Government childcare stimulus package explained

15 minute read  15.04.2020 Penelope Eden, Maria Parisi, Nicole Morgan

The Australian Government's stimulus package announced on 2 April, supports the viability of the early childhood education and care sector and ensures that children of essential workers and vulnerable and disadvantaged children are able to access care during the COVID-19 pandemic.

Key takeouts

  • The package aims to ensure early childhood education and care services remain open to support essential workers and disadvantaged and vulnerable children and families
  • A weekly payment will be made to early childhood education and care services that remain open and meet other conditions
  • Services should obtain advice from professional advisers and consider their options

What is the package?

On 2 April 2020, the Federal Government announced the Early Childhood Education and Care Relief Package (Package) which aims to ensure early childhood education and care services remain open to support essential workers and disadvantaged and vulnerable children and families. The package came into effect 6 April 2020 and will be reviewed after one month. It will continue for 12 weeks until the week ending 28 June 2020, at which point an extension of the Package will be considered.

Under the new Package, the Government will provide a weekly payment to early childhood education and care services that remain open and meet other conditions. The Package complements the Government's JobKeeper wage subsidy and other Government initiatives supporting small businesses (which are open to early childhood education and care services that meet the eligibility requirements for these other initiatives).

The Package payments replace the usual Child Care Subsidy (CCS) and Additional Child Care Subsidy (ACCS) payments. Session reports will not need to be uploaded to the CCS System during this time. Given that session reports will not be submitted, absences will not be counted from 6 April 2020. However, services need to continue maintaining attendance records and providing statements to families of the care provided during the Package period. Centre-based care services, family day care services, outside school hours care services and in home care services will qualify for the Package payments if the relevant conditions are met.

How is the payment calculated?

Payments under the Package are based on 50% of the service's hourly session fee or 50% of the relevant hourly rate cap (whichever is lower) for sessions of care in the fortnight preceding 2 March 2020. For services that provide vacation care only, Package payments are calculated based on the equivalent of the average weekly amount for the vacation period between Term 3 and Term 4 in 2019 (September-October School Holidays). If a service charged fees for only one week of care during this fortnight or vacation period, as applicable, (eg a start-up), the amount will be calculated on the week in which care was provided and the amount doubled.

The Package may not benefit all services or go far enough, particularly if:

  • Your fees are above the relevant hourly rate cap;
  • Your service is a start-up and the fortnight preceding 2 March 2020, is not a representative example of fee income as occupancy increases;
  • The Package payment may not be enough for services to meet costs and expenses to maintain usual operations, including staffing levels (due to ratio requirements) and rent (particularly if a service has not been able to secure rent relief); or
  • The occupancy of your service has not been significantly impacted by COVID-19 (eg the service is located on hospital grounds or a family day care service has experienced a surge of enrolments from essential workers) and the service could have achieved higher fee revenue if fees had been charged.

Services may qualify for greater Package payments if exceptional circumstances exist

The Exceptional Circumstance Supplementary Payment should be requested, for example, where the service requires greater funding due to increased enrolments of vulnerable children or children of essential workers, among other reasons. At this stage, it is unclear how greater Package payments will be calculated and whether it will be sufficient for services.

Criteria for accessing the payment

In order to receive Package payments, the Government has previously indicated that services must:

  1. Stay open with at least one child enrolled for care by the service during the week, unless closed on public health advice or for other health and safety reasons;
  2. Ensure families are not charged a fee, including an out-of-pocket or gap fee;
  3. Prioritise care to [children of] essential workers, vulnerable and disadvantaged children, and previously enrolled children. Presumably, this order of priority will apply;
  4. Continue to record attendance of children (including in and out times); and
  5. Comply with all other provider obligations including National Quality Framework and other relevant conditions of approval under Family Assistance Law. 

Services do not need to apply in order to receive the payments. Payments will be calculated by the Government and made automatically into the service's bank account from the week beginning 6 April 2020 until the week ending 28 June 2020. Compliance with the above conditions will be monitored by the Government.

