Coalition Senators' additional comments

1.1The Wage Justice for Early Childhood Education and Care Workers (Special Account) Bill 2024 (bill) was introduced into the House of Representatives on 12September 2024. On 19 September 2024 the bill was referred by the Senate to the Senate Education and Employment Legislation Committee (committee) for inquiry with a report due on 30 October 2024.

1.2The committee held a public hearing on 23 October 2024. Answers to questions taken on notice by witnesses were due to the committee secretariat by 28October 2024.

1.3On 29 October 2024, the committee was advised by the secretariat that the Department of Education had not provided answers to questions on notice from the hearing. Later that day, shortly before 5.00 pm, the secretariat received those answers to questions on notice from the Department of Education. The lateness of these answers to questions on notice being made available to the committee is completely unacceptable.

1.4The Senate inquiry process is meant to ensure that non-government senators and stakeholders can properly scrutinise government legislation.

1.5It is the responsibility of the government to ensure departments respond to questions on notice in the timeframe set out by the committee.

1.6The government also has a responsibility to ensure that any Senate inquiry is managed in a timeframe which is realistic and transparent and reflects respect for the proper processes of the Parliament. The government has failed to meet these obligations.

1.7This bill provides for the establishment and operation of a special account, known as the Wage Justice for Early Childhood Education and Care Workers Special Account, to support a government-funded 15 per cent pay increase for child care workers in Australia.

1.8This pay rise will be phased over two years, starting with a 10 per cent increase from December 2024, followed by an additional five per cent in December 2025.

1.9The special account will be used to administer grant funding for the Early Childhood Education and Care Worker Retention Payment Program.

1.10Approved Early Childhood Education and Care (ECEC) providers must apply for grants. The intention is that funding under the grants would be paid to providers monthly in arrears to cover expenses already incurred.

1.11The Government estimates the cost of the grant program at $3.6 billion for the 2024–25 and 2025–26 financial years.

1.12The Coalition values the work of early childhood educators. We understand that without educators, services could not open, and families would not be able to return to work or study.

1.13While the Coalition has concerns with this bill, which we have raised in the Parliament and during the inquiry process, the Coalition supports responsible wage increases for the sector and one which service providers can afford.

1.14The Coalition supports this bill in principle but maintains concerns over how the policy will affect early childhood education providers now and into the future.

1.15The Albanese Government took to the election a promise to reduce the cost of early childhood education through their $4.7 billion 'cheaper child care' reforms. Instead, out of pocket costs have increased by 8.4 per cent over the last 12months.

1.16The Albanese Government continues to talk about their commitment to universal early learning and equality of access, and yet they continue to do nothing to increase access in regional, rural and remote Australia, where many communities have no early learning service available.

1.17In relation to this bill, the Coalition make the following observations.

Financial strain and administrative burden

1.18The Albanese Labor Government has promised $3.6 billion to deliver a 15 per cent wage increase for early childhood educators commencing 2 December 2024. With less than six months' notice, the government is burdening the sector with more regulation and compliance to secure funding. This includes asking them to sign up for a grants program without releasing the full detail of how much each service will receive in arrears, or how much the fee cap will be in the second year of the program.

1.19Over nearly three years the Albanese Labor Government has presided over persistently high inflation and a cost-of-living crisis. This has placed stress on service providers who have faced rent increases, high electricity, gas and groceries bills, all of which have gone up under this government's watch.

1.20Underscoring this was evidence taken during the Senate Select Committee on Cost of Living inquiry submitted by the Australian Small Business and Family Enterprise Ombudsman who commented:

The rising cost of living – driven by international and domestic inflationary pressures – is having an acute adverse impact on small and family businesses that underpin livelihoods, fuel prosperity and generate opportunities for many Australians. Although public debate and commentary on the cost of living tends to focus on households, small business owners are exposed to the same cost pressures, in addition to direct input costs and a generally higher cost of borrowing.[1]

1.21The bill does not include critical information for providers, including the formula the Department of Education will use to calculate payments, or what the fee cap figure will be in the second year.

1.22Ms Samantha Page from Early Childhood Australia highlighted the lack of detail is causing financial anxiety for some providers:

We've also suggested that more information be provided about the amount of the grant—if not the formula for calculating the grant, then some kind of ballpark figure. Perhaps that's a process that could come before the grant application or that we reassure services they can apply for the grant and then make the decision about whether they're going to take that up or not. Ithink there's an absence of information that's creating more anxiety than is necessary because of that.[2]

1.23Ms Jennine Blundell from Uniting NSW.ACT raised similar concerns:

There are more and more questions being raised as we try to understand the grant scheme, what's included and what's not included, and how the calculation of the formula works. The lack of transparency means that we're trying to look at all of the issues that might have an impact on our organisations and the sustainability of our services.[3]

