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CELA’s 2021-22 budget review – what you need to know and what still needs to be addressed

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The Commonwealth Government Budget was brought down on 11 May. It contains a range of announcements that will impact the early childhood education and care system.

Here’s a brief summary of what of what you need to know, how it may impact you, and what still needs to be urgently addressed.


Following measures announced in the Federal Budget, CELA is pleased to progress on several of our key advocacy pillars, however there is still much work to be done.

Ongoing investment and reform in early learning in the year before school

CELA is delighted to see, off the back of joint sector advocacy, an ongoing commitment by the Commonwealth government to ensure all children have access to high quality early childhood education in the year before school. The Government is committing $1.6b over 4 years and will negotiate a new agreement with states and territories. As part of this, the government will ensure every child enrolled in an approved preschool program will see the full benefit of Commonwealth funding (around $1,340 per child in 2022) regardless of the preschool setting. From 2024, payments to states and territories will be tied to attendance targets. A preschool outcomes measure will be developed and trialled for introduction in 2025.

$33.6 million over five years from 2021-22 (and $2.0 million per year ongoing) will be invested to improve preschool data collection and underpin a new preschool framework to support the reform. This includes funding to continue undertaking the annual National Early Childhood Education and Care Collection (NECECC) from early 2023. It also includes funding to improve and expand the NECECC to underpin a performance framework to drive reform, with a focus on attendance, and to develop and trial a method for testing the degree to which preschools achieve the outcome of getting children school-ready. Read CELA’s reaction to this plan at the end of this page.

Child Care Subsidy System Changes

“The $1.7 billion additional funding for childcare subsidies is good news for some families and will give parents more choice about increasing the days they work, but we are concerned about the impact that that high volumes of new enrolments will have on workforce.” says CELA CEO Michele Carnegie.

From 1 July 2022, the Government is removing the annual CCS cap of $10,560 per child, which will benefit high income earners who access three or more days of ECEC per child. The Government is increasing the CCS subsidy rate by up to 30 percentage points (to a 95% CSS cap) for second and subsequent children below school age in CCS funded services. This initiative will benefit around one in four families who have multiple children in long daycare services, with families on lower percentages of CCS benefiting the most. This initiative is costed at $1.7b over 5 years.

What it looks like in practice

  • A family on over $69,390 with one parent not working will continue to receive no subsidy.
  • A family on under $69,390 who work less than 8 hours per fortnight with two children in care one day per week (as is allowed under the activity test) will receive 85% CCS for the first child and 95% for the second child, saving 10% on the cost of one child’s care (around $12.20 for ten hours of care at the hourly rate cap).
  • A family on $253, 679 with two children in care five days a week will receive 50% CCS for the first child and 80% CCS for the second child, saving 30% on the cost of CCS for one child’s care (around $183 for the week of care based on ten hours per day at the hourly cap).

Regulatory changes

$16.9 million will be used to establish a central child care services website, consolidating two existing sites. This is expected to make it easier for families to get accurate information about child care services, quality, fees and vacancies. In addition, the Government will pilot joint monitoring, data sharing and compliance operations with two states’ jurisdictions in a bid to step up efforts to prevent and detect fraud within the child care system.

Children with additional needs

The Government will provide $17.9 million over four years from 2021-22 to establish a new Early Childhood Program. The program will deliver a range of disability-specific information, workshops and supported playgroups for young children aged birth to eight years of age with disability or developmental needs.

Other initiatives related to parents, families and communities

  • $46.6 million will be provided over four years from 2021-22 for parenting education and support to parents and carers with children aged under 12 years and to develop national guidelines to assist with early identification of emerging emotional difficulties.
  • $54.2 million has been allocated over four years from 2021-22 to work with the states and territories to establish child mental health and wellbeing hubs to provide multidisciplinary care and preventive services.
  • $4.0 million has been allocated in 2021-22 to continue to provide up to ten free trauma and distress counselling sessions for those impacted by the bushfires.