The Government is treating the Package payments as business continuity payments under the family assistance laws. An amount of business continuity payment in relation to a service for a week is nil if:

  • the Government is satisfied that the provider has failed to comply with any of the requirements in the Early Childhood Education and Care Relief Package Payment Conditions document, as published on the Department of Education, Skills and Employment's website from time to time. We note that the name of the document published on the Department's website should be corrected by the Government to accurately reflect the name of the document described in the family assistance laws. The payment conditions outlined in the Package Conditions are similar (but not identical to) the conditions outlined above but we have not explored the Package Conditions in detail in this update;
  • the provider receives fees in relation to sessions of care provided to children during the week by services of the provider;
  • the service is closed for a reason other than because a health agency has advised or required the service to close because of the COVID-19 pandemic; or
  • there are no children enrolled for care by the service during the week.

Can services charge families any fees?

The Government has stated that services cannot charge fees on and from 6 April 2020 to be eligible to receive the Package payments. The changes to the family assistance laws provide that Package payments will be reduced to $nil if, among other reasons, the 'provider receives fees in relation to sessions of care…' (our emphasis added), rather than 'charges' fees. The Package Conditions provide that families 'must not be charged any child care fees' during the Package period and 'therefore, services will not be required to collect the…'gap fee' amounts'.

It appears that families will continue to incur a liability to pay for the sessions of care under their complying written arrangements but services will, in effect, be required to waive these fees to remain entitled to receive Package payments. Consideration will need to be given whether under the changes to the family assistance laws services can invoice families for the fees but then waive those fees in that invoice or whether families simply must not be invoiced for the fees. There may be different tax consequences depending which approach is adopted. Regardless, services will need to meet their costs and expenses from the Package payments (or any other external sources of income), with no contribution of fees for sessions of care from families.

Families are often required to pay fees in advance. Services should arrange for any fees paid in advance for sessions of care to be provided on and between 6 April and 28 June 2020, to be refunded to families.
Consideration will need to be given to whether under the changes to the family assistance laws, services can receive amounts from families for:

  • Late pick-up (additional wages may be incurred by a service if children are picked up outside of operating hours); and
  • Any incursions or optional classes (such as language and dance classes) provided at the service within the COVID-19 directions and guidelines issued by State and Territory governments about the safe operation of early childhood education and care services.

The Package Conditions provide that the Government expects that services will not seek to replace the gap fee through new and additional charges to families. The Government is encouraging families to report instances of this behaviour.

Services may wish to consider notifying families of the changes to the family assistance laws and make it clear that, at this stage, the Package ends on 28 June 2020 and that fees in relation to sessions of care provided on or after 29 June 2020 must be received by the service once the Package ends.

Who is an essential worker?

Services must prioritise providing care to children of essential workers. Doctors, nurses, pharmacists, other healthcare providers, workers in the aged care or disability sector, paramedics and other emergency workers are clearly 'essential workers' for the purposes of the Package. However, it is likely that 'essential workers' will be interpreted more broadly than these frontline roles. The Prime Minister has stated that anyone with a job is an 'essential worker'. Education Minister Dan Tehan has stated that the Package will not be based on means-testing, but is designed to ensure that all parents who need to attend work will be able to access child care services during the pandemic.

Consideration will need to be given whether:

  • parents with a job but who work from home are within this priority group; or
    only those parents with a job who are unable to work from home fall within this priority group.

Who is vulnerable or disadvantaged?

The Package also requires services to give priority to vulnerable and disadvantaged children. The Government has not provided a definition of children who fall into this category. However, in other recent amendments to the Child Care Subsidy Minister's Rules 2017 (Cth), the Explanatory Statement provide that a 'child in vulnerable or disadvantaged circumstances includes, but is not limited to, children from families who have complex and multiple challenges, which adversely affect the child's social and developmental opportunities and outcomes. Challenges could include poverty, child neglect, a primary carer with a health or disability issue, and domestic violence or other traumas, where these factors have the effect of restricting the child's access to early education and care'.

If a child is or was at risk of serious abuse or neglect and the family or the service would have been eligible for ACCS (wellbeing) but for the Package, the child should be given priority under this requirement.

Other considerations

The Government has amended its statements regarding CCS eligibility and has confirmed that:

  • 'all Child Care Subsidy (CCS) eligibility requirements will continue in place', including the requirement for children to meet certain immunisation requirements; 
  • families with children who do not meet the CCS immunisation requirements can attend services (other than in home care services) being supported by Package payments where permitted to do so under State or Territory regulations. These children must be enrolled under a Relevant Arrangement or Organisational Arrangement; and
  • children attending an in home care service must be CCS eligible. Children who do not meet the CCS immunisation requirements cannot attend in home care services.

