Key issues
2.1
The National Quality Framework (NQF) aims to ensure the provision of high
quality early childhood education and care (ECEC) services. Most submitters
and witnesses to the childcare inquiry therefore supported the NQF's regulation
of the ECEC sector.[1]
2.2
However, the committee heard that there is still a wide variety and
amount of regulation affecting the ECEC sector.[2]
The Australian Childcare Alliance (NSW) warned that 'regulatory requirements
usually come at a cost' and can become 'burdensome, excessive and/or arguably
counter-productive'.[3]
The Centre for Independent Studies (CIS) similarly submitted that regulation
can comprise red tape if it is ineffective or inefficient:
Even where a policy objective is recognised as important (for
example, early childhood development), some or all of the regulations
implementing the policy may be red tape if they are ineffective or an
inefficient way to achieve the desired objective.[4]
2.3
This chapter discusses the following matters raised during the inquiry:
-
NQF and regulatory reduction;
-
the Family Day Care (FDC) sector;
-
staffing regulations;
-
regulatory compliance costs; and
-
fee assistance and the Child Care Subsidy.
NQF and regulatory reduction
2.4
The Australian Children's Education and Care Quality Authority (ACECQA) submitted
that the NQF has improved ECEC regulation through the creation of a nationally
unified system. This system replaced eight state and territory regulatory models
plus a partially overlapping national quality assurance regulatory scheme administered
at the Commonwealth level:
Prior to the NQF, requirements...were often duplicated...Expectations
were inconsistent...with varying standards for service types, ratio and
qualification requirements. Information flows between the nine regulators were
highly restricted...A provider operating across multiple jurisdictions and
regulators could find themselves needing to comply with multiple but slightly
varying paperwork, notification and record keeping obligations both within a
single jurisdiction...or between jurisdictions.[5]
2.5
Both ACECQA and the Department of Education and Training (Department)
argued that ongoing review ensures the NQF delivers 'quality outcomes for
children, while balancing the need to reduce red tape and unnecessary
administrative burden for approved providers and educators'.[6]
2.6
Not all submitters agreed that the NQF has improved national consistency
or reduced regulatory burden,[7]
with some expressing concern about increasing amounts and costs of regulation.
The CIS, for example, submitted:
The childcare sector in Australia has been characterised by
growing government intervention in recent decades, culminating in the
introduction of the National Quality Framework (NQF). Inevitably, this has
precipitated new forms of red tape for the sector. Many of the NQF regulations
entail significant administrative and compliance costs, while many of the cited
benefits are contestable and not based on compelling evidence.[8]
2.7
Family Day Care Australia (FDCA), for example, argued that its
sector has been adversely affected, resulting in 'excessive administrative
burden, service closures and a decrease in high level quality ratings'.[9]
Australian Childcare Alliance referred to certain 'onerous' reporting
requirements and stated:
...the government must
acknowledge the increase of paperwork and stress that has been introduced to
the sector over the past 10 years. It is disappointing when our governing body
minimises this by stating that paperwork has reduced.[10]
Family Day Care sector
2.8
Several witnesses supported a flexible childcare market that provides
children with the formal or informal care that best suits their family
circumstances.[11]
For example, Andrew Paterson, Chief Executive Officer of FDCA, advised that
FDC is an option of choice for many Australian families (currently, about 185
000 children; 14.5 per cent of children in formal care). He explained that FDC
provides:
...quality flexible early childhood education and care in small
groups, in a natural home learning environment. The sector is unique in its
capacity to service the diverse and disparate needs of children, families and
communities. Family day care is the only approved service type that can
effectively and efficiently deliver non-standard-hours care, including weekends
and overnight, and is heavily represented among regional, rural and remote
communities and amongst some of the most socio-economically disadvantaged
segments of Australian society.[12]
2.9
Mr Paterson detailed how the FDC sector has been challenged by a
significant increase in regulation, coupled with a decline in operational
funding. This funding previously supported FDC services in providing FDC
educators (who are largely small business operators) with regulatory support.
