Early Childhood Education
Around one million families are set to receive free child care during the coronavirus pandemic under a plan from the Federal Government that will help deliver hip pocket relief and help the early childhood education and care sector make it through to the other side of this crisis.
Under the plan, the Government will pay 50 per cent of the sector’s fee revenue up to the existing hourly rate cap based on a point in time before parents started withdrawing their children in large numbers, but only so long as services remain open and do not charge families for care. The funding will apply from 6 April based on the number of children who were in care during the fortnight leading into 2 March, whether or not they are attending services.
The plan supports families while also ensuring as many of the sector’s 13,000 child care and early learning services as possible could keep their doors open for workers and vulnerable families who need those services.
The plan provides funding certainty to early childhood education and care services at a time where enrolments and attendance are highly unpredictable. This, along with the JobKeeper payment, means services can offer free education and care.
The plan means the sector is expected to receive $1.6 billion over the coming three months from taxpayer subsidies because of the March 2 baseline that has been set, compared to an estimated $1.3 billion if current revenues and subsidies had continued based on the existing system and the significant reduction of enrolments the sector has seen.
The new system will see payments start flowing from 9.4.2020. The system will be reviewed after one month, with an extension to be considered after three months. The payments will be paid in lieu of the Child Care (CCS) and Additional Child Care Subsidy payments.
Until the payments arrive, the Government is allowing services to waive gap fees for families who keep their children home, and families will be able to use the 20 extra absence days the government has funded for coronavirus related reasons without giving up their place in a child care centre.
If you have terminated your enrolment since 17 February, you are able to get back in contact with your centre and re-start your arrangements. Re-starting your enrolment will not require you to send your child to child care and it certainly won’t require you to pay a gap fee. Re-starting your enrolment will, however, hold your place for that point in time when things start to normalise, and you are ready to take your child back to their centre.
The Federal Government will also make payments of higher amounts available in exceptional circumstances, such as where greater funding is required to meet the needs of emergency workers or vulnerable children.
SUPPORTING SOLE TRADERS THROUGH THE EFFECTS OF CORONAVIRUS
On 26.3.2020, the Federal Government is expanding the eligibility criteria for JobSeeker Payment to support sole traders and Australians who are self-employed if their income is negatively affected by the economic impact of the Coronavirus.
Under temporary changes to social security rules, sole traders will be encouraged to keep their business operating but may be able to access income support should their earnings take a significant hit.
These new rules are designed to make sure sole traders can access income support if they find their income significantly reduced through no fault of their own.
Previously to determine if a self-employed person was unemployed for the purpose of accessing social security payments they had to be genuinely willing to seek and be available to take up alternative work effectively requiring their business to close.
If someone remained committed to continuing with their business then they were not considered unemployed and could not access payments.
This test has been temporarily removed to allow sole traders to continue operating. Income testing will apply consistent with current arrangements which allows individuals to earn more than $1000 per fortnight before losing access to payment.
Under the temporary arrangements a range of JobSeeker Payment eligibility criteria has been relaxed including waiving the assets test, liquid assets waiting period, seasonal work preclusion period and newly arrived residents’ waiting period.
In line with the changes sole traders will be able to use work in their own business to meet their mutual obligations.
This ensures sole traders have maximum flexibility to maintain cash flow in these extraordinary circumstances.
From 30.3.2020, the self employed are also able to register their interest in the JobKeeper allowance which could mean $1,500 per fortnight, before tax. Note it is either or – only one of the JobSeeker or JobKeeper allowance is available for an individual.
THE AUSTRALIAN BUSINESS SECURITISATION FUND SUPPORTS SME’S
On 3.4.2020, the Australian Office of Financial Management (AOFM) announced a round of funding from the Australian Business Securitisation Fund (ABSF) to enable smaller lenders to continue supporting Australian small and medium sized businesses (SME’s).
The AOFM will invest $250 million of ABSF funding in securities issued by a warehouse facility to support lending to SME’s.
The investment will fund a portfolio of loans for a period of up to four years and will assist with deepening the market for SME asset backed securities.
Small lenders are critical to Australia’s lending markets in creating more competition, especially for SME’s, during the current coronavirus crisis.
This funding complements other initiatives undertaken by the Government and the Reserve Bank of Australia (RBA) to support lending to SME’s, including:
- $15 billion to allow AOFM to invest in wholesale funding markets used by small ADIs and non-ADI lenders. The AOFM made its first investment under this program on 27 March, purchasing residential mortgage-backed securities valued at $189 million.
- The SME Guarantee Scheme to support up to $40 billion of lending to SMEs. Under the Scheme, the Government will guarantee 50 per cent of new loans issued by eligible lenders.
- The RBA’s $90 billion term funding facility for ADIs with a priority for SME lending.