The Government Mid-Year Economic and Fiscal Outlook

The Australian Government has released its 2018 Mid-Year Economic and Fiscal Outlook (MYEFO), which is expected to deliver a surplus by the 2020 financial year. But what does this mean for the early childhood education and care (ECEC) sector?

The Federal Government’s underlying cash balance is forecast to improve from a $14.5 billion deficit at Budget to a $5.2 billion deficit in 2018-19, and the Budget is now expected to reach a surplus of $4.1 billion in 2019‑20 – the first surplus since the final budget of the Howard Government in 2007-08.

The Government states that the mid-year outlook “confirms the strength of the Australian economy and that the Budget will return to surplus as part of the Government’s plan to guarantee the essential services which Australians rely on”.

The outlook outlines increases to funding for the essential services such as health, hospitals, Medicare, aged care and schools – pledging more than $300 billion in recurrent funding for schools to 2029.

It also notes that Australian unemployment rate over the past year has fallen to its lowest level since 2012, and states that it will continue to strengthen this via initiatives such as the $119.2 million Women’s Economic Security Package to support women’s workforce participation, earning potential and economic independence.

A commitment to schooling, high employment rates and increased measures to support women’s workforce participation should bode well for the ECEC sector, however the Federal Government has not included Universal Access funding for preschools after the 2019 FY despite urges from ECEC sector participants and research bodies. This is unsurprising given the Council of Australian Government’s Education Council yesterday released a communique of ECEC-related projects for the 2019 calendar year – with no mention of the Universal Access initiative.  

So what MYEFO measures are relevant to the ECEC sector?

IHC funding to increase

The Government will provide an additional $35.1 million over four years from the 2019 FY to increase the In Home Care (IHC) program’s family hourly rate cap from $25.48 to $32.00 and to increase the number of IHC places from 3,000 to 3,200, commencing from 1 January 2019.

The IHC program provides access to the Child Care Subsidy (CCS) and Additional Child Care Subsidy for childcare provided in the family home to assist parents or carers who work non‑standard hours, are geographically isolated or have families with complex needs.

The Government said that these changes will help to improve families’ access to affordable IHC services, based on the latest available data. However the Australian In Home Care Association has claimed that the changes are “too little, too late”, stating that the new measures would not solve the crisis caused by the withdrawal of funding which occurred with the transition to the new CCS earlier this year, which led families to cancel their IHC and the closure of many IHC operators.

FDC scrutiny expected to save $135.8 million

As Federal Minister for Education Dan Tehan announced last week, the Federal Government will continue to target non-compliance and fraudulent behaviour in the Family Day Care (FDC) sector, and improve the integrity of payments to FDC services – activity that it expects will lead to savings of $135.8 million over the next four years.

Shadow Minister for Early Childhood Education and Development Amanda Rishworth has criticised the Federal Government as “unfairly targeting”the FDC sector in order to achieve savings goals, however the MYEFO statement claimed “this measure does not impact the support families will receive for legitimate care”.

A surplus is good, but at what cost?

Summarising the MYEFO statement, the Government said “The combination of a growing economy with a record number of people in work is helping to increase revenues while decreasing expenditure” – highlighting that “in accordance with our disciplined budget management, new spending has been offset by reduced spending elsewhere”.  

It states “Importantly, the rate of real spending growth under the Coalition is averaging 1.9 per cent, the lowest of any Government in 50 years.”

Since 2008, the Australian Government has invested over $3.7 billion in preschool funding. The Department of Education and Training website states “Research shows that participating in a quality preschool program can significantly increase positive education and life outcomes for children, especially those from disadvantaged backgrounds.

“Proof of long-lasting benefits of preschool can be seen in assessment results for Year 3 students, where children who attended preschool obtain consistently better results across all areas,” the website says.

It is a shame that the current Federal Government no longer recognises this as a priority.  

To read the MYEFO statement and Budget in full, click here.