Mr Paterson indicated that the sector has been struggling with regulatory
compliance with consequent effects on many small businesses:
...since making our submission, we have seen quality services
who have battled to remain viable and, confused by the constantly changing
regulatory landscape, being disproportionately sanctioned for administrative
noncompliance and forced out of the sector for administrative error rates of
less than one per cent over two years.[13]
2.10
In its submission, FDCA mentioned two particular concerns: coordinator‑to‑educator
ratios (1:25) and caps on the number of educators registered with an approved
service. These caps were introduced as part of the 2017–2018 changes to the NQF
and are determined by the regulatory authority in each jurisdiction:
[These are] an example of excessive regulatory restriction of
market competition which ultimately will universally limit the number of
educators within family day care services across Australia and affect the
choices available to Australian families...educator caps unfairly limit family
day care educators' ability to choose a service to register with and has the
potential to severely limit the viability of the family day care sector. Family
day care services are businesses like any others and legitimate expansion needs
to be an option to remain viable in a competitive, demand driven and dynamic
market.[14]
2.11
In relation to these concerns, Gabrielle Sinclair, Chief Executive
Officer of ACECQA, advised that the Council of Australian Governments (COAG)
Education Council will shortly report to COAG on ways to better support FDC
educators. Conceding that these educators are isolated, Ms Sinclair said:
I'm quite anxious to see this report and to see whether there
could be something else that we haven't thought of that would help them. Maybe
it means that we have to put some more in to their professional learning and
support, or maybe it's something that could be a little bit simpler and
less expensive. At this stage, I know that many family day care providers have
decided to close up shop because they say that families choose to go to long
day care.[15]
Department response
2.12
Asked for its response, the Department's representative commented on the
amount of work recently conducted to address sharp practices in the FDC sector
(such as the claiming of benefits for non-existent enrolments). The officer
said that 'the government is very committed to the family day care sector', the
majority of suppliers being 'honest, hardworking people providing excellent
service to families'.[16]
2.13
The officer agreed that the FDC sector could be more price competitive
than long day care (LDC) but cautioned that this was not yet certain:
The numbers, largely because of the problems we've had recently,
haven't borne that out. In fact...the average cost per hour for family day care
was similar to and sometimes higher than long day care... It is cheaper now but
not a great deal. The last data we had has long day care averaging about $9.20
an hour and family day care at $8.80...Family day care, at the bottom end of a
quite skewed bell curve, is quite a bit cheaper generally than long day care.
It's because of the overheads being cheaper. Why are people leaving it? There
are various reasons. They may or may not be viable.[17]
Committee view
2.14
The committee supports the availability of flexible childcare options
for Australian families and is concerned by claims that the viability of small
businesses in the FDC sector is under threat. Ultimately, this impacts both the
availability and affordability of child care and is contrary to families' needs
and Australian Government policy. The committee suggests that the
Australian Government should demonstrate its commitment to the FDC sector by
working toward red tape reductions as part of COAG's
current review process.
2.15
The committee cannot see why FDC is not offering substantially lower
cost childcare options to benefit a wide range of families which struggle to
fund LDC. Its conclusion is that bureaucracy and red tape are seriously
increasing the cost of FDC and impeding the viability of the sector.
Recommendation 1
2.16
The committee recommends the Australian Government, through the Council
of Australian Governments, expeditiously work toward reducing the regulatory
burden in the Family Day Care sector, including by removing limits on the number
of educators in each service.
