From today, early learning providers can apply for Commonwealth Government funding to deliver early childhood education and care workers a historic 15 per cent pay rise.
To be eligible to receive the Albanese Government’s funding for the wage increase, early childhood education and care services must agree not to increase their fees by more than 4.4 per cent between 8 August 2024 and 7 August 2025.
This is good for early childhood educators and good for families.
There will also be a limit on fee growth in the second year of the wage subsidy. The percentage limit on fee growth that will apply from August 2025 will be determined by a new ECEC cost index being developed by the Australian Bureau of Statistics (ABS).
This is an important condition that will keep downward pressure on out-of-pocket costs for families.
Services must also pass on funding in full to employees through increased wages.
The 15 per cent pay rise will be phased in over two years, starting with a 10 per cent increase from December 2024, with a further 5 per cent increase from December 2025.
This means a typical early childhood educator who is paid at the award rate will receive a pay rise of more than $100 per week this year, increasing to more than an additional $150 per week from December 2025.
This significant wage increase is an important next step in the Government’s reforms to the sector, building on the successful Cheaper Child Care policy.
Latest data shows that Cheaper Child Care has seen the average out-of-pocket costs for families decrease by more than 13 per cent from the June quarter 2023 to the June quarter 2024.
The Government’s Cheaper Child Care policy increased the base subsidy rates from July 2023 for all families earning up to $530,000, and set the maximum subsidy to 90 per cent for families earning $80,000 or less.
Thanks to the increased subsidy, a family earning $120,000, with one child in care three days a week, paid around $2,140 less last financial year than they otherwise would have.
The Government is currently considering the Productivity Commission’s report handed down earlier this month.
