THE HON DR ANNE ALY MP

Minister for Early Childhood Education

Minister for Youth

SUBJECTS: The Federal Budget; Cheaper Early Childhood Education.

TOM CONNELL, HOST: Well in the Budget, of course, plenty of new measures. There was also a significant one, even though we already knew about it, that is an increase to the rebate for childcare, for those with children in childcare. Joining me now, the Early Childhood Minister Anne Aly. Thanks very much for your time. So, not a new announcement, but it’s new money hitting the economy. What's the overall inflationary impact of that?

MINISTER ANNE ALY: Well, we know that the Budget was delivered at a time of high inflation and Jim Chalmers, the Treasurer, I think has done an amazing job in ensuring that the Budget does not add any inflationary pressure to the economy-

CONNELL: But that spending though -

ALY: And that he’s come out and said that he’s supremely confident that that's the case. And all the advice that we have had and all the modelling that we have done has said that this does not add inflationary pressure -

CONNEL: That's childhood specifically?

ALY: Specifically early childhood education -

CONNELL: So, how does that work. So, the prices go down because it's a rebate. The CPI measurement of childhood will go down, childcare will go down. And then even though people will spend some of that money overall - that's how it works?

ALY: You're assuming here, Tom, that the money goes straight into the pocket of the parents or the families -

CONNELL: I didn't say that. What I said was I'm assuming the price goes down because of the rebate -

ALY: The money gets paid to the provider. Right. So, the provider can then provide the service to the families and pass that cost down to the parent -

CONNELL: And so the CPI measurement of childcare effectively goes down?

ALY: Yes.

CONNELL: And even if people spend the money, at worst it'll be neutral. That's how it effectively works. Is that the?

ALY: Well, the advice that we've had is that it will not add any inflationary pressure to the economy.

CONNELL: Okay.

ALY: That's what we've been told and that's what we -

CONNELL: So, let's look at the changes though, because on the demand side, the supply side seems to be a big issue still. So, in terms of major issues going right now, two thirds of centres have a cap on new enrolments. One in six have a waiver to not have to have the minimum number of qualified staff because of staff shortages. Would you call those numbers a crisis?

ALY: Look, I think there are significant issues and I have said that from the start. We've inherited significant issues, to be frank, because the previous government did absolutely nothing to address any of those issues over the last ten years. There are significant issues, there are significant workforce issues, there are issues in the way that the market operates, where there are areas where there is a lot of demand but very thin supply, for example. And that is why we've asked the Productivity Commission to do a review of the early childhood education and care sector and the ACCC to do a review of pricing.

CONNELL: But the increase in demand now is happening with that level of crisis already. Is that going to be a problem?

ALY: It has been happening for a while, Tom -

CONNELL: But those numbers are going to get worse aren't they?

ALY: It's not something that's only happened over the last twelve months.

CONNELL: No I know that, but I'm just saying the problems remain just as you sort of [indistinct] -

ALY: And we're cognisant of those problems, believe me. They keep me awake at night, these problems. That is why, in the last Budget, we also announced a $72.4 million package to address some of the workforce issues that have been directly raised with me by early childhood educators. And I was very pleased to be able to respond directly to those concerns that were raised about workforce with the package that addresses professional development and the cost and price of -

CONNELL: The sector says what's really needed is a pay rise, though. So, $72 million spent on that. $11 billion spent on a government pay rise for aged care workers. Are we going to see staff go from childcare to aged care?

ALY: There are two very different sectors, and I think you say childcare, it's actually early childhood education, and we need to recognise that those who educate our children in early childhood learning centres are actually educators. It's not a direct kind of skill set, if you like, from early childhood education into aged care, that's the first thing. But let me also say this, Tom, because Australians are seeing their wages finally start to move in a very long time, and that's due directly to the actions that this government has taken to get wages moving again. That includes an increase in the wages of some of the very low earners, including some in early childhood education and care.

CONNELL: But we haven't seen a government backed pay rise, so we'll see what happens with wage decisions. I'm well aware -

ALY: That's right we have to wait and see what happens with the Fair Work Commission. We've got that mechanism in place.

CONNELL: So, is it still on the table that if there's a significant pay rise that sort of spreads out through the sector, that the government could foot the bill? Is that on the table?

ALY: Well, what we've said that since we introduced the IR legislation last year, that created this mechanism to make the bargaining process easier for early childhood education and care workers that'll begin in June. What we've said is that when the time is appropriate, we are willing to come to the table, but we cannot pre-empt the outcome of this bargaining..

CONNELL: What does come to the table mean? Pay for it? Pay for the pay rise?

ALY: Well, that remains to be saying, but we can't pre-empt what the outcome of the bargaining process is going to be.

CONNELL: But in aged care, you did pre-empt it. You said we'll pay for whatever it is. Childcare, you're going to wait to see. But it is possible the government will foot the bill for the for this for a pay rise in this sector as well. Is that what you're saying?

ALY: What I'm 100 per cent guaranteeing is that we are willing to come to the table when the time is appropriate. What I'm saying is that we are waiting to see what the process looks like and what the outcome is, but we cannot pre-empt that.

CONNELL: Minister, thank you for your time.

ALY: My pleasure. Thank you Tom.

[ENDS]