Staffing regulations
2.17
More broadly, submitters and witnesses commented at length on two
particular staffing regulations—ratios and qualifications—which are mandated by
the NQF and which vary across jurisdictions. The CIS submitted that these regulations
are burdensome as labour-related costs account for over 60 per cent of approved
providers' total operating expenses. For example, with educator-to-child ratios,
'centres have to employ more staff and,
obviously, that leads to increased wage costs which are passed onto parents'.[18]
Its submission cautioned:
In the absence of any efforts to lighten the burden of regulations,
labour and regulatory costs can be expected to continue rising over time. This
will flow through to higher childcare fees and, consequently, the more generous
Child Care Subsidy, coming into effect from 2 July 2018, will be less effectual
than desired in improving childcare affordability.[19]
Ratio requirements
2.18
Some information presented to the childcare inquiry questioned the
rationale for ratios in the ECEC sector. Chiang Lim, Chief Executive Officer of
Australian Childcare Alliance (NSW), and FDCA noted that, prior to
implementation of the NQF, there was variation between jurisdictions.[20]
2.19
In addition, some submitters and witnesses queried the evidence-base for
the current ratios (educator-to-child; coordinator-to-educator; et cetera).[21]
Dr Buckingham said that ratios are sensible for very young children but
less so for older children whose care needs are fewer.[22]
FDCA commented that 'there is no evidence that indicating a specific ratio of coordinators
to educators will promote the best outcomes for children'.[23]
2.20
Australian Childcare Alliance indicated that, in at least one
jurisdiction, there has been inadequate cost/benefit analysis of ECEC
regulation:
[Introduction of the 1:5 ratio for two to three years old
children] resulted in many services charging higher fees for this age
group...Minimal NSW‑centric analysis appears to have been undertaken at the
time to investigate how these costs would be covered by childcare services
and/or how such costs would be passed on as increased fees to parents. The resulting
reduction in the availability of affordable childcare places in the under 3 age
group also does not appear to have been considered.[24]
2.21
Ms Sinclair from ACECQA said that the current ratio requirements are
based on world's best practice—such as identified in the E4Kids study
conducted by the Melbourne Graduate School of Education at the University of
Melbourne.[25]
However, the committee notes that when the Productivity Commission examined
educator‑to‑child ratios it reported:
The key policy challenge regarding these ratios and
qualifications is that it is impossible to tell whether they have been set at
appropriate levels. This is because there is limited evidence to support
specific settings for these requirements or to reliably quantify their benefits.[26]
Qualification requirements
2.22
Some submitters and witnesses raised the issue of qualification
requirements. The NQF sets out minimum qualifications for persons working in
centre-based and FDC services, as well as school-aged children in out of school
hours care services.[27]
For example, in a centre-based service half the educators required to meet the
educator-to-child ratio must have, or be working toward, a diploma level
qualification. All other educators must have, or be working toward, a relevant
Certificate III qualification.[28]
2.23
The CIS, for example, contended that the costs of this regulation
outweigh its benefits, with Dr Buckingham stating that there is no evidence of
higher qualifications improving outcomes for children. She explained:
There are some social and behavioural impacts, at least in
the short term, but very little evidence of any cognitive benefits in terms of
vocabulary, literacy and numeracy skills—those sorts of things. Any tiny
impacts that are found are generally not found to be durable so when [they are]
followed up three or four years later those effects have washed out.[29]
2.24
In contrast, Dr Cannen from United Voice argued that strong evidence 'directly
links qualifications of educators and teachers to higher NAPLAN scores in year
3 and better performance at age 15'. Dr Cannen referred to research conducted
by Dr Dianna Warren and others in relation to:
...how the number of words that children hear has a direct
impact on them cognitively, emotionally and socially. This is the 'iron triangle'
for higher quality early education, which is to do with ratios, qualifications
and group sizes. That formula is based on years of international research,
including OECD reports—several Starting strong reports—which indicate
things like our National Quality Framework is integral to providing the best
education and care for our children.[30]
2.25
Ms Samantha Page, Chief Executive Officer of Early Childhood Australia
(ECA), agreed that, for children in formal care:
...it's really important that the staff that work in that
setting have early childhood qualifications. That is well documented in
research... Qualifications make a difference, ratios make a difference, group
size makes a difference, and the quality of the setting and the environment
that is available to the children makes a difference, and that's why we have
national quality standards.[31]
2.26
ACECQA's representative, Ms Sinclair, acknowledged that qualifications
are not the only criterion: 'what we want in the ideal world is people who love
children, are experienced and also have the qualification'.[32]
In relation to the evidence-base, she said:
...the international evidence looks at the quality from the
perspective of the iron triangle—that is, qualifications of staff,
child-to-educator ratio and group size...those three things don't change...[Further]
the research over the last 50 to 60 years has shown that class size and
educator-to-child ratios are very significant for young children and children
with disability.[33]
2.27
The committee further notes the following comment from the Productivity
Commission:
The evidence that specific levels of qualifications improve
the learning and development outcomes for children under 3 years of age is
absent and evidence of positive impacts of qualifications, by themselves, is
inconclusive.[34]
Committee view
2.28
The committee notes the variation in staffing regulations as permitted
under the National Quality Framework. The committee acknowledges that there is
a rationale for imposing staffing ratios but is not convinced that the current
policy settings are correct. The committee notes that there is insufficient
evidence in this area, as highlighted by the Productivity Commission in its
2014 report Childcare and Early Childhood Learning.
