3.1
The importance of a quality, affordable and accessible early childhood education and care (ECEC) system cannot be overstated. Alongside the growing evidence showing that quality ECEC is essential to childhood development and life chances, access to ECEC for working carers helps support carers to participate in the workforce actively and flexibly, while balancing their childcare responsibilities.
3.2
This chapter considers the evidence received by the committee in support of a reformed ECEC system—one which is affordable, universal, and of high quality. A reformed ECEC system should help support, normalise and encourage women's return to work, but place at its centre the wellbeing of children in all their diversity. Vital to this is an effective Paid Parental Leave (PPL) scheme which encourages primary and secondary carers to re-enter the workforce after caring for young children. In this way, ECEC and PPL are essential and complementary parts of the framework supporting working carers.
3.3
This chapter also examines issues such as childcare deserts across Australia, the impact of COVID-19 on the provision of childcare services, and current government measures in place to support ECEC enrolment and engagement. It will also put forward evidence about how leave provisions, including PPL, could be better structured to help people balance work and care responsibilities and remain engaged in the workforce.
The current ECEC framework
3.4
As detailed in Chapter 3 of the committee's Interim Report, ECEC can include formal childcare, informal paid or unpaid care, and services delivering a preschool program. The Interim Report also explained the following responsibilities for early childcare between jurisdictions:
the Australian Government—has policy responsibility for formal care; administers fee subsidies for childcare (and provides some funding to Australian Government approved services); oversees quality accreditation systems in early childhood education and care;
state and territory governments—are responsible for the policy and funding of preschools; and
preschool education—is delivered using a variety of funding and delivery models, including private provision.
Issues with the current system
3.5
The ECEC system is a substantial piece of the puzzle for those trying to balance paid employment with caring for young children, with seeking income security, active participation in the workforce and access to suitable leave entitlements. It facilitates job‑seeking, education, volunteering and community engagement, and is also crucial to the development of children in the first five years of their life.
3.6
The Hon Jay Weatherill AO, Director of the Thrive by Five initiative with the Minderoo Foundation, pointed to the 'profound' evidence showing 'how the trajectory in the first five years then determines, fundamentally, the trajectory for life'. He continued that 'the time and expense and difficulty of altering a trajectory that's established in the first five years proves to be very difficult'.
3.7
It is known that the size of a child's brain reaches 90 per cent of an adults by the age of five. Accordingly, a child's early years are 'critical to lifelong learning and wellbeing'.
3.8
The Department of Education drew attention to data from the Australian Early Development Census, indicating that preschool reduces the number of children who are not ready to start school by approximately 10 per cent—with preschool being of particular benefit to First Nations children, and those from disadvantaged families and communities.
3.9
However, as was made clear in the committee's Interim Report and in a considerable volume of other research and evidence, Australia's ECEC system does not provide sufficient support to carers with young children, nor does it provide the best possible start for children.
3.10
The following issues about Australia's current ECEC system were discussed in the committee's Interim Report:
the ECEC system is a major weak point in the care and support system, and is a source of stress and instability;
it is particularly problematic for employees engaged in work with unpredictable or non-core hours;
many working parents face significant challenges in accessing appropriate ECEC, which would enable them to work the hours they wish to;
the high cost of ECEC acts as a barrier to working carers accessing care to support their engagement with paid employment;
lack of access to ECEC, including 'childcare deserts', has a direct, negative impact on earning potential and career progression for working carers;
workforce shortages, with ECEC educators facing low wages and high demands;
a lack of long-term funding for community controlled and culturally appropriate ECEC services for First Nations communities, and in regional, remote and rural areas; and
the negative impact of activity tests on subsidised childcare.
3.11
Further, as the committee's Interim Report highlighted, the gendered nature of care responsibilities means that women are more likely to be responsible for the care of children. Women are thus more likely being asked to make difficult choices between their caring roles, and engaging in the workforce and progressing their career. This choice has direct financial consequences for women, especially later in life.
3.12
The issues with the current ECEC framework—including financial issues—were well summarised by the Centre for Policy Development (CPD) in its 2021 report, Starting Better. The CPD observed that:
The early childhood sector is expensive and underfunded. As a share of family income, the costs of early childhood education and care in Australia are among the highest in the developed world. Many children are locked out of services altogether, with almost two thirds of families citing expense as a problem. Mothers who want to work say that looking after children is the main reason why they can't look for a job.
…
Our Early Childhood Development (ECD) system remains difficult, expensive, and confusing for everyone to navigate. The range of services available for parents to choose from often does not reflect what would best meet the needs of children and families. In fact, it's misleading to call this collection of services a 'system' at all since the parts rarely connect well.
