Fund governance

The NSW Government has now passed legislation to establish the $5 billion Childcare and Economic Opportunity Fund as a statutory entity.

The establishment of the Fund in legislation

  • creates enhanced transparency and accountability to the operation of the Fund;

  • provides certainty of long-term funding;

  • enhances investment confidence and

  • ensures the Fund delivers on its strategic intent to boost accessibility and affordability of quality early childhood education and care and improve outcomes for NSW children and families.

The NSW Childcare and Economic Opportunity Fund Act 2022 includes the establishment of a special deposits account for the Fund, and the creation of a statutory entity – the Childcare and Economic Opportunity Fund Board.

Establishing a special deposits account (SDA) is the best way to preserve the Fund’s integrity and provide long term funding certainty for the early childhood education and care sector.

The SDA will mean that the funds will be separately identified, with expenditure permissible only on the things that are clearly within the scope and purpose of the legislation.

The success of the Fund will be reliant on a strong and collaborative partnership with industry. Legislating the Fund in an SDA signals the NSW Government’s lasting commitment to early childhood education and care reform.

Certainty of long-term funding will also instill investor confidence and support the commissioning of more innovative proposals than might otherwise be undertaken by sector participants.

Other benefits of the SDA include:

  • a publicly transparent disbursement process, with clearly delineated approval by ministerial, board and departmental officers clearly enshrined in legislation and

  • enhanced accountability for the performance of the Fund through periodic reporting and evaluation requirements.

Establishing a Childcare and Economic Opportunity Fund Board reflects best practice grants administration governance frameworks.

The appointment of the Board will follow the Department of Premier and Cabinet’s NSW Government Boards and Committees Guidelines as well as advice from the Public Service Commission.

It will include a public advertisement for nominations, and merit assessment against set criteria, prior to recommendation to the Minister for Education and Treasurer.

The Board will be comprised of 5 members to be appointed by the Minister with the concurrence of the Treasurer:

  • the NSW Department of Education Secretary or delegate (Chair)

  • the NSW Treasury Secretary or delegate

  • 3 additional members, with at least one employed in the Department of Education; and any members external to government to be selected based on their expertise, as prescribed by the regulations.

Appointing the Secretary of the NSW Department of Education as Chair of the Board (and other ex-officio members) will ensure that the Fund is complementary to – and works effectively with – the Early Years Commitment and other existing grant and capital funds.

The Fund must be delivered in addition to existing and proposed NSW Government early childhood education and care initiatives or it will be unlikely to achieve its intended benefits.

The NSW Government will release detailed guidelines for accessing the Fund after consultation with the sector.

A consultation survey about the main issues currently faced by the early childhood and care sector is open for responses until midnight on Friday 21 October 2022. Further public consultation on the Fund will be conducted over the coming months.

Frequently asked questions

The Childcare and Economic Opportunity Fund will target known barriers to families accessing quality early childhood education and care by providing major incentives to enable providers to extend their services to more families, more affordably.

The Fund will help early childhood education and care services and other sector organisations – including not-for-profit and private providers – to grow in size and quality. It will aim to improve the viability of new and existing services, particularly those in regional and rural locations. The Fund will also support services to improve affordability for families and to build, retain and better support their workforce.

The Fund addresses the number one recommendation of the NSW Government’s Women’s Economic Opportunities Review, which is to make early childhood education and care more accessible and affordable, to empower women to enter, re-enter, or remain, in the workforce.

Now that the legislation to establish the Fund is in place, consultation will continue with the sector to identify priorities for investment, guidelines will be developed, and the Fund will open for applications from financial year 2023-24.

The aim of the Fund is to help create opportunities for our early childhood education and care sector to think big, innovate and grow. Applications for funding will be invited from existing and prospective service providers and sector organisations, with priority investments for the Fund expected to include:

  • enabling workforce initiatives

  • building larger facilities

  • forming new partnerships to deliver more affordable early childhood education and care places

  • helping providers start new services in areas where there is a shortage of places

  • helping services to operate in communities that need extra help to stay viable and

  • trialling new service models to meet the needs of modern families.

The Government’s intention with the creation of the Childcare and Economic Opportunity Fund and Board is to provide enhanced transparency and accountability to the Fund operations and safeguard its commitment to long-term investment to address access and affordability of quality early childhood education and care in NSW.

The Fund represents an unprecedented investment of $5 billion over 10 years. Given its size and ambition, it is important that safeguards are put in place to ensure the Fund is implemented according to the purposes for which it is intended and provision is made for long term funding arrangements.

This will enhance investment confidence in the ECEC sector, encourage innovation, and help provide the opportunity to fund long term priorities.

A memorandum of understanding will be established between the Board, the Department of Education and Treasury to provide clear operating guidance and ensure alignment of objectives. This will help reduce the risk of adding to the complexity of existing funding arrangements.

By creating a new statutory entity, the Government is indicating to the childcare sector and its families an enduring confidence in the Fund.

By legislating the Fund, the Government is signalling its lasting commitment to early childhood education and care sector reform. Certainty of long-term funding will instil investment confidence for long term public-private partnerships, and support the commissioning of innovations in service delivery with different risk profiles than may otherwise by undertaken in the sector.

It is the intention of the Fund to foster strong and collaborative partnerships and back the sector to think big, innovate and grow.

We will work hard to ensure that funding is ready for roll out from financial year 2023-24, in line with the budget commitment.

The establishment of the Fund Board as a statutory body, with clear roles and responsibilities for Board members, will ensure the independence of the decisions for the Fund. The legislation clearly articulates the roles of executive government and the functions the public service performs on the Board. The governance arrangements will be established to ensure decisions are guided by independent evidence and impartial advice.

The Board will be comprised of 5 members including:

  • the Secretary of the NSW Department of Education (or delegate)

  • the Secretary of the NSW Treasury (or delegate)

  • 3 additional members, with at least one employed in the Department of Education, to be selected based on their relevant expertise.

The Fund is unlikely to achieve its intended benefits unless it is delivered in addition to existing and proposed NSW Government early childhood education and care initiatives. Appointing the Secretary of the Department of Education as the chair of the Board, and other ex-officio members, will ensure the Fund is complementary to and works effectively with the Early Years Commitment suite of measures and existing grant and capital funds.

The NSW Department of Education will consult broadly on the Regulations and Guidelines. These will be developed now that the legislation for the Fund is in place.

Key decisions on eligibility will be determined in the Fund Guidelines in consultation with the sector.

The Board will develop a Strategic Investment Plan based on evidence from an independent market monitoring review and data and intelligence gathered by the Department of Education through its enhanced system stewardship role.

Public consultation on the Fund priorities has already begun, with the opportunity to participate in a survey now open until midnight on Friday 21 October. Participants are also invited to nominate themselves to participate in workshops to inform the Fund priorities over the coming months.

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