2.29
The committee recognises that there are various views about the value of
staffing qualifications in ECEC, particularly across different age groups. In
relation to the youngest cohorts of children, the committee heard that while there
is some international evidence to support the current regulation, the committee
is mindful that not so long ago (2014) the Productivity Commission was critical
of the evidence-base for these cohorts. The committee suggests that it would be
prudent to establish a sound evidence-base to promote the relationship between
staffing qualifications and children's outcomes, and to avoid the perception of
that regulation being unnecessary red tape.
2.30
The committee further notes that an alternative to formal child care is
for children to remain at home with their parents who usually have no formal qualifications
in early childhood education. Arguments in support of higher qualifications for
childcare workers, if they result in fewer children receiving early childhood
education due to resulting costs, cannot be supported.
Recommendation 2
2.31
The committee recommends that the Australian Government, through the
Council of Australian Governments, promote and/or develop an evidence‑base
for staffing ratios and staffing qualifications in early childhood education
and care, as a quality component of the National Quality Framework.
Recommendation 3
2.32
The committee recommends that, following
establishment of the evidence‑base for staffing ratios and staffing
qualifications in early childhood education and care, the principles of the
National Quality Framework be reviewed to ensure they appropriately reflect the
evidence-base.
Recommendation 4
2.33
The committee recommends that, in reviewing the principles of the
National Quality Framework, Australian, state and territory governments
recognise that formal qualifications are not the only prerequisite for the
provision of high quality child care, as this can also be provided by parents.
Regulatory compliance costs
2.34
Since 2013, there have been a number of inquiries or surveys about
regulation in the ECEC sector. ACECQA, for example, measures approved
providers' perceptions of administrative burden, which it and ELACCA argued
enable identification of and reduction in burdensome regulation.[35]
2.35
In its latest performance report, ACECQA highlighted strong support for
the NQF (97 per cent), as well as a high perception of regulatory burden
(Figure 2.1).[36]
Figure 2.1:
Perception of overall burden, 2013–2017
Source: ACECQA, National
Partnership Annual Performance Report, National Quality Agenda, December 2017,
p. 73.
2.36
According to ACECQA, approved providers identified six administrative
areas as creating the most regulatory burden,[37]
five of which were considered more beneficial than burdensome (Figure 2.2).
Figure 2.2: Provider
perceptions, administrative burden, specific requirements
Source: ACECQA,
National Partnership Annual Performance Report, National Quality Agenda,
December 2017, p. 75.
2.37
Some submitters and witnesses considered that the benefits of quality
ECEC outweigh the regulatory burden.[38]
ACCS and Michael Tizard, Chief Executive Officer of The Creche and Kindergarten
Association (C&K) observed also that perceptions of administrative burden
have declined over time.[39]
2.38
However, Australian Childcare Alliance (NSW) submitted that its own Annual
Early Learning and Childcare Services Survey reveals ongoing concerns about
significant regulatory burden, including:
-
a high percentage of staff (62 per cent) spending more than one-third
of their time on administrative tasks;
-
more than half of staff (58.9 per cent) considering that NSW staffing
ratios had negatively impacted the cost of running a service;
-
more than half of staff (51.23 per cent) considering that time
spent on administrative tasks was negatively impacting costs to services; and
-
a high percentage of staff (61.52 per cent) believing that the
NQF was increasing paperwork.[40]
Committee view
2.39
The committee notes current surveys indicating that approved providers
perceive a high level of regulatory burden, notwithstanding their support for
the objectives of the NQF. The committee believes this must translate to a
considerable amount of time and money being spent on compliance. The Department
has not recently reported any significant regulatory savings in ECEC, although
current reforms are expected to deliver over $100 million in savings. The
committee believes that these savings should be reported in the Department's
next annual report for the Deregulation Agenda.
Recommendation 5
2.40
The committee recommends that the Department of Education and Training
provide a detailed annual report to the Department of Jobs and Small Business,
to provide greater transparency about red tape reductions in early childhood
education and care.