3.13
The Parenthood made the point that 'successful early childhood development policies focus on equipping families with the time, resources, knowledge, and skills' to provide care. The Parenthood explained, however, that these policies in Australia are lacking and inaccessible, especially around ECEC, saying:
Australia had the fourth most expensive early childhood education and care (ECEC) fees in the OECD [Organisation for Economic Co-operation and Development]. Participation rates in ECEC lag global peers and Australia's female workforce participation is peculiarly low. Workplace discrimination against parents is prolific. These are all structural drivers of gender inequity which remains stubbornly entrenched.
3.14
Similarly, Ms Alannah Batho argued that 'having and raising children is absolutely critical to the healthy functioning of our economy and our society', but also maintained that social changes around the distribution of work have not been reflected in the ECEC framework. Ms Batho explained that:
Kindergarten and school hours and holidays were previously not problematic, in the model where the mother worked at home full-time and was able to pick up and drop off the children and care for them during school holidays. However, it is clear [childcare] hours are fundamentally inconsistent with a household in which both parents work.
…
A huge proportion of our workforce are parents. The fact that our working system is so incompatible with the realities of parenting, and that these are seen as individual rather than collective issues, is unacceptable.
3.15
The Parenthood drew attention to research suggesting that Australia's lack of early support to children and families, or late intervention, is estimated to cost the economy more than $15 billion annually.
3.16
A lack of access to ECEC also has direct impacts on children when they start school. The CPD observed that one in five children will start school developmentally vulnerable, rising to two in five for children without the benefits of ECEC.
The need for cheaper and universal childcare
3.17
The issues detailed above need to be addressed if Australia is to have an ECEC system which supports people balancing work and care, while providing the best possible start in life for babies and children. The evidence about the importance of a child's early years to their entire life reinforces the importance of access to quality, holistic ECEC.
3.18
The committee received compelling evidence that universal, affordable and accessible childcare would create significantly improved outcomes for children and their families, and for working carers—and especially for women and their engagement with paid employment.
3.19
The committee was pointed to considerable evidence, showing that access to adequate, quality ECEC plays a vital role in ensuring better life outcomes for children, and for increasing workforce participation for carers.
3.20
For example, Goodstart Early Learning (Goodstart) observed that many families and children face 'complex administrative and structural barriers that impact their ability to fully realise the benefits' of ECEC. Goodstart noted that:
Access to affordable, high quality early childhood education and care is critical to supporting workforce participation for carers. It is also essential that children with disability, developmental delays or other inclusion support needs have their needs met so they can fully participate in and benefit from early learning.
3.21
As noted by the Department of Education, the benefits of an effective ECEC system help both children and their carers:
A strong early childhood education system built around early learning gives children the best start in life—supporting them to build social and behavioural skills to help prepare them to transition to school.
For parents and carers, affordable childcare enables them to participate in the workforce, pursue further education or other opportunities to contribute to their community—bolstering the social wellbeing and economic prosperity of the nation.
Affordable childcare can have an immediate impact on the capacity of primary carers (predominantly women) to engage in the workforce, as well as a lasting impact on labour market outcomes throughout the remainder of their careers.
3.22
The Work + Family Policy Roundtable (Roundtable) said that Australia's ECEC policy 'must be reframed in order to deliver the triple dividend of supporting labour force participation, sustaining decent, fairly remunerated employment, and investing in the next generation'. The Roundtable called for:
… a national system of publicly funded, free early childhood education and care. This universal system should be available for all children regardless of their parents' workforce participation, where they live or their socioeconomic status.
3.23
Similarly, the Thrive by Five initiative advocated for a 'universal, high‑quality, early-learning system' across Australia, to go beyond childcare and incorporate universal access and 'high quality connected services' that are place-based and community led.
3.24
Mr Weatherill noted that such an approach would also include PPL, high-quality ECEC and preschool, 'extensive infant maternal health services', and involves wrap-around, place-based care including:
…navigators for families that require more-extensive support and it needs to speak effectively to some of the other more-episodic service systems—like child protection, disability, allied health.
Our ultimate goal is to have something at the level of the neighbourhood, which is friendly and welcoming, where relationships can be formed with parents and where all of the needs of parents of young children are met in the one place.
3.25
Further to this, Mr Weatherill argued Commonwealth leadership and system accountability was necessary, with measurements of outcomes in the first five years—at the moment, there is no clear reporting or responsible entity for assessing such outcomes. He concluded that there is:
… quite a complex system of systems that nobody is really responsible for. The big conceptual challenge for the Commonwealth is to decide, first, whether they are going to exercise the function of leadership there and, secondly, how that system is then going to be built. These are not trivial questions; they are really complex questions.
3.26
The Community Child Care Association (CCCA) pointed to research showing that participation in high quality ECEC is linked with higher levels of parental and female employment, financial and income security and improved health outcomes over people's lives.
The intersection of paid parental leave and ECEC
3.27
ECEC needs to be supported by an effective PPL scheme—the two are complementary and form an essential part of the framework for supporting those combining work and care after the birth of a child.
3.28
As was noted in evidence, parents are often left with the 'invidious choice of relying for a period of time on only one salary … or outsourcing care for their child at a very young age'.