The Government has also confirmed that families:

  • who do not meet the CCS residency requirements can be enrolled under a Relevant Arrangement or Organisational Arrangement enrolment while payments under the Package are being made to a service (noting the requirements to prioritise care to certain children); and
  • who have children enrolled under a Relevant or Organisational Arrangement can attend a service receiving Package payments, for free during the Package period.

A family's income (which is used to calculate CCS entitlements) will not be taken into account during the Package period.

Under the Package Conditions, priority of access is given to 'children of essential workers and vulnerable and disadvantaged children'. However, the Government has confirmed that services are not obliged to accept new enrolments or increase session lengths where families request it and that this is a business decision for the service. Presumably this includes new enrolments or an increase in session lengths for 'children of essential workers and vulnerable and disadvantaged children'. However, this is unclear and should be expressly clarified by the Government.

Are other subsidies and support available?

Services should explore options for government assistance which may be available, including applying for the JobKeeper wage subsidy scheme if they are eligible. Government links to some of these programs include:

Services should also keep up to date with any intervention by the Government with regarding commercial leases which may provide assistance during these unprecedented times. State governments have indicated that they are continuing to provide certain types of kindergarten funding to services (eg the Queensland, Victorian kindergarten funding schemes). Services can no longer apply for business continuity support from the Community Child Care Fund Special Circumstances Grant Opportunity.

Waiver of gap fees while service is open before 5 April and changes to allowable absences

Services will have the discretion to waive any gap fees for families whose children remain enrolled but who were absent from care between 23 March and 5 April, if the service was open.

Commencing on 19 April 2020, families will be entitled to 62 allowable absences for the 2019-20 financial year, which has been increased from the standard 42 absences. From 24 March 2020, a medical certificate is not required for additional absences on or before 31 December 2020 for an illness, if the child or a family member reports symptoms similar to the symptoms of COVID-19. Also, additional absence days may be claimed if a family (or other relevant person such as the service or a government agency) decided the child's attendance would put the child or any other person at risk of contracting COVID-19 and the absence occurs on or before 31 December 2020 during a period that is reasonable having regard to advice published by a government agency.

Services are not obliged to waive gap fees in the above permitted circumstance. However, it will encourage families not to withdraw children from care and to use the allowable absences while enabling the service to be paid CCS until 5 April 2020. It is a business decision for the service to determine whether all or part of the gap fee will be charged or recovered. If fees have been paid, a service may wish to offer a refund to families or credit their family account.

It appears that services will not be able to simply waive gap fees for families whose children attended the service between 23 March and 5 April 2020 (ie the service will need to take all reasonable steps to enforce the gap fee for these families). However, a family may be entitled to ACCS (temporary financial hardship) which provides short-term support to families experiencing temporary financial hardship if families have had a substantial reduction in their ability to pay child care fees due to, for example, loss of employment. Services should assist families with this process if support is required.

What happens if you decide to or must close your service?

Services will not be eligible for payments under the new Package (nor will CCS be paid to services) if they make a business decision to close (and the service has not been directed to do so by public health advice).

However, since 23 March 2020, gap fees can be waived if a service is closed because a health agency (ie a Government agency with responsibility for human health) has advised or required the service to close as a result of the COVID-19 pandemic. The fees can be waived for the required or advised closure period until the earlier of the last day of the closure period and 30 June 2020.

The Package Conditions provide that services that are required to temporarily close by state or territory health or education regulatory authorities for COVID-19 related reasons will be eligible for the payments [under the Package].

The Government has indicated that services directed to shut down because of COVID-19 should follow standard processes for activating a 'period of local emergency' (in the Government's COVID-19 Frequently Asked Questions for early childhood education and care providers). It is unlikely that, from 6 April 2020 until (at least) 28 June 2020, the service will need to activate this process but this should be expressly clarified by the Government (noting that this requirement is not contained in the Government's Information for early childhood education and care providers and services on Early Childhood Education and Care Relief Package payments from 6 April 2020).

State and Territory governments are responsible for making any decisions and directions about whether services should close. Services must notify their relevant State or Territory regulatory authority of any closures within 24 hours. Services will also need to notify the Government of any closures under family assistance laws.

How will the Package payments affect families on ACCS?