Fee assistance and the Child Care Subsidy
2.41
The CIS argued that the Australian Government, which provided 81.6 per
cent of total government ECEC expenditure in 2016–2017,[41]
should be strongly motivated to minimise unnecessary and/or ineffective
regulation, as these contribute to the rising cost of child care.[42]
2.42
According to Australian Childcare Alliance, there is too much regulation
which affects childcare affordability: 'regulatory requirements come at a cost
that [is] inevitably passed onto families reducing affordability'.[43]
CIS added that these amounts also contribute to the increasing cost of
Australian Government fee assistance,[44]
which in 2016–2017 amounted to $7.7 billion.[45]
Fee assistance policy objectives
2.43
Australian Government fee assistance is based on two policy objectives—namely,
workforce participation and quality ECEC.[46]
Ms Page from ECA commented on a third objective—the reduction of inequity and
vulnerability—which she argued was the primary basis for ECEC regulation:
Children who are coming from a disadvantaged background will
benefit the most from quality early childhood education and care...It's not
necessarily that parents are choosing between staying at home and providing a
safe, rich learning environment for children or going to work and those children
going to a safe, rich learning environment somewhere else. There are a host of
other circumstances that children can be left in that are very undesirable and
very unsafe, and that's why we provide a regulated system of education and care
in this country.[47]
2.44
Dr Emma Cannen, Policy and Stakeholder Manager, Big Steps, United Voice,
argued that fee assistance produces multiple economic benefits:
There are different ways that you can contribute to the
economy. There is firm evidence that maternal workforce participation in this
country is very low compared to other OECD countries, and it does increase
returns on the economy...But there are broader returns on investment to the
economy, regardless of the question of maternal participation, because of the productivity
and children's outcomes. When you have children that are performing better on
NAPLAN and PISA tests, they go on to have better jobs and have continuous input
into the economy. There is also less strain on the taxpayer in relation to
health, training, education and even the criminal justice system.[48]
2.45
Other submitters and witnesses—such as Australian Community Children's
Services (ACCS) and Community Child Care Association (CCCA)—agreed that ECEC
benefits are experienced across a life cycle.[49]
Their submissions referred to economic modelling conducted by Price Waterhouse
Coopers (2014), whose key findings about returns on investment were reiterated
by Ms Page from ECA:
By investing more in early childhood education and care and
increasing children's participation in early childhood education and care the
Australian economy stands to benefit by $6 billion from increased workforce
participation, particularly amongst women. We stand to benefit by another $10.3
billion from improving children's transition to school—making sure that
children are ready for learning, that they're inquisitive, confident learners
and that they are ready to make that important transition. But the biggest gain
was an estimated $13 billion that we stand to gain from addressing vulnerability
amongst children who may not have had the best start in their early years and
can improve through accessing a quality early childhood program.[50]
2.46
Ms Page argued there are social and economic benefits for women in high‑income
families returning to the workforce:
Where we invest a small amount generally to encourage
high-income families to access the universal system of early childhood
education and care we get well and truly more money back than we invest,
through the taxes paid through increased workforce participation...[Also, staying
at home] has significant impact down the track on women's superannuation
savings, on women's capacity to earn later in life and on separated families,
where there is then an inequity between one parent, who's been out of the
workforce for a significant period of time, and the other parent, who hasn't.[51]
2.47
Elizabeth Death from the Early Learning and Care Council of Australia (ELACCA)
and Dr Cannen from United Voice concurred that fee assistance is a factor in
high-income families' decision to return to work.[52]
Linda Davison, Chairperson of CCCA, added:
I run a service and I know that there are families who are
currently using our service who are thinking very carefully about whether one
or other of the parents will return to work, and in what capacity, very much on
the basis of the fact that they will no longer receive any childcare subsidy at
all. Some of these women—they are mostly women—are highly skilled women in very
senior positions. Yes, they are high-income earning families, but they're also
families who have high expenses.[53]
2.48
The committee notes the following findings of the Lifting Our Game,
Report of the Review to Achieve Educational Excellence in Australian Schools
Through Early Childhood Interventions report (Figure 2.3).
Figure 2.3: Economic
effects of quality early childhood education
Source: Pascoe, M.
and D. Brennan, Lifting Our Game, Report of the Review to Achieve Educational
Excellence in Australian Schools Through Early Childhood Interventions,
December 2017, p. 55.
Increased regulation
2.49
Submitters and witnesses commented that the new funding arrangements
have markedly increased the administrative burden for approved providers and
families.[54]
ELACCA commented, for example:
The implementation of this [reform] requires major system
reform for Government, providers and families prior to and post 2 July 2018 and
involves lengthy, complex and costly change management...the Office of Best
Practice Regulations (OBPR) noted on review of the RIS that there will be significant
impacts on the early childhood education and care market and recommended a more
in-depth analysis of the expected net benefits.[55]
2.50
Mr Tizard described how implementation of the Child Care Subsidy has impacted
families and services in the C&K community:
It's having an enormous impact, in terms of readiness.
