Early childhood education workers will receive a 15% pay increase funded by the government – but only if centres agree to limit fee increases.
The wage boost, first reported by Guardian Australia in April, fulfils a commitment from the Albanese government to better address the wage inequity for workers in the crucial sector.
The increase will be phased in over two years, including a 10% increase from December this year, with the remaining 5% from December 2025.
For an average worker receiving the award rate, the boost will mean an extra $103 a week in pay by the end of the year, increasing to $155 a week by December 2025.
The funding and conditions will also apply to centres which run outside school hour care, with hopes more spaces will be opened up for working parents with primary school-age children.
For a childcare centre operator to receive funding from the $3.6bn package, fees cannot increase by more than 4.4% over the next 12 months from Thursday, and the full funding must be passed on to staff through pay increases.
Given staffing constraints within the industry, which were made worse when aged care workers received a government-backed 23% average pay increase, the government hopes centres will accept the conditions in order to retain staff, or risk losing more staff to higher paying centres.
The 4.4% limit was set by combining inflation and the wage price index, with the rationale being there would be no need to further increase fees beyond the yearly growth.
The funding has been set for two years to allow the Fair Work Commission to finalise its gender undervaluation priority awards review, which is expected to overhaul the care and health sectors.
The eligibility criteria was one of the sticking points for the government when creating the policy. Last year parents complained that an increase to their individual subsidy payments was wiped out by childcare centres raising their fees after the scheme kicked in.
The government hopes that by forcing centres to limit fee hikes in order to receive funding for staff pay increases, parents and care givers will be saved from further price shocks.
The Productivity Commission’s final report on the early childhood education and care system, including fees, has been handed to the government. No date has been set for a response.
Anthony Albanese, who has made a universal childcare system one of the goals of his prime ministership, said it was a “great day for everyone who cares about childcare”.
The treasurer, Jim Chalmers, said the pay boost improved access to affordable care, “while boosting productivity and workplace participation”.
The education minister, Jason Clare, and early childhood education minister, Anne Aly, also spoke on the announcement. Clare described the policy as a “cost-of-living double whammy” by increasing wages for workers while keeping fees down. Aly said increasing the pay of workers was crucial in better valuing the sector.
“Properly valuing the early childhood education and care workforce is crucial to attracting and retaining workers and vital to achieving the quality universal early learning sector Australian families deserve,” she said.
“A quality early childhood education sector is necessary to support children’s learning and development as well as workforce participation in the broader economy.”
Advocates welcomed the announcement of a pay increase in the budget but have continued to push the government to scrap the activity test, a measure which limits how many hours of subsidised early childhood education a child can receive if one parent works less than 15 hours a week.
An estimated 126,000 children from low-income households are believed to miss out on early childhood education because of the test.
