Pressure mounts on the Albanese government as two major unions call for significant changes to childcare worker pay and reforms to the petroleum resource rent tax (PRRT). The United Workers Union (UWU) is advocating for a permanent 15 percent pay rise for approximately 60,000 childcare workers, while the Australian Workers Union (AWU) is urging a comprehensive overhaul of the existing tax framework for oil and gas companies.
The UWU’s proposal would add billions to the national budget, suggesting that the government should also fund an additional 10 percent pay increase for childcare workers over the next two years. This would complement the annual increase in the award wage set by the Fair Work Commission (FWC), which employers finance. The union’s demands come as the Albanese administration grapples with rising costs in social programs, seeking savings as it prepares for the upcoming May budget.
Jim Chalmers, the Treasurer, has indicated that the budget will include measures aimed at stimulating productivity and reforming the tax system. Recent reports have highlighted an increase in budget pressures, totaling $47.8 billion due to existing social programs. This includes $3 billion in support for seniors, $2.3 billion for the National Disability Insurance Scheme, and $2 billion for childcare subsidies.
In its annual submission, the UWU urged the government to make the 15 percent retention payment for childcare workers permanent. This payment is set to expire in November and was introduced as part of the government’s commitment to enhance the early childhood education sector ahead of last year’s election. Prime Minister Anthony Albanese has championed universal childcare, proposing a flat fee of no more than $10 or $20 per day.
As of December, over 60,000 childcare workers across more than 500 employers are eligible for the proposed pay increase. Labor and the unions had anticipated that the timing of the payment’s expiry would coincide with a scheduled 23 percent pay rise for early childhood workers, as determined by the FWC to address gender pay disparities in female-dominated sectors.
In late 2022, the FWC rejected a proposal to accelerate these increases, citing affordability concerns for childcare centers. As a result, workers may face a pay reduction of between 5 and 6 percent when the retention payment concludes. The UWU is now requesting that Labor maintain this payment and implement two additional 5 percent pay rises in June 2026 and June 2027, alongside the regular annual increases typically between 2 and 4 percent.
Carolyn Smith, UWU’s early education director, emphasized the necessity of the 15 percent retention payment to prevent financial setbacks for childcare workers. She explained, “It is important that federal government funding in the sector is not just applied on the ‘demand side’ but also helps the ‘supply side’ in ensuring children and families receive quality education and care.”
A spokesperson for Education Minister Jason Clare confirmed that the government is examining the long-term implications of the FWC’s decision.
In a related push, the AWU has called for reforms to the PRRT, which currently imposes a tax of approximately $1.42 billion on profits from major oil and gas companies. The AWU argues that the current tax structure is inadequate and has not generated the anticipated revenue. Companies impacted include Woodside, Santos, Shell, Chevron, and ConocoPhillips.
The PRRT was last updated in 2024, limiting deductions to 90 percent of assessable receipts, with expectations of raising an additional $2.4 billion over four years. Although revenue briefly spiked to $1.95 billion in the current financial year, projections indicate a decline to $1.45 billion by 2028-29.
The AWU is advocating for a complete revamp of the PRRT, proposing to eliminate the ability for energy companies to carry forward deductions and shift exploration-related deductions between projects. The union suggests replacing the PRRT with a system that collects a fixed portion of the market value from oil and gas projects.
AWU National Secretary Paul Farrow remarked, “This tax was supposed to give Australians a fair return on the resources we all own, and it’s failing. Ordinary Australians pay their taxes without the benefits that these corporations enjoy.”
As unions push for these significant changes, the Albanese government faces the challenge of balancing budgetary pressures with the demands of the labour movement, all while navigating a complex economic landscape.