There's a new time and attendance system—we're installing an electronic
check-in system so that we can record time of arrival and time of departure.
There's enormous work to vary our enrolment forms so that they meet the
compliant written agreement requirements. We are educating our educators about
the many aspects of the new system. We are working with our families, in terms
of getting them ready and getting them onto myGov. There's been advertising,
but a lot of families rely on directors.[56]
2.51
Mr Tizard explained that the changes will also affect affordability and
accessibility, and potentially affect the diversity of current ECEC services:
We are having a look at what impact it's going to have on the
utilisation of our services. We're concerned about services in disadvantaged
areas where eligibility may drop if they don't meet the activity test. We're
concerned about the large number of kindergartens and the fact that families
may exit kindergarten to go into long day care because it is cheaper. There are
many tentacles to this new package for an organisation like C&K.[57]
Affordability and accessibility
2.52
There are three factors that determine a family's level of Child Care
Subsidy (combined family income, activity test and service type). Alys Gagnon,
Executive Director of The Parenthood, expressed concern that not all families
will benefit from Child Care Subsidy due to the new means test. Ms Gagnon said
that test might even provide less assistance to children from vulnerable and
disadvantaged backgrounds:
Some families will be demonstrably worse off, around a
quarter of a million families across all income brackets...this will mean they
absorb the financial hit. A parent, probably the mother, will stop working or
will cut their hours at work or they will withdraw their child from early
learning... it is the children who derive the greatest benefits from early
learning—those from disadvantaged backgrounds—who are most likely to be
withdrawn.[58]
2.53
Other witnesses expressed concern about families' readiness for Child
Care Subsidy due to the administrative requirements for the transition.[59]
Ms Death of ELACCA said:
We've got families who don't necessarily always have access
to the internet—they need to have a myGov account—and they have a whole range
of other issues there that provide hurdles, and often it's the most vulnerable
families who can't jump those hurdles faster.[60]
2.54
The committee notes that, as at 2 July 2018, more than one million
families had transitioned to the Child Care Subsidy and that there will be a
three month grace period for approximately 51 000 families who experienced
difficulties transitioning by that date.[61]
Attendance reporting and the Activity
Test
2.55
Several submitters and witnesses voiced concerns about approved
providers' and parents' ability to comply with various administrative
requirements that require ongoing time and financial investment.[62]
Two particular concerns were identified: the need to report actual attendance;
and the Activity Test.
2.56
Australian Childcare Alliance argued that the need to report each
child's arrival and departure time would be burdensome and costly to providers:
Those services that choose to manually enter the data will
have to allow for a significant number of additional hours each and every week
that would be much better served supporting educators and children. In a
service with 100 children this will mean that the centre will need to manually
enter 1,000 attendance periods per week. This will increase human
resourcing costs for administration staff by 4 to 6 hours a week.[63]
2.57
For approved providers who seek a technological solution, ECA observed:
Not only is the implementation of the new scheme causing
increased administrative requirements, it also requires a significant financial
investment by service providers with the need to purchase/upgrade technology
and train administrative personnel.[64]
2.58
In relation to the Activity Test, submitters and witnesses argued that
childcare affordability will be affected by parents having to meet a
three-stepped activity test. Parents will only receive subsidised child care
for the number of hours engaged in a recognised activity each fortnight (Figure
2.4).[65]
Figure 2.4: Child
Care Subsidy, Activity Test, per fortnight
Source: Department
of Education and Training, 'Child Care Subsidy – activity test', https://www.education.gov.au/child-care-subsidy-activity-test-0
(accessed July 2018).