On and from 6 April until 28 June 2020, the Package payments will be made instead of ACCS. The Government has confirmed that:

  • If current ACCS determination continues past the Package payment period, the families will return to their ACCS entitlement (and that this will be the case for most families receiving ACCS (grandparent));
  • If family's ACCS (transition to work) eligibility expires during the Package period (or the family requests to cease this ACCS), the family will need to apply for ACCS (transition to work) if they meet the eligibility criteria for the payment to recommence after the Package period;
  • If family's ACCS (child wellbeing) determination expires during the Package period, services will need to apply for a new determination to ensure that ACCS (child wellbeing) continues to flow after the Package period ends. Services are encouraged to submit determinations prior to the end of the Package period to avoid gaps;

If children are enrolled at a service during the Package period who otherwise would be considered 'at risk' for the purposes of ACCS (child wellbeing), the service is required to make a referral to an appropriate support agency as per the existing ACCS (child wellbeing) referral requirements; and

Any pending applications for ACCS (temporary financial hardship) will still have their eligibility assessed for the period prior to 6 April 2020.Encouraging re-enrolment

The Government has emphasised the importance of services encouraging parents who have recently withdrawn their children from the service to re-enrol. Families who have ceased enrolment since 17 February 2020 are being encouraged to re-enrol their children. The child needs to be enrolled in accordance with the family assistance laws (among other criteria) to maintain CCS eligibility once the Package ceases.

Services should communicate with parents to encourage re-enrolment, including information about the new Package and updated information about steps the service is taking to ensure the safety of children, their families and staff members, and how the service will comply with the State and Territory directions and guidelines relating to COVID-19.

Key considerations

Services should obtain advice from professional advisers and consider their options, including whether the service should:

  • remain open and ensure that they meet the relevant conditions of the Package each week so that they can rely on the Package payments to assist them through these unprecedented and disruptive times. In particular, services should take steps to minimise costs, where possible (including ensuring rostering systems are efficient while meeting legislative requirements) and, subject to the requirements of the Package Conditions, consider whether they will, as a matter of policy during the COVID-19 pandemic:
    • encourage and accept new enrolments or increased session lengths requested by families (particularly if these families are likely to remain at the service after the Package ends and, if exceptional circumstances exist, the service may apply for greater Package payments); or
    • not accept new enrolments or increased session lengths requested by families (in light of any potential increase in costs (eg due to staffing) and the amount of Package payments that will be received by the service;
  • opt out of receiving the Package payments and continue to operate by charging full fees to families. Practically, it is mostly unlikely that families will pay full fees in the current circumstances. The Government has stated that provider approval under the family assistance laws must be suspended to opt out of Package payments and reasons must be given to the Government; or
  • temporarily close due to business reasons, noting that a closure (even if temporary) may assist in controlling costs but it is likely that it will have impacts on staff and families, approvals and lease obligations and the service will not be entitled to Package payments.

It will be essential to engage in clear messaging with families, outlining the steps your service is taking with respect to the Package and the COVID-19 pandemic.

Contact

Tags

eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJuYW1laWQiOiIzYmUxMWQ1Ni0zNjk4LTRkNjMtODVhYy02NTljOTNiMjFiYmMiLCJyb2xlIjoiQXBpVXNlciIsIm5iZiI6MTczMTQ2NTU4NiwiZXhwIjoxNzMxNDY2Nzg2LCJpYXQiOjE3MzE0NjU1ODYsImlzcyI6Imh0dHBzOi8vd3d3Lm1pbnRlcmVsbGlzb24uY29tL2FydGljbGVzL2Vhcmx5LWNoaWxkaG9vZC1lZHVjYXRpb24tYW5kLWNhcmUtZmVkZXJhbC1nb3Zlcm5tZW50LXN0aW11bHVzLXBhY2thZ2UtZXhwbGFpbmVkIiwiYXVkIjoiaHR0cHM6Ly93d3cubWludGVyZWxsaXNvbi5jb20vYXJ0aWNsZXMvZWFybHktY2hpbGRob29kLWVkdWNhdGlvbi1hbmQtY2FyZS1mZWRlcmFsLWdvdmVybm1lbnQtc3RpbXVsdXMtcGFja2FnZS1leHBsYWluZWQifQ.G0hEl-RGusJjichrAhpyh_JHl7QJ-CmejpyMpRqfnKE
https://www.minterellison.com/articles/early-childhood-education-and-care-federal-government-stimulus-package-explained