Childcare Fee Impact and Modelling Assumptions Following Wage Increases

Question

Senator O'SULLIVAN: Given that the worker retention payment is expiring on 30 November, how much notice will providers be provided of what's going to happen? Maybe it's a question for the minister in terms of when you will be making your decision about the replacement or new arrangements. Senator Walsh: We already have the mechanism in place with the worker retention payment, which goes to payments to services for the pay rise and also goes to capping of fees in return for the funding for the pay rise. Going to your earlier questions about fees, this is something that we are incredibly focused on. The fee-capping part of all of this has been, I think, incredibly successful. Fees have been capped at 31/2 per cent growth across the sector as part of the worker retention payment. So the infrastructure is there. As we've said and as you've said in your question, the current arrangements flow through to the end of the year. Government will have more to say when we can. Senator O'SULLIVAN: What assumptions were made regarding additional fee increases that are required to fund the 10 per cent award increase, which is coming in December this year; the 15 per cent increase, which is coming in July next year; and the 20 per cent increase in July 2028, if the worker retention payment ceases? Mr Reed: I would have to take on notice what the exact assumptions are, but we do have a forward estimates model-a microsimulation model-that uses our administrative data as well as assumptions around indexation, future demand and future fee increases. So I'd have to take on notice what the exact assumptions are in relation to the Fair Work Commission wage increases, but we do have a forward estimates model that does estimate these things and has estimated in the budget papers. Senator O'SULLIVAN: Have you got that here? Mr Reed: I could see whether I could get it prior to our session finishing. I don't have it in my pack. Senator O'SULLIVAN: We'll be here for a couple more hours, so, if you could do that, that would be good. What proportion of the increase would reflect higher projected childcare fees associated with wage increases? Have you got that? Mr Reed: What proportion of the- Senator O'SULLIVAN: What proportion of any of the increases would reflect higher projected childcare fees associated with the wage increases? When you say it's indexed and it's growing- Mr Reed: I would have to take that on notice, sorry. I don't have with me what the impact on fees would be. Senator O'SULLIVAN: Could you provide us with the assumptions used in the 2025 budget-so last year's-and MYEFO and then in 2026 regarding the projected numbers of children and families using approved childcare. Mr Reed: The projected number of families using child care? I can tell you that, I believe, based on this budget, or do you want to know what the difference- Senator O'SULLIVAN: Do you have last year, MYEFO and now this year? Mr Reed: Let me just check. I've definitely got this budget's projections, I believe. Senator O'SULLIVAN: Let's start with that. I'm after the number of children, not the amount- Mr Reed: I've got the number of children. In the projections for the next financial year, the number of children is 2,057,476. Senator O'SULLIVAN: Have you got last year's? Mr Reed: Last year's was 1,988,914. Senator O'SULLIVAN: MYEFO? Mr Reed: Sorry, I've only got this budget's projections, so they're the child numbers for last financial year or this current financial year. Senator O'SULLIVAN: Oh, so that was the actual. Is that right? Mr Reed: It's probably not actual. It's still a projection, but it's for this current financial year. I've got the projections over the forward estimates but based on this budget. I would have to take previous estimates on notice. Senator O'SULLIVAN: Could you come back to us with what was projected 12 months ago and in MYEFO as well.

Answer

Please see the attached PDF.

Documents

• Question with answer (PDF) (opens in a new tab)
• SQ26-000691.pdf (opens in a new tab)