Ten key questions facing ECEC leaders as they plan for a return to the CCS system

by Jason Roberts

May 18, 2020

With both the Prime Minister and Education Minister confirming a return to the CCS system after the expiry of the ECEC Relief Package is more or less a certainty, although detail has not been provided, the focus of early childhood education and care (ECEC) leaders will now shift to planning for a post COVID-19 operating environment. 

 

With so much uncertainty as to what that future might look like The Sector has compiled a list of key questions that will need to be answered to ensure their organisations are prepared for a post COVID-19 future.   

 

1. How will switching off “free childcare” impact my enrolments?

This in the short term is the key question for ECEC leaders to grapple with. 

 

The growth in enrolment and attendance levels in recent weeks across the sector has been well telegraphed. With schools returning and families becoming increasingly confident demand for ECEC services has continued to climb with some services now experiencing levels of enrolment at or above the March 2020 reference fortnight used in the ECEC Relief Package. 

 

But how many of these families will still be there once “free childcare” has been switched off? How many of the still absent former families will be returning? How many of the new families will continue attending? And what about the absences rules? Will they still apply?

 

The uncertainty around these questions will come into sharp focus as 28 June 2020 approaches. 

 

2. What approach do I take for new enrolments ahead of 28 June to mitigate the risk associated with switching back to a paid ECEC model?

It is one thing to recognise and understand that a portion of current enrolments and attendances will not carry over into July 2020 but it is another to be able to prepare a service in advance for the inevitable reset that will come once free child care is switched off. 

 

For those operators that are currently operating below capacity there will be an incentive to sign up as many new families as possible between now and 28 June. However, their ability to do so will be constrained by the financial reality of the ECEC Relief Package whose payments are fixed based on occupancies recorded pre COVID-19 taking hold. 

 

For those operators already tracking at or close to capacity the push will be to sign up enough new families to replace those that are lost, but not too many that license place limits are breached and families will need to be turned away.

 

Irrespective of the different strategies adopted by operators a universal challenge will be securing parents CCS approval in advance of commencement in an environment where CCS, and therefore associated Centrelink activity is currently switched off. 

 

3. How will families and team members respond to non COVID-19 winter flu outbreaks? Will children be kept at home and gap fees not paid?

As we move into the winter months the likelihood that non COVID-19 related colds and flus will flare up as well as the outside chance that COVID-19 related illness will re-emerge. 

 

The question will be how do services manage these different types of outbreaks and how do services manage parents’ responses to these outbreaks especially having been conditioned to believe ECEC should be free if illness occurs as per the COVID-19 outbreak.  

 

Will this lead to an increasing prevalence of parents refusing to pay gap fees when their children are unwell and held back from the service, and could it also lead to concerns amongst the floor based teams should “runny noses, coughs and sniffles” become persistent and prevalent? 

 

4. What happens if the ECEC sector stops receiving JobKeeper?

The JobKeeper policy was designed to work in tandem with the ECEC Relief Package. It is therefore difficult to argue that JobKeeper will be extended without the ECEC Relief Package being in place. 

 

Should this be the case, a return to the CCS system and a reversion to “old income” levels will likely mitigate to some degree the loss of JobKeeper payments at a service level, but the uncertainty around what income might look like after 28 June, due to factors articulated in point one creates a challenging risk to prepare for. 

 

In addition, the JobKeeper uncertainty is not only limited to whether it is extended to the ECEC sector after 28 June, but also what happens to the general demand for ECEC services once the package itself ends after 27 September 2020 (or even before as some speculation suggests may happen), and those employees that are let go transition across to the JobSeeker support streams. 

 

5. How will CCS, an activity-based model, cope with unemployment at 10 per cent or more?

The CCS system is an “activity-based” subsidy model whereby the number of hours of subsidised care is linked to the number of hours of activity that parents complete in a given fortnight with the range of recognised activities including paid work, training courses, volunteering and actively looking for work. 

 

Both parents need to declare their activity to trigger eligibility for the funding stream. 

 

The question is whether this model, constructed and launched in a healthy economic environment, will be able to withstand unemployment levels as high as 10 per cent as forecast by the Treasuries models and whether the structures for eligibility built into the system that were designed to boost “workforce participation” will transition to a very different economic backdrop. 

 

6. What about Centrelink? How will they manage with a surge in CCS/ACCS applications?

The challenges experienced by the sector during the transition to the CCS subsidy model in July 2008 were widespread but one area of repeated frustration and concern was Centrelink and its inability to register, process, and approve family applications in a timely and consistent manner. 

 

Will this experience be repeated? Especially in light of an expected jump in ACCS applications which by their very nature require greater input from Centrelink and ultimately approval before they can be signed off?

 

Switching off “free childcare” and switching off JobKeepers will lead to a spike in Centrelink related activity. The question is though, will they be prepared for it and how can the sector manage it?

 

7. Will the transition to CCS disadvantage LDC in NSW as the “free preschool for 6 months program” continues?

Queensland, Victoria and New South Wales all announced free kindergarten / preschool packages in the early stages of the COVID-19 pandemic with Queensland and Victoria committing to free kindergarten for Term 2 and New South Wales going one step further and committing to free preschool for six months. 

 

The NSW program will be made available to 700 state funded preschools and 38 mobile services which is a very substantial cohort and may impact parents’ decision making in light of it being free compared to long day care (LDC) kindergarten programs which will fall back under the CCS payments structures. 

 

8. What will happen to the supply of new centres post COVID-19? Will it fall or continue its rise?

Calling the end of the supply cycle has been a futile exercise in the last five years with the opening of new centres growing at above 4.0 per cent per annum on average and even accelerating in the three months ending March 2020 which recorded the fastest rate of LDC growth for at least 5 years

 

It is still too early to say whether COVID-19 will turn out to be a sufficiently large shock to change developer’s and operators behaviour around opening new centres. Greater insight will be available when the next ACECQA snapshot is released in early July 2020.  

 

In the short term however, the focus will turn to any centres closed during the outbreak and whether these centres will reopen once the operating environment normalises somewhat. 

 

9. Will working from home become the new normal and if so will it impact demand?

Although it is difficult to predict how Australian households will respond to a return to a more normal social and economic environment it is fair to say that COVID-19 has precipitated a greater understanding and acceptance of the potential for work to become decentralised (ie: home-based) and still be productive. 

 

It is therefore probable that even with office places opening up again and business as usual resuming, a significant portion of the workforce will elect or be instructed to “work from home” more often. 

 

The question, therefore, is how will this maturing trend impact demand for ECEC services? Yes 

 

Will we see families requiring less hours per day as they now have no commute to work, or less days per week as they now have proven routines in place that enable them to coexist with their children while working from home?

 

10. Will falls in female workforce participation force a change in ECEC demand patterns?

The unemployment statistics released by the ABS on 15 May 2020 confirmed a jump in the unemployment rate from 5.2 per cent in March to 6.2 per cent in April and that 104,500 more individuals were now without work. 

 

Digging deeper into the numbers it is clear that the distribution of job losses has not been equal between men and women, with the female participation rate falling by 2.9 percentage points whereas the male participation rate fell by 1.9 per cent. 

 

Although the employment data has yet to capture the full impact of COVID-19 and going forward the mix of male versus female job losses may change, this early spike in female related unemployment is a concern given the role that rising female workforce participation has had on ECEC demand in the past. 

 

It is too early to tell with certainty what the outcomes of any of these ten questions will be and the consequent impact on the short, medium and long term dynamics of the ECEC sector but they will undoubtedly questions that are central to the planning for the future that ECEC leaders will currently be engaged in to ensure that the transition to the new normal is as effective as possible. 

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