2.59
ECA emphasised that this is not conducive to achieving the best developmental
outcomes for children:
ECA believes that there is a very strong case for providing
all children with access to at least two days a week of early learning,
regardless of their parents' workforce participation, to achieve their best
development outcomes...the benefits are significant and ongoing for children
from disadvantaged backgrounds in particular. Two days per week can also
provide stability for families supporting employment preparation, searching and
transition and would make the CCS system simpler for parents to navigate,
especially though who are already managing complexity in regards to their
employment situation.[66]
2.60
ELACCA and CCCA described the new funding arrangements in terms of
missed opportunities and, similar to ECA, stated that the new system is complex,
onerous and will adversely impact children from disadvantaged and vulnerable
backgrounds. ELACCA submitted:
The need for documentation of activity, a random audit
process and the associated risk of accumulating a debt will likely result in
families choosing to withdraw their child from, or not enrol their child in,
early learning. As a result, the policy intent of workforce participation
and/or early learning outcomes of the CCS in all likelihood will not be
achieved. In particular, Australia's children experiencing vulnerability and
disadvantage, who in the absence of early intervention will potentially require
more costly interventions in the future, are most likely to be denied access.
The cost of administering the activity test far outweighs the benefits
received, and future costs incurred.[67]
Department response
2.61
A departmental representative indicated that families generally do not
use childcare when it is not subsidised: 'it's very expensive without a
subsidy'. The officer agreed with Ms Gagnon that families could decrease their children's
hours in care but also suggested that the ECEC sector might address this
accessibility issue by restructuring their care sessions:
The minister has said quite openly, so it's government
policy, that, particularly for the low-income families who get 24 hours per
fortnight, yes, that is definitely one 12-hour session per week. It's also two
six-hour sessions per week...some in the sector are already considering, for [a young]
cohort, offering two six-hour sessions.[68]
2.62
The Department recognised a need to minimise administrative requirements
for parents, which is to be achieved through improved data/information sharing
and IT systems (Child Care Subsidy System, CCSS). The new systems are intended
to provide 'a simple and easy user interface...and significant time saving
benefits...when applying for fee assistance and reporting change in circumstances'.[69]
2.63
The Department assured the committee that it would be closely monitoring
implementation of the Child Care Subsidy. Further:
A Post Implementation review is planned, and will be
completed within 2 years following implementation. This review will, amongst
other things, examine any regulatory burden of the package against the benefit
for families.[70]
Committee view
2.64
The committee acknowledges that current Australian Government ECEC
policy supports multiple policy objectives. The committee recognises the
importance of these objectives and the evidence indicating that there are
significant returns on investment in ECEC by promoting maternal workforce
participation among families from low socio-economic backgrounds and the
development of children from disadvantaged backgrounds. Nonetheless, the
committee agrees with the CIS's overarching suggestion that unnecessary and/or
inefficient red tape should be identified and eliminated.
2.65
The committee heard that implementation of the Child Care Subsidy is
causing some difficulties for the ECEC sector, as well as Australian families
using services. The committee is concerned that there have been transitional
issues for a significant number of families, who might now be impacted by
issues of affordability and accessibility. Further, the committee has heard
that several administrative requirements will be burdensome and ongoing, an
alternative to but not a simplification of the previous arrangements.
2.66
The committee notes that the Department will be monitoring the situation
and encourages it to proactively address issues as they arise, including
through consideration of the matters raised in this report. The committee expects
to see more thorough consideration and reduction of red tape throughout the
ECEC sector in the Department's next annual report in pursuance of the
Deregulation Agenda.
2.67
The committee is not persuaded that Australian Government fee assistance
is sufficiently well targeted, notwithstanding recent reforms. If the objective
of assistance is to increase maternal workforce participation, it should be
tailored to the demographic and occupational groups least likely to return to
work without assistance, and from which the economy receives the most benefit.
If the objective is to assist disadvantaged children, this should also be reflected
in the targeting. The committee heard no evidence that these aspects had
even been considered.
Recommendation 6
2.68
The committee recommends that the Department of Education and Training and
the Department of Jobs and Small Business report in greater detail on the
regulatory effect of implementing the Child Care Subsidy, including in relation
to Activity Test.
Recommendation 7
2.69
The committee recommends that the Australian Government review the
objectives of fee assistance to ensure that it is actually targeting maternal
workforce participation and children from disadvantaged backgrounds.
Concluding comment
2.70
Some stakeholders suggested that the committee might find it more useful
to conduct its inquiry after implementation of the Child Care Subsidy on 2 July
2018. However, the committee is of the view that there are a broader range of regulatory
issues meriting examination, as highlighted in this report. The committee trusts
that its findings and recommendations assist the Department to finesse the childcare
reforms and provide Australian families with a better ECEC system that more
fully supports the viability of the sector.
Senator David Leyonhjelm
Chair
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