Parents face hefty childcare fee hike unless Government extends sector’s pay top-up

Parents face with double-digit rises in childcare fees unless the Federal Government extends a $3.6 billion program covering better pay for educators. If it doesn’t extend the payments that offered educators a 15 per cent pay rise, the sector warns, parents will face a hefty fee hike of between 10 and 15 per cent at the end of next year. The Government announced late last year it would offer grants to cover a staff pay rise of 10 per cent this year and a further 5 per cent next year, in exchange for a cap on fee increases. Providers believe the government is gearing up to extend the scheme to cover the gap between an imminent Fair Work Commission ruling on pay and work to sort out a new funding system but that’s not yet assured. Goodstart Early Learning, the nation’s largest not-for-profit provider, said the grants had been “an absolute game changer.” It’s seen a 36 per cent drop in its job vacancies as fewer educators leave the sector, and more people applying for each job. “A more stable workforce means better quality early learning for children, which is great news for our families,” Goodstart chief executive Ros Baxter told The Sunday Times. “We strongly support the wage subsidy being retained beyond the December 2026 expiry of the current grants. This policy has been a huge success and delivered on its goal of a better-paid, more stable workforce with no extra out-of-pocket cost for families. “We want to see that continue.” By mid-August, about 60 per cent of all eligible providers had applied for the payment. This includes large providers such as Goodstart and for-profit group G8, so it covers 90 per cent of eligible workers. The sector has privately criticised a clunky system that has taken months in many cases to approve applications. Only about 60 per cent of applications by day care centres and outside school hours care services have been approved to date, covering 7181 providers, according to government data. Applications opened last October. The scheme currently covers two years of pay rises, until the end of 2026. The Fair Work Commission in April made a draft decision that would see most childcare workers awarded a permanent 23 per cent pay rise. It noted the Government hadn’t yet committed to help providers cover this, unlike for the aged care sector. But the Commonwealth’s lawyers have asked for the final decision to stage the pay increase so that it reaches 15 per cent by the end of 2026 — when its interim retention payments end — but further rises are delayed until mid-2028. Multiple sources in the sector have interpreted this as the Government readying to extend its payments for two years while it works to bring a universal childcare system to reality. The Government says it’s waiting for the final Fair Work decision, due in October, before it decides what to do. Wages account for about 70 per cent of costs for childcare providers. Few providers would be able to absorb the costs of a significant wage hike without raising fees. But it was also safe to say the government wouldn’t be ready by the end of next year to implement universal childcare or any new funding system, Centre for Policy Development deputy chief executive Annabel Brown said. “Government will be contemplating the potential of just extending the worker retention payments for another one to two years as it works out the funding approach that it wants to take,” she said. Early Childhood Education Minister Jess Walsh said the worker retention payments were “already paying big dividends” with vacancies down across the board. “We know that a quality workforce is the foundation of a quality universal early education system,” she said. “Better pay means higher retention for the profession, creating a steady environment and better outcomes for children and families.”