Announcement date
8 August 2024
Link to announcement
Pay rise for early educators while keeping fees down for families | Ministers' Media Centre
Problem being addressed
Over the past several years, workforce shortages in the Early Childhood Education and Care (ECEC) sector and the associated impacts have attracted significant media attention with the Australian Competition and Consumer Commission (ACCC) finding that ‘labour force shortages are affecting all childcare markets, in terms of both the supply of childcare services and the costs to supply these services’. Low wages, low professional status, and lack of pay parity with school teachers are among the barriers impacting attraction and retention. The sector continues to report that workforce shortages are reducing the quality, safety, sustainability, and availability of care.
Proposal
Three policy options were considered for Government funding to support a wage increase for workers in the ECEC sector.
- Option One – No additional Government funding in support of a wage increase (status quo).
- Option Two – Funding a time-limited workforce retention payment to participating ECEC employers.
- Option Three – Funding a time-limited workforce retention payment to ECEC employers under a workplace instrument.
The preferred option is Option Three. This option meets the policy objective to increase wages for ECEC educators and teachers to improve workforce attraction and retention, minimises risks of non-compliance and fraud and maintains enforcement options for workers. This supports the Government’s gender equality agenda by improving pay and conditions for the low-paid, heavily female-dominated ECEC workforce.
This option has also been designed to account for potentially significant award increases resulting from the Fair Work Commission’s gender-based undervaluation – priority awards review and allows for funding to be made conditional on a fee growth control mechanism. The fee growth cap is an important condition that supports the affordability of ECEC and ensures the costs of a wage increase are not passed on to families.
Note that this IA supported a decision in June 2024, some of the data and information presented has now been superseded. Publishing was delayed while the Fair Work Commission considered the Children’s Services Award 2010 as part of the gender-based undervaluation – priority awards review.
Assessed Impact Analysis outcome
Good Practice
Assessment comments
The IA addresses the seven IA questions and follows an appropriate policy development process commensurate with the significance of the problem and magnitude of the proposed intervention. In particular, the IA provides a strong overview of the distributional and gender impacts for the ECEC Wage Case. The Second Pass also provides a comprehensive overview of international benchmarks.
To achieve ‘Exemplary’ the IA needed to articulate a more comprehensive evaluation plan, identifying responsibilities and timeframes.
Questions on accessibility requirements should be directed to the Department of Education.
Regulatory burden
The Department of Education estimates the preferred option will increase average regulatory costs by $46.8 million per year, over three years.
Note that the publishing of this IA was delayed in order for the Fair Work Commission to finalise its decision in relation to the Children’s Services Award 2010 as part of the gender-based undervaluation – priority awards review. The Commonwealth participated in this process including attending conferences and providing several submissions to the Fair Work Commission.