The Australian Greens thank witnesses to the inquiry and those who made submissions for their time and expertise.
The Australian Greens believe early childhood education and care (ECEC) is an essential service that should be free and accessible for all. High quality ECEC can give children the best start in life and is a critical component of lifelong learning.
While the Family Assistance Legislation Amendment (Cheaper Child Care) Bill 2022 (bill) does not go nearly far enough to achieve our vision of universal and free ECEC, the Australian Greens support the bill as it nonetheless represents a step in the right direction.
However, there are some key issues that still need to be addressed, as summarised below.
Workforce Issues
Numerous stakeholders raised the alarm about current ECEC workforce shortages and the potential for these shortages to get worse if the bill comes into effect. Some, such as the Parenthood and the Early Learning and Care Council of Australia (ELACCA) went so far as to say the policy aims of the bill may not be realised unless urgent action to address workforce shortages is taken before July 2023.
It is estimated that around 9000 additional educators will be required because of the reforms introduced in the bill and there are currently 7000 vacancies in the sector already. Assuming attrition rates continue as they are, it is estimated that there will be over 10 000 vacancies next year. That would mean there would be a need to find an additional 19 000 educators in July next year.
Currently, the only measure in this bill aimed at attracting and retaining existing educators is the provision of a permissible educator discount that providers may offer to their educators. Under this measure, ECEC providers will be permitted to offer a discount on ECEC fees to staff engaged as educators, without affecting the amount of child care subsidy payable for the educator. While we support this measure and consider that it should be extended to all staff employed at ECEC centres, including cooks, we consider this measure to be completely inadequate to address the scale of the ECEC workforce shortage.
The Australian Greens support calls from the sector that the Government should provide an interim wage supplement, funded partly or wholly through the savings achieved in the bill. The Government should implement protections to ensure that the wage supplement is passed on in full to educators. For clarity, this measure should be interim while longer term, structural changes are undertaken to improve educator pay and conditions such as proposed changes to the Fair Work Act 2009 to address gender pay equity and improvements to bargaining processes.
Recommendation
That the Government fund an immediate and interim wage supplement for educators.
Recommendation
That the bill be amended to extend the early childhood education and care (ECEC) discount to all staff employed at ECEC centres.
Activity Test
The Australian Greens welcome the new baseline entitlement to
36 hours per fortnight of subsidised ECEC for Aboriginal and Torres Strait Islander children regardless of the activity levels of their parents.
However, we believe the activity test should be abolished entirely. The activity test is cruel, punitive and beyond repair. As the inquiry heard from numerous stakeholders, the activity test has the effect of denying access to ECEC for the most disadvantaged children and punishing families with insecure, casual work.
The activity test is plainly bad policy and ignores the reality that parents often need to have access to high quality, reliable ECEC before they can commit to work. As ELACCA stated:
The challenge is so much that families are in a chicken-and-egg situation. They are seeking work, but they can't engage in work until they have early childhood education. They can't access early childhood education because they're not working.
According to an August 2022 report from Impact Economics, the activity test is also contributing to at least 126 000 children from the poorest households missing out on ECEC. The report found that because of the activity test:
single parent families are over three times more likely to be limited to one day of subsidised child care per week;
Aboriginal and Torres Strait Islander families are over five times more likely to be limited to one day of subsidised child care per week;
non-English Speaking families are over six times more likely to be limited to one day of subsidised child care per week; and
low-income families earning between $50,000 and $100,000 are over six times more likely to be limited to one day of subsidised child care per week.
Removing the activity test would represent significant progress towards delivering universal ECEC and would ensure that the full benefits of the Child Care Subsidy (CCS) increase can be realised by all families.
Thousands of children from disadvantaged families are missing out on ECEC now. There is sufficient evidence available to warrant abolition of the activity test immediately. The Government does not need to await the outcome of the Productivity Commission inquiry to abolish the activity test.
Recommendation
That the bill be amended to abolish the activity test.
Language
We heard during the inquiry that the language of 'cheaper childcare' used in the bill could undervalue the role of educators. Ms Tamika Hicks, on behalf of United Workers Union (UWU), Early Childhood Education Delegates expressed bitter disappointment with the choice of words and questioned how educators could ever change the narrative about the value, recognition and importance they deserve without support 'from the top'. The Australian Community Children's Services also noted that:
An unintended and unfortunate consequence of this choice of language is the undervaluing of the role high quality education and care plays in the long-term education and developmental outcomes of our youngest citizens.
The Australian Greens support these views and consider that the Government should take a leading role in shifting public discourse by consistently using the term 'early education and care' instead of the term 'child care'.
Recommendation
That the title of the bill be amended to replace the words 'Cheaper Child Care' with 'More Affordable Early Education and Care'.
Transparency
The Australian Greens agree with the many stakeholders that supported a need for greater transparency in the ECEC sector during the inquiry. Many early learning centres are run by large non-government providers. Particularly, in recent years, there has been a proliferation of for-profit ECEC providers. Given the substantial public money that these providers receive, there is a compelling need for a robust transparency and integrity regime to ensure appropriate use of public money.
We therefore welcome new reporting requirements for large providers in the bill but consider that these requirements should be expanded to cover all providers, as recommended by the Centre for Policy Development and that this information should be publicly available.
We also support calls from the UWU that for profit providers should have to publicly report their full finances including their wages expenditure and investment in quality and inclusion, not just their rental costs and fee increases. We also support the Centre for Future Work's view that providers should be required to disclose details regarding profitability, dividend payments and other disbursements to shareholders, and executive compensation to contribute to greater public awareness of how private providers are using public money.
Recommendation
That the bill be amended to include more robust transparency measures that apply to all early childhood education and care providers.
Affordability of ECEC
The main policy aim of the bill is to make ECEC more affordable. However, we agree with concerns raised by The Parenthood that the predicted gains for families could be eroded if providers take the opportunity to increase fees.
If the subsidy changes come into place and demand for ECEC places rises at a time where there are not enough educators and therefore not enough places to meet that demand, it seems possible that for-profit ECEC providers will raise their prices and people could be more out of pocket because of higher gap fees.
We therefore call on the Government to closely monitor ECEC prices to ensure the bill achieves its aim of making ECEC more affordable and also commit to a phase out of for-profit provision of ECEC as a step towards improving the affordability and quality of ECEC in the long term.
Recommendation
That the Government monitor changes in early childhood education and care prices after reforms commence and take steps to address any excessive fee increases by providers.
Recommendation
That the Government develop a plan for the phase out of for-profit early childhood education and care.
Supply and Child Care Deserts
The bill will increase demand to ECEC without corresponding investment in supply and/or measures to encourage supply.
Concerningly though, supply of ECEC is already an issue, as pointed out by regional and rural stakeholders during the Inquiry. According to a report from the Mitchell Institute earlier this year, 35 per cent of the population, live in neighbourhoods classified as childcare deserts where there are more than three children per one childcare place.
People in regional areas are more likely to live in a childcare desert, while those in remote and very remote regions are highly likely to be living in a childcare desert.
The Mitchell Institute report noted that areas with the highest fees also generally had the highest levels of childcare accessibility, suggesting that providers are not only establishing services where there are greater levels of demand, but where they are likely to make greater profits. Such a finding supports Recommendation 7 above that for-profit ECEC should be phased out to ensure improved, more equitable access to ECEC.
Recommendation
That the Government work with states and territories to invest in greater availability of early childhood education and care.
Senator Mehreen Faruqi
Greens Senator for New South Wales