COVID-19

Policy

Unpacking the new ECEC Relief Package – What does it mean for your service?

Jason Roberts

Apr 2, 2020

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Prime Minister Scott Morrison has announced a new COVID-19 relief package dedicated to the early childhood education and care (ECEC) sector that will see an estimated $600 million of additional support find its way to ECEC services, on top of the $1 billion associated with the JobKeeper package announced earlier in the week.

The latest package will effectively see the existing Child Care Subsidy (CCS) system suspended for 12 weeks, and a new system based on fortnightly payments of a fixed amount paid directly to a service by the Commonwealth Government.

The new payment mechanism has been designed in a way to bypass some of the more complex requirements of the CCS system, one of which was the requirement for parents to pay a “gap” fee for the centre to be able to claim the subsidy.

There are some concerns being expressed within the ECEC sector in relation to the scheme for services which fall outside of CCS scope, such as preschools, and also from Family Day Care educators and In Home Care.

With respect to preschools we are starting to see State Governments step in with commitments to support families and services and with regards FDC and In Home Care a separate announcement has been made to address concerns in these areas.

So how will the new system work?

Each service will now receive a lump sum payment from the Commonwealth directly into their bank account every fortnight for the next 12 weeks up to the end of the Financial Year.

The payment will be made instead of CCS and ACCS.

The lump sum payment will be the services to use as they see fit. There is no specific requirement to use it to pay rent or overheads or wages. It is up to the service how they spend it.

There is also no requirement to apply. The payments will flow automatically from 6 April 2020 until the week ending 28 June 2020.

The new system will be reviewed in four weeks time to ensure that it is working as intended.

So what do I need to do to get the payment?

Nothing in the first instance.

The government will work out revenues based on the data submitted as part of the session reporting processes associated with the CCS systems.

However, going forward a service must remain open for the next 12 weeks, must not charge families a fee of any sort for the next 12 weeks, must prioritise care to essential workers, vulnerable and disadvantaged children and children who have previously enrolled that may have un-enrolled due to COVID-19.

For the next 12 weeks, services must continue to record attendance of children and of course must continue to comply with obligations under the National Quality Standard and other approved conditions under Family Assistance Law.

Children enrolled on 5 April 2020 will still be enrolled when the ECEC Relief Package terminates.

Services will not need to upload sessions through third party software providers for the 12 week period, although attendance (see below) must still be recorded. Software platforms will effectively be hibernating until CCS starts to flow again.

There is a requirement that all sessions recorded up to the 6 April are uploaded as normal and any corrections to previous uploads are correct by the same date.

How much will I receive?

The lump sum fortnightly payment will be calculated as 50 per cent of the revenue (CCS plus gap) the service generated in the reference period between Monday 17 February and Sunday 1 March.

However, if the service’s fees are above the hourly rate caps stipulated by the CCS then the payment will be capped at the rate cap.

The rate caps are $11.98 per hour for centre based care, $11.98 for outside school hours care and $11.10 for family day care.

So if a service’s hourly cost of care is $11.50 per hour ($103.50 per day) and it generated $62,100 of revenue (CCS and gap) in the reference period, they will receive a lump sum direct to their bank accounts of $31,050 every fortnight until the end of the 2019/20 Financial Year.

If the service's hourly cost of care is $13.00 per hour and they had the same level of enrolments in the same period, the lump sum received will be less than $31,050, because the calculation will be based on the fee cap of $11.98 NOT the $13.00 actual hourly rate.

Services can, under special circumstances, (such as if they are providing care to a large number of essential workers ie: near a hospital or if occupancy spikes materially) request for a higher percentage of revenue to be paid.

Providers seeking a higher payment will be asked to complete an online form which will soon be available on the Department of Education, Skills and Employment website.

How does this work with the JobKeepers payment? Will I receive both?

The ECEC relief package payment and JobKeeper payment can both be received by a service at the same time.

Notably, there is no eligibility criteria for the ECEC relief package. It will flow as long as a service is registered service and complies with the rules.

For the JobKeeper payment however, there are eligibility requirements, with the main one being that a service must demonstrate that revenue has fallen more than 30 per cent due to COVID-19 (applicable only for a service with revenues of less than $1 billion).

Although there is a lack of clarity around the base period which is to be used for comparison, it is understood that the vast majority of services will now qualify given their actual revenue received will be cut by 50 per cent under the new ECEC Relief Package rules.

That being said and for the avoidance of any doubt the Treasurer has also confirmed that charities registered with the Australian Charities and Not-For-Profit Commission (ACNC) will be eligible for the JobKeeper Subsidy if they estimate their turnover has, or will likely fall, by 15 per cent or more relative to a comparable period.

This is an important confirmation and highlights that not for profits will now be eligible for JobKeeper.

So, all services will receive the relief contribution and those services who qualify for JobKeeper, which is expected to be the majority, will receive this payment also.

So how might that work in practice?

For a hypothetical service with 80 licence places, 75 per cent occupancy in the reference period, fees of $103.50 for a 9 hour day ($11.50 per hour) and a team of 13 with 11 educators in the rooms and a cook and centre manager that has seen a 30 per cent drop in revenue due to COVID-19 the key support payments will be roughly as follows:

ECEC Relief Payment = 50per cent of revenue in reference period = $62,100 x 50per cent = $31,050

JobKeeper Payment = $1,500 per employee = $1,500 x 13 employees = $19,500

Total payments to receive per fortnight = $31,050 + $19,500 = $50,550

This compares to the $62,100 of revenue received in the reference period.

If a service is not eligible for JobKeeper the total received will be just the ECEC Relief Payment.

If a service is not eligible for JobKeeper and charges fees of more than $11.98 the service will just receive the ECEC Relief Package, but a lower amount than outlined above.

If a service is eligible for JobKeeper, the service will receive both funding streams.

Please note this is a hypothetical example for illustration purposes only. The actual outcome for each service will be dependent on a range of factors including but not limited to the ones identified above but also rostering policies, rental amounts and other expenses.

Is there anything else I need to know?

Yes, a service will now be able to waive the gap fee for families whose children are not attending where a service remains open.

This can be retrospectively applied from the 23 March 2020 and essentially extends the gap fee “waiving” policy that was introduced earlier in the month for services that were ordered to shut for public health reasons.

This provision has been included in the Department of Education’s communications with services but is not a mandatory directive. Services are able to make their own decision as to how they approach gap fees in the 23 March to 6 April period based on their own circumstances.

So what do I say to parents?

The key message to parents is that care is now free for them in the sense that they do not have to pay the service and the service will not bill them.

Parents who have made the decision to withdraw children for financial reasons can now re-enrol those same children as care is free.

For those parents that have withdrawn their children for COVID-19 related reasons and still feel uncomfortable about re-enrolling their children, it is important to encourage them to at the very least re-enrol their children, although they do not need to attend care, so that when the ECEC Relief payments stop they can immediately start receiving CCS again.

If parents start to re-enrol in large numbers and service costs start to rise to a level that becomes too high even after the ECEC Relief Payment is received, then an application can be made to increase the ECEC Relief Payment percentage.

Do I have to accept new enrolments from families in this period?

In short, the answer to this is no.

Services are not compelled to accept new enrolments from families if they do not want to. They are only expected to prioritise access for essential workers.

And what about children that would previously have been classed as “at risk”?

Children who are at risk, per the previous ACCS guidelines should receive priority for re-enrolment and support, and referrals to external agency support should continue, in line with ACCS guidelines. Services that have a high proportion of ACCS families can ask for an increase in their payments to help cover any additional costs.

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