Australia estimates that Australia faces an existing shortfall of approximately 21 000 workers, with even more required to meet future demand.
2.87Inquiry participants underscored the urgency of addressing these workforce shortages. Community Child Care and Community Early Learning Australia described workforce shortages as the 'number one issue restricting accessibility for families', while Goodstart Early Learning suggested that each unfilled educator role can impact up to 15 families per week.
2.88To restore Australia's ECEC workforce, existing early educators need to feel that their work is valued, respected and fairly remunerated. Australia also need to attract more workers into the sector by ensuring people see ECEC as a rewarding and long-term career option.
2.89The impact of low wages and high vacancy rates on the workload and safety of existing ECEC staff cannot be underestimated. As reported by the United Workers' Union, 84 per cent of educators surveyed in a snap poll earlier this year said staff had left their centre in the last year as a result of burnout. As one worker stated, 'I am tired of being taken advantage of, being underpaid, overworked and undervalued'.
2.90Unsurprisingly, the committee heard widespread support for delivery of the 15 per cent wage increase for up to 200 000 educators. Once passed, this bill will see a typical early educator paid at the award rate receive a pay rise of at least $103 per week from December this year. From next year, this will increase to at least $155 per week. For a typical early childhood teacher, the pay increase will result in an additional $166 per week from December this year, increasing to an $249 next year.
2.91To this end, the committee would like to acknowledge the tireless efforts of advocacy groups, unions, and early educators themselves in advocating for this historic wage rise.As Mrs Georgie Dent of The Parenthood told the committee, this is a 'critical and historic first step towards valuing dedicated early years professionals and the essential role they play for children, families, our wider society and the economy'.
2.92Like the 2022 wage rise for aged care workers, many participants told the committee they believed this pay increase will help attract and retain qualified ECEC workers—including those who may have previously left the sector.
2.93While there is broad support for the bill, the committee noted some participants' concerns about aspects of the grant program implementation, in particular the two-year funding period, the operation of the fee-growth cap, and the requirement for services to have compliant workplace agreements in place.
2.94However, the committee recognises that this bill is just the first step in a longer process of reform to deliver a truly universal early education system. As such, the two-year grant funding program will ensure that ECEC workers get more money in their pockets without delay, while the Fair Work Commission concludes its gender undervaluation review, and the Government develops its fulsome response to the reports by the Australian Competition and Consumer Commission and Productivity Commission.
2.95In addition, the committee notes that it remains open to the Parliament to consider an amendment to the 30 June 2028 end date should this be intended at a later point in time.
2.96In relation to the fee growth cap, the committee is confident the department will be able to respond to variations in costs across the sector through its alternative fee cap process.
2.97The committee also supports the objective of the bill to encourage good faith bargaining and the making of enterprise agreements in the ECEC sector. As pointed out by various inquiry participants, sectors with higher rates of collective agreements tend to have better pay and conditions.
2.98However, in recognition of the above-mentioned concerns, the committee encourages the department to continue working closely with the sector, in particular Aboriginal and Torres Strait Islander Community Controlled Organisations, to ensure that services feel supported to participate in the grant program. The committee also agrees that monitoring and evaluation will be important to assess the impact of the program and to ensure it delivers on its objectives. To this end, the committee welcomes the department's planned evaluation.
2.99Finally, the committee thanks all participants who contributed to this inquiry, both via written submissions and in providing evidence at the committee's hearing in Melbourne. That said, the committee would like to express its disappointment with the quality of the department's submission, which essentially repeats information already provided in the Explanatory Memorandum. The lack of additional detail offered to the committee in the submission is particularly inadequate given the more detailed information available on its website and in the Early Childhood Education and Care Worker Retention Payment Grant Opportunity Guidelines.
2.100In conclusion, and considering the overwhelming participant support for the pay increase—as well as the strength of the evidence base supporting higher wages in the ECEC sector—the committee recommends that the bill be passed.
2.101The committee recommends that the bill be passed.
Senator Catryna Bilyk
Chair
Senator for Tasmania