Workforce related initiatives

  • The Government will expand the Boosting Apprenticeship Commencements wage subsidy. This measure will uncap the number of eligible places and increase the duration of the 50 per cent wage subsidy to 12 months from the date an apprentice or trainee commences with their employer. From 5 October 2020 to 31 March 2022, businesses of any size can claim the wage subsidy for new apprentices or trainees who commence during this period. Eligible businesses will be reimbursed up to 50 percent of an apprentice or trainee’s wages of up to $7,000 per quarter for 12 months.
  • $15.6 million is provided in 2021-22 to increase all wage subsidies to $10,000 for eligible participants in jobactive, Transition to Work, and ParentsNext to incentivise employers to hire eligible disadvantaged job seekers. This will align with wage subsidies commencing under the New Employment Services Model measure from 1 July 2022.
  • $213.5 million has been budgeted over four years from 2021-22 to expand the Local Jobs Program to 51 employment regions and to extend the program for three years from 30 June 2022 to 30 June 2025. The Local Jobs Program supports tailored approaches to accelerate reskilling, upskilling, and employment pathways in selected regions, supporting Australia’s economic recovery from the COVID-19 pandemic.
  • $1.6 million has been budgeted over two years from 2020-21 to amend the Relocation Assistance to Take Up a Job program to provide additional support for job seekers relocating to take up employment. Eligibility requirements under this program will be changed so that relocating participants who take up a minimum of 40 hours work in at least two weeks can receive up to $2,000 in relocation assistance, and those who take up a minimum of 120 hours work in at least four weeks can receive up to $6,000 in relocation assistance.

How this can benefit services

Services can advise jobseekers willing to relocate that they may be able to attract relocation assistance. Services in Local Jobs Program areas (see https://www.dese.gov.au/local-jobs-program for more details) can work with regional employment facilitators to recruit and re-skill jobseekers into early childhood education and care. Services hiring new apprentices or trainees can access up to a 50% subsidy on their wages for 12 months.

Tax cuts

The budget provides a tax cut of up to $1,080 for low and middle income earners. It is expected many educators will benefit from these cuts. The instant asset write off has been extended, with businesses with a turnover of up to $5 billion per annum able to write off assets such as motor vehicles.

CELA’s reaction

What we’re pleased about:

CELA is pleased to see that universal access to early childhood education and care has been made ongoing. This will provide greater stability for preschools, and the focus on participation will further support all children to undertake early childhood education before they commence school. This is a win for long daycare and mobile preschool providers. However, collecting data on children in preschool remains a highly contentious issue. CELA will be consulting with members to understand the types of holistic information that would provide additional evidence of the impact of preschool on children’s development. We will work with and inform the government to ensure any new measure is not burdensome, and provides insights for services to support children, particularly those most vulnerable.

The additional funding to assist children with emerging emotional difficulties and funding for mental health is vital. Throughout COVID-19 we have heard of increased social and emotional issues and mental health issues emerging in children, and welcome additional resources that early childhood education and care services can link families to.

CELA has been actively advocating for support for families affected by bushfires. Continued access to ten counselling sessions will assist families in continuing to experience bushfire related trauma.

What still needs to be addressed:

CELA is disappointed that access to ECEC for vulnerable and disadvantaged children has not been addressed in the budget. We will continue to advocate for the activity test to be removed to ensure all children can access subsidised early childhood education and care. CELA CEO Michele Carnegie has written to The Hon Alan Tudge MP welcoming positive progress and articulating our ongoing concerns.

We will also advocate that the Child Care Subsidy is increased for low income earners and unemployed families.

We are disappointed that specific workforce initiatives are not funded for early childhood education in this budget. We note initiatives such as the apprentice and trainee wage subsidy are helpful, but unlikely to make a significant impact without additional support for employers to attract and mentor trainees.

Industries such as aged care and mental health have had targeted initiatives funded to attract workers who have left the workforce and to retain existing workers. We urgently require similar initiatives in early childhood education and care, and will be advocating for this to be a key part of the workforce strategy.

What are your thoughts on the new budget and how it may impact our sector? Share your thoughts below in the comments.

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