Unpacking the latest ECEC support measures for Metro Melbourne Services

Federal Minister for Education Dan Tehan has announced a new set of emergency support measures to support the early childhood education and care (ECEC) sector in Victoria in light of the move to Stage 4 lockdown in Metropolitan Melbourne and Stage 3 in Regional Victoria announced 2 August 2020.

 

The measures announced at a high level are two fold:

 

• Families will be allocated a further 30 days of allowable absences 
• Services will receive a further 5 per cent of reference period revenue top up business continuity payment. 

 

Notably, Mr Tehan stated that the new measures announced “will provide a service with on average between 80 per cent to 85 per cent of revenues” and therefore sustain visibility through the lockdown period. 

 

This article aims to unpack the new proposals and help understand the context behind Mr Tehan’s 80 per cent to 85 per cent assertion. 

 

How much will a service located in Metro Melbourne now receive?

 

They will receive a new Top Up Payment directly from Government equal to 5 per cent of revenues in the reference period which, like for the ECEC Relief Package payments, will be the fortnight ending 1 March 2020. 

 

This payment will be in addition to the 25 per cent Transition Payment currently being received. 

 

But won’t our service also be able to receive CCS for non permitted worker parents not attending?

 

In theory yes, but only if those parents register the days that they do not attend as allowable absence days. 

 

If they do this, then the service will continue to receive the child care subsidy (CCS) for their fees from the Government without families having to pay the gap fee. 

 

So it is important that a service encourages allowable absences to be used?

 

Yes, it is essential. 

 

The whole package is based around the assumption that allowable absences are being used and that’s why in this latest package the number of days was increased by 30.

 

Without this part of the package the visibility of the sector and all of the services, and their employees, within it are at risk. It is essential that services proactively engage families to ensure they take their allowable absences. 

 

That means that if a family has one child that attends 3 days a week there are sufficient absences for 10 weeks. Given the lockdown is set for 6 weeks, that should be more than enough. 

 

So how did Mr Tehan arrive at the 80 per cent of revenue mark? 

 

Mr Tehan’s comment is based on a set of assumptions that have not been made public however by working through an example, it is possible to see that where his estimates may come from. 

 

Example:

 

A service with 75 license places and fees of $100 per day is currently at 75 per cent occupancy. The daily revenues for the service is $5,625 (75 places x $100 fees x 75 per cent occupancy). 

 

This service receives 45 per cent of its fees from families as gap payments, and 55 per cent from the Government in the form of CCS. 

 

As a result of the Stage 4 restrictions 90 per cent of their enrolled families will no longer be able to attend because they are not permitted workers. The other 10 per cent will attend as normal. 

 

Families that will not be attending the service use their allowable absences and in so doing enable the CCS component of their fees to be paid.

 

This will equal $2,531 (90 per cent of current enrolments x $100 fees x 50 per cent CCS paid). In addition to this they will receive the gap and CCS for the permitted workers (10 per cent of enrolments) whose children are attending which equates to $750 per day (10 per cent of current enrolments x $100). 

 

So the total fees, both gap and CCS received will be $3,281 or 58 per cent of current revenues. 

 

We will then need to add on the Transition Payments and the Top Up Transition Payments which are being received and are equal to 25 per cent and 5 per cent of revenue in the March fortnight reference period. 

 

These, assuming revenues are the same as currently, will see the service receive $1,406 plus $281 respectively. 

 

Combining the gap and CCS received of $3,281 and Transition Payments of $1,687 we get $4,968 which is 88 per cent of current revenues. 

 

*It is important to recognise this is an example and all services will have different inputs and therefore outputs but regardless of specific service circumstances the example provides an indication of the framework to be applied when considering the financial impact of this latest announcement. 

 

But what about if our service has a CCS percentage of less than 50 per cent? 

 

This is a key point. Those services that receive less CCS from the Government would be at a serious disadvantage from those that receive more without any fault of their own. 

 

To address this the package includes a special provision that will see larger top up payments flow to services with less than 50 per cent CCS that have seen enrolments fall by 30 per cent. 

 

The Top Ups for eligible services will be between 10 per cent and 25 per cent depending on their specific circumstances and be paid in addition to the current 25 per cent Transition Payment. 

 

Are there any conditions to receive the new Top Ups?

 

Although complete details have not yet been published it is understood that the rules are similar to the existing Transition Payment scheme in place with no fee increases and employment guarantees being mandatory. 

 

And what about if my service is located outside of Metropolitan Melbourne? 

 

This package is only for services in the 31 designated metropolitan local government areas across. 

 

For a complete list please see the bottom of this article.

 

The Sector will continue to cover announcements and policy changes as they come to light. To access all relevant statements and transcripts from the Federal Government, please see here.