The Wage Justice for Early Childhood Education and Care Workers (Special Account) Act 2024 (Cth)(Wage Justice Legislation) commenced on 11 December 2024 and supports remuneration increases for workers in the early childhood education and care sector.

The Wage Justice Legislation establishes the 'Wage Justice for Early Childhood Education and Care Workers Special Account'. The purpose of the account is to make grants of financial assistance to 'approved providers', in relation to the remuneration of workers. When grants are provided, childcare operators are limited from increasing their fees, which is a measure designed to ensure the funding is passed on to workers.

The payment runs for 2 years and will fund:

• a wage increase of 15% above the modern award rates
• a minimum additional 20% funding for eligible on-costs (calculated against base funding).

Providers opt-in by applying for the payment and meeting the conditions.

To be eligible, providers must:

• be approved for Child Care Subsidy (CCS);
• operate Centre Based Day Care (CBDC) or Outside School Hours Care (OSHC) services;
• engage workers through a workplace instrument that:

• includes an obligation to pay workers at least 10% above current award rates;
• provides for an additional 5% above applicable award rates from 1 December 2025;
• applies until at least 30 November 2026;
• does not exclude penalties, loadings, termination payments, payments while on leave and superannuation from the above calculations.

• limit fee growth by a set percentage from August 2024. The fee growth cap is 4.4% between 8 August 2024 and 7 August 2025 and 4.2% between 8 August 2025 and 7 August 2026; and
• agree to pass funding on to all eligible workers through increased wages.

Preschools and kindergartens are not eligible for the payment.

In response to these eligibility requirements, more than 60 ECEC providers have signed up to the Early Childhood Education and Care Multi-Employer Agreement 2024-2026, a landmark multi-employer supported bargaining agreement that gives workers a 15% pay rise over two years, and obliges providers to apply for the retention payment.

The Fund includes:

• $500 million in targeted capital grant rounds focused on quality not-for-profit ECEC providers and state and local governments to establish new services and increase the capacity of existing ECEC services. Grants will be targeted to priority and underserved markets, including regional locations and the outer-suburbs. Where possible, services will be located on or near school sites.
• $500 million provisioned for future Commonwealth investment in owning and leasing a portfolio of early childhood education and care centres to increase the supply of services, with $2.3 million over two years from 2024-25 to undertake a business case to inform final design.

This initiative is in response to the Productivity Commission's inquiry into Australia’s ECEC system, which found that there was an undersupply of ECEC services, ultimately contributing to a barrier to ECEC access for families across Australia.

The Building Early Education Fund will deliver grants to providers and the Government will also explore options for the Commonwealth to invest in owning and leasing out services.

It will include a focus on co-locating services on school sites and on supporting the growth of high-quality not-for-profit providers.

The fund has not yet been established by legislation, so it is possible that it may not go ahead if the Albanese Labor Government is not re-elected.

The 3-day guarantee will provide cost-of-living relief to families and help ensure that children can access the benefits of high-quality early education and care. For ECEC providers, this means a larger proportion of families will be eligible for subsidised care, potentially increasing demand and revenue. However, providers will need to adapt their systems to accommodate the new guarantee, including ensuring they can accurately calculate and process subsidies for the increased number of eligible families.

From 5 January 2026, all CCS eligible families will get 3 days’ subsidised care each week for each child.

What this means, is that the first 3 days of care each week is subsidised (i.e. every family earning under $533,280 per year will get six fully subsidised days (72 hours) of child care per fortnight).

In addition to this, First Nations families will get 100 hours per fortnight of subsidised care and families who already qualify for 100 hours (due to work/study/exemption) will keep them.

Families earning over $533,280 in 2024-25 are not eligible for subsidised care – consistent with current settings.

Interestingly, the Senate referred the Bill to the Senate Education and Employment Committee for a Parliamentary Inquiry, and that inquiry remains underway notwithstanding the passage of the bill.