1.24Ms Elizabeth Death from the Early Learning and Care Council of Australia raised concerns around the uncertainty of the fee cap in the second year:

One is that at the moment the providers don't know what the fee cap will be for the second year, so again we've got some uncertainty there.[4]

1.25Ms Page echoed those sentiments:

We do understand that services need to know what the fee constraint will be in the second year. It would be somewhat irresponsible to sign up to something without that piece of information and without knowing what that looks like and what that will mean.[5]

1.26Ms Death also noted the lack of information around from the government on how services could apply for an exemption from the fee cap should they need to:

I'd quickly add that there's a challenge we have in the sector at the moment with a 4.4 per cent cap, because providers were not aware it was coming. There are also other factors, such as rent increases, lease increases, that go way beyond that 4.4 per cent. So I think it's really important that we have those mechanisms within the funding that take those into consideration.[6]

1.27The Coalition reiterate our concerns that the bill will put further financial pressure on small and medium sized providers who will have to cover the majority of on-costs, cannot increase their fees and have to pay the wages upfront, whilst receiving reimbursement in arrears.

Workplace instrument and forced unionisation of the sector

1.28The Albanese Labor Government is covertly attempting by stealth to unionise the early childhood sector.

1.29This is something which this government has track form, as evident by the trade union's recent increased activity in the mining industry. According to the Australian Bureau of Statistics around 15 per cent of the community and personal service workers are unions members, which includes ECEC sector.[7]

1.30In an effort to appease the unions, the bill requires a workplace instrument to be in place for a service to access grant funding.

1.31This ambiguity is further exacerbated by the Albanese Labor Government's decision to rush this legislation through the Parliament ahead of the next federal election, when the multi-employer bargaining process is still ongoing.

1.32According to the grant guidelines, a workplace instrument can include an enterprise agreement, multi-enterprise bargaining or an individual flexibility agreement.

1.33The Government suggests this is necessary to ensure funds are passed on to educators.

1.34The Productivity Commission in their final report suggested that only around 13 per cent of the sector currently had an enterprise agreement in place.[8]

1.35In addition, during the public hearing, the Department of Education revealed:

…there's about 30 per cent coverage of some sort of enterprise agreement across the sector.[9]

1.36The Coalition are very concerned about this inclusion in the bill, and several stakeholders agreed that the grant program could be successful without the need for a workplace instrument.

1.37Mr Brent Ferguson from the Australian Industry Group suggested this requirement was not actually needed, and the program could be done without it:

In our view, this could be achieved in a much more straightforward way than is envisaged by the guidelines. In essence, we think this could be achieved by requiring employers to implement a written contractual agreement with their employees to implement wage increases instead of through a formal workplace instrument.[10]

1.38Mr Ferguson also testified that a workplace instrument would impose further red tape and burden on employers:

In our view, forcing an employer to enter into formal workplace agreements to secure funding will impose unnecessary red tape and burden on employers and it will undermine many of the objects of the bill resulting in fewer workers receiving the increase.[11]

1.39Mr Warren Jacobson from the Outside School Hours Council of Australia (OSHCA) testified on the burden a workplace instrument would place specifically on outside school hours care (OSHC):

We're concerned about the administrative burden of entering the scheme and the practicality of compliance, particularly as it relates to the administration of individual flexible arrangements, including how the process will work at the outset and then ongoing… Given the challenging workforce supply environment, we could not risk a more onerous and time-consuming process and being at a commercial disadvantage to other providers like long day care providers, with whom we already compete for talent.[12]

1.40In response to questions from Coalition Senators, several stakeholders provided evidence on the estimated cost for service providers to join the current multi‑employer bargaining process or undertake individual flexibility agreements with all their staff.

1.41Paul Mondo from the Australian Childcare Alliance suggested it could cost a provider thousands of dollars to opt in to the multi-employer bargaining agreement currently underway:

…we haven't modelled that cost but we expect it to be in the thousands of dollars to help someone be authorised into the agreement.[13]

1.42Mr Scott Wiseman from P&Cs Queensland also testified it would cost thousands per service:

We've got a provider looking at charging $3,000 for each of our OSHCs to develop and write an MEA. We've also looked at the legal costs associated with an award amendment, which is about $25,000. We're a small organisation so that is a significant amount of money.[14]

1.43Coalition Senators remain concerned about this section of the bill and grant guidelines, and the potential future impacts of forced unionisation on business.

Nothing for regional, rural or remote Australia

1.44The Albanese Government will spend almost $8 billion through its 'cheaper child care' reforms, and 15 per cent wage subsidy for educators, and not one single dollar will go towards increasing access in the regions.

1.45Families living in regional, rural and remote Australia continue to have limited or no access to early childhood education, with many living in what are termed 'thin markets' and 'childcare deserts'.

