Add Category
In short:
The government says there's more work to be done towards its goal of introducing universal early childhood education.
Finance Minister Katy Gallagher has also dismissed concerns the $3.6 billion pay bump for childcare workers would add to inflation pressures.
What's next?
The pay increase for early childhood educators is set to come into force in December.
Finance Minister Katy Gallagher says the federal government is working towards a goal of universal early child education, a day after announcing a $3.6 billion wage increase for workers.
The 15 per cent pay rise will be delivered in stages over two years from December in an attempt to address wage inequity for workers in the crucial female-dominated sector.
Senator Gallagher on Friday suggested the payment was a stop-gap measure to improve staff retention while the Fair Work Commission progressed through its award review and work continued toward making affordable childcare part of the broader schooling system.
"We are also doing a huge amount of work about how do we make early childhood education universal," she told journalists.
"There’s more work to be done."
The government has received a report from the Productivity Commission examining universal child care, but is yet to release it publicly.
In its draft report, the commission said expanding the sector's workforce was essential before any other measures towards universal early childhood education could succeed.
Prime Minister Anthony Albanese described the pay increase as a "first step" towards the goal of universal child care, which he said has to happen in stages.
The taxpayer-funded 15 per cent increase is tied to a commitment that early childhood education providers will not raise fees by more than 4.4 per cent for the first year of the policy.
Senator Gallagher said any fee increases after that would be watched closely.
"Theoretically, if they did that I imagine a lot of children and a lot of parents would go to other centres that aren’t doing that," she said.
Opposition Leader Peter Dutton on Thursday described the pay bump as a "one-off sugar hit" and questioned what would happen after the first 12 months.
"The government has to explain whether or not these workers are going to get this pay ongoing, or whether they will get a pay cut after the election," he said.
Government says pay rise won't be inflationary
Senator Gallagher also brushed aside concerns that the pay bump would further fuel inflation, after a former Reserve Bank assistant governor said the bank would not look favourably on the decision.
The announcement came just days after the Reserve Bank warned current spending levels were contributing to persistent inflation.
Luci Ellis, who is now Westpac's economic spokesperson, told the ABC on Thursday that given this context the bank would be worried about any new spending.
"Higher wages does mean more spending from more people, so that does mean at the margin the Reserve Bank will be thinking, 'well, that's a bit more demand from consumers,' even though they're only a small subset of consumers," she said on Insiders On Background podcast.
In response, Senator Gallagher said she did not expect the policy to have an impact on inflation because it was already factored into May's budget and information provided to the Reserve Bank.
"When you look at the things that are causing inflation, wages for the lowest paid is not one of the drivers of inflation in this economy," she said.
Mr Albanese also dismissed concerns over inflation on Friday, stating the pay rise would ensure the sector could attract and retain essential workers.
"We are giving these workers a decent wage so that the sector continues to be able to exist," he said.
"Every analysis says that if you continue to underpay workers in this sector then they would not be able to continue."