Government commits to funding 15% educator pay increase – here’s what we know so far

The Australian Government has agreed to fund an increase in educator wages in a move that marks the end of an extended period of negotiations made possible by new Industrial Relations Laws introduced in November 2023.  

 

A number of senior politicians have commented on the announcement with Prime Minister Albanese noting that it was a “great day for everyone who cares about childcare (sic.)” and Treasurer Jim Chalmers saying that the pay boost is likely to improve access to affordable care, “while boosting productivity and workplace participation”.

 

Although details of the plan at this stage are relatively scarce the following is what is known, and not known, so far. 

 

What has the Government committed to?

 

The Government has committed to fund a 15 per cent pay increase for both early childhood and outside school hours care educators, with the rise to be spread over two years. 10 per cent of the rise will begin in December 2024 and a further 5 per cent in December 2025. 

 

Was this expected?

 

To a degree, yes. 

 

Firstly, the Treasurer had signaled that an educator wage increase was on the agenda in this years Budget and secondly, the Aged Care sector, which historically has resembled the Early Childhood Education and Care (ECEC) sector in terms of composition and low pay rates, received a 23 per cent Government funded boost.

 

Will all educators regardless of where they work benefit?

 

No, not initially it seems. 

 

Only educators that work at employers that have “opted in” to the multi enterprise agreement (MEA) that will govern how the terms and conditions of the scheme will be applied will benefit. 

 

So who are those providers?

 

Thus far employer groups including the Australian Childcare Alliance (ACA), Community Early Learning Australia (CELA), Community Child Care Association (CCCA) who are representing around 64 different providers including Big Fat Smile and Gowrie NSW as well as G8 Education participated in the negotiations so are expected to be parties to the MEA. 

 

Is participation limited to only this group?

 

No, it won’t be. 

 

It is understood that any provider can agree to sign up to the new employment agreement and access the funding streams if they have an enterprise agreement registered with the Fair Work Commission that outlines their commitment to pass the money to educators and they agree to adhere to a set of conditions. 

 

So what are the conditions that providers need to adhere to in order to access funding?

 

Although there is little detail on this yet, there are two key conditions. Firstly, that they have or sign up to a registered enterprise agreement, the second is that they must cap fee increases to 4.4 per cent over the next twelve months. 

 

What details around the fee increase constraints exist?

 

Only that any increases between 9 August 2024 and 8 August 2025 must not exceed 4.4 per cent, a level arrived at by combining the key inflation indicators, the consumer price index and wage price index. 

 

And how will this be enforced?

 

The provider will have to sign up to a legally enforceable agreement between the Commonwealth Department of Education, State Department of Education, and the centre itself  that they won’t increase fees by more than 4.4 per cent if they want access to the funding.

 

What happens if providers are not prepared to cap fees and therefore dont sign up?

 

In the event that a provider does not want to sign up (because perhaps they don’t want their fees capped or are already fully staffed and are not impacted by shortages or already pay above award wages) they can actually be compelled to participate via Industrial Relations laws that allow for Union members in the service to organise and vote to join. 

 

If 50 per cent plus one employees at a service vote to join, then the employer must sign up. 

 

What happens if an employer already has an enterprise agreement that pays above award?

 

This will be a matter for your employer but as noted above if the agreement is consistent with Fair Work requirements it can be registered and the provider can participate in the funding. 

 

How long has the funding program been agreed for and how much will it cost?

 

For two years initially at a cost of $3.6 billion. 

 

What happens next?

 

Like many such announcements from the Government the devil is often in the details so the next important milestone will be more information about the enterprise agreement, the rollout and the participation conditions. 

 

These are expected in due course and will be reported on by The Sector’s team.