1.46In response to questions from Coalition Senators, Mrs Louise Martin from the Isolated Children's Parents Association of Australia stated that it would do nothing for the families they support:

Senator O'SULLIVAN: Do you believe this bill will make much of a difference to the families you represent without a measure similar to what we're discussing here?

Mrs Martin: I would say about zero per cent, really.[15]

1.47Mrs Martin also went on to testify that she was not aware of the Albanese Government doing much to increase access in the regions:

Senator O'SULLIVAN: Are you aware of anything that the current government is doing alongside this bill that might address the lack of access and these childcare deserts specifically in the areas that you operate across regional and rural Australia?

Mrs Martin: Not specifically. Occasionally there's money for mobile day care. Grant funding, yet again, is uncertain. Really, I don't see anything of significance that the government is doing to address this issue out here.[16]

1.48Coalition Senators reiterate that the government has done nothing to address child care deserts and thin markets around the country, and this bill will not increase access for parents who currently have none.

Uncertain future

1.49The Wages Retention Grant Program is scheduled to cease payments from 30November 2026.

1.50The Special Account will cease on 30 June 2028.

1.51This leaves the sector with uncertainty around who will pay the ongoing cost of higher wages in two years' time.

1.52The majority of stakeholders raised their concerns regarding the short term of the program, noting it will take more than two years to retain the current workforce and increase the pipeline of future educators.

1.53Again, the Coalition reiterate the short time frame in which this policy was announced, the lack of detail provided and an impending federal election lead us to believe this is just another vote chasing exercise for the Albanese Government.

Outside School Hours Care vs Centre Based Day Care

1.54There are currently 5 062 OSHC services across Australia.[17]

1.55OSHC provide care before and after school for primary aged children, and many services also offer vacation care during school holidays. They operate differently to centre based day care (CBDC) that provide eight to ten hour days of care for children aged zero to five years.

1.56Many OSHC providers are located within school grounds, and usually have a contractual agreement in place with the school, which includes when and by how much they can increase fees.

1.57Several stakeholders testified that OSHC services operate on lower profit margins than CBDC services.

1.58Mr Jacobson noted in OSHCA's submission that:

OSHCA estimates that a fee increase of around 6% would be required in January 2025 in order to allow the sector to keep up with cost increases, with any rate lower than this resulting in the sector going backwards.[18]

1.59Given the stark difference between the two sectors, including operation costs, it is unfair of the government to impose the same fee cap and grant restrictions on both sectors.

Footnotes

[1]Senate Select Committee on Cost of Living, Australian Small Business and Family Enterprise Ombudsman, Submission 13, p. 1.

[2]Ms Samantha Page, Chief Executive Officer, Early Childhood Australia, Proof Committee Hansard, 23 October 2024, p. 32.

[3]Ms Jennine, Executive Manager, Communities, Uniting NSW.ACT, Proof Committee Hansard, 23 October 2024, p. 48.

[4]Ms Elizabeth Death, Chief Executive Officer, Early Learning and Care Council of Australia, Proof Committee Hansard, 23 October 2024, p. 28.

[5]Ms Samantha Page, Chief Executive Officer, Early Childhood Australia, Proof Committee Hansard, 23 October 2024, p. 32.

[6]Ms Elizabeth Death, Chief Executive Officer, Early Learning and Care Council of Australia, Proof Committee Hansard, 23 October 2024, p. 26.

[7]Australian Bureau of Statistics, Trade union membership.

[8]Productivity Commission, A path to universal early childhood education and care, Volume 2, 18 September 2024, p. 153.

[9]Ms Julia Chandra, Assistant Secretary, Workforce Branch, Department of Education, Proof Committee Hansard, p. 61.

[10]Mr Brent Ferguson, Head of National Workplace Relations Policy, Australian Industry Group, Proof Committee Hansard, 23 October 2024, p. 2.

[11]Mr Brent Ferguson, Head of National Workplace Relations Policy, Australian Industry Group, Proof Committee Hansard, 23 October 2024, p. 2.

[12]Mr Warren Jacobson, President, Outside School Hours Council of Australia, Proof Committee Hansard, 23 October 2024, p. 32.

[13]Mr Paul Mondo, President, Australian Childcare Alliance, Proof Committee Hansard, 23 October 2024, p. 28.

[14]Mr Scott Wiseman, Chief Executive Officer, P&Cs Qld, Proof Committee Hansard, 23 October 2024, p.41.

[15]Mrs Louise Martin, President, Isolated Children's Parents Association of Australia, Proof Committee Hansard, 23 October 2024, p.41.

[16]Mrs Louise Martin, President, Isolated Children's Parents Association of Australia, Proof Committee Hansard, 23 October 2024, p.41.

[17]Department of Education, Child Care Subsidy data report – June quarter 2024.

[18]Outside School Hours Council of Australia, Submission 12, p. 2.