3.29
However, if Australia's PPL scheme was extended, and ECEC more affordable, accessible and of a high quality, then working parents—and particularly women—would not need to make this choice.
3.30
Ms Samantha Page, Chief Executive Officer of Early Childhood Australia, summarised this intersection well and outlined how both ECEC and PPL could be improved to better complement each other:
We understand that not everybody can afford to take long paid parental leave at the minimum wage. I think we need to address both the rate of paid parental leave and the length of paid parental leave. We know it's good for babies. It's very good for babies to have time at home with both parents, so we do need to make sure that we're including fathers and second carers. It's good for babies to have that time at home, and it's good for families to feel that they're not rushed back to work or rushed into the service system.
We are conscious that some families need to make that decision anyway and will come back quite early after paid parental leave, which is why early childhood education for those very children needs to be top notch—it really needs to be high quality. But, certainly, we'd like to see paid parental leave available to more families for a longer period of time at a higher rate; and we've suggested adding superannuation, to try and reduce that longer-term penalty that women, particularly, face when they take time out of the workforce.
3.31
Mr James Fleming, Executive Director of the Australian Institute of Employment Rights, also pointed out that an inadequate level of PPL and a lack of affordable childcare 'is a significant contributor to gender inequality' in Australia, leading to reduced women's workforce participation and career progression. Mr Fleming recommended that a more generous PPL scheme (like that in Sweden), combined with affordable ECEC, would be 'sufficient to ensure parents can return to work, with no gaps in income, whilst having a child—and every child has a right to a childcare place'.
A guarantee for young children
3.32
The committee was frequently pointed to the CPD's Starting Better report, which proposed a guarantee for young children and their families. The guarantee is 'based on evidence of what has the greatest impact' and 'connects all parts of the [early childhood development] system from the day a child is born until the early years of primary school'. The guarantee focuses on:
a more generous paid parental leave scheme;
incentives to share caring roles in families;
maternal and child health;
wraparound services and support;
quality, low or no cost, reliably high-standard ECEC preschools and services, with a stable workforce of qualified educators;
access for young children to two years of preschool and three days of free or low-cost ECEC; and
the early years of primary school.
3.33
The CPD argued that while the guarantee would take a 'decade of sustained effort' to deliver such reform:
Benefits of the guarantee are substantial, and include additional economic growth, tax revenue and reduced government spending on welfare, health and the justice system. Similar proposals aligned with the guarantee have projected even larger returns.
We estimate the costs and benefits of the guarantee will break even when fully rolled out [in 2030]. By 2045, all benefits of the guarantee will be realised as children who attend high-quality ECD services move into the workforce, leading to an estimated yearly return on investment of $15 billion.
A guarantee for young children and families is one of the best ways to address disadvantage because it increases the prospects for children to thrive, learn and earn throughout their lifetimes. By making it easier for women to balance work and family, and by improving wages and conditions in the female‑dominated early childhood sector, the guarantee also drives gender equality.
Childcare costs and accessibility
3.34
There was extensive evidence put to the committee about the prohibitive costs of ECEC, and the lack of clarity around the leave and financial supports available to parents to support a child's participation in early education.
3.35
The CPD drew attention to a survey of 1700 parents by the Front Project, which found that ECEC was too expensive and that:
almost half of respondents had made significant financial sacrifices to access ECEC;
nearly half of respondents found the subsidy system difficult to understand;
the costs of ECEC services were opaque; and
the cost of ECEC was a barrier to having (more) children.
3.36
It was put to the committee that free ECEC would be greatly beneficial to the Australian economy, to families, working carers and to children. It would remove a key barrier to access and reduce administrative complexities and costs.
3.37
The Parenthood called for access to free, high-quality ECEC for all Australian children, at an estimated cost of $20 billion per year. The organisation argued that the investment would lift the future productivity of children once they grow up and enter the workforce, which could add up to $2.15 billion to gross domestic product (GDP) by 2050, as well as lifting the current participation of women in the labour market. This could lift GDP by up to $47.2 billion (1.2 per cent) by 2050.
3.38
The Parenthood made the broader point about engagement in the workforce, submitting that proper investment in ECEC 'presents a compelling and immediate solution to the workforce shortages being experienced across industries and sectors'.
3.39
Some stakeholders supported cheaper, but not necessarily free, ECEC. For example, Mr Weatherill suggested that while childcare might not necessarily have to be made 'free', it should be 'so affordable that cost is no barrier', and financial disincentives should be removed.
3.40
Mr Weatherill made the point that generally speaking, childcare has not been accessible for families with a 'chaotic relationship with the world of work'. However, he noted that 'all the evidence is that they would be the ones that most benefit' from a universal childcare system.
3.41
The committee was pointed to international examples of best practice in ECEC, which further highlighted the limitations of Australia's current ECEC system and its prohibitive costs.
3.42
For example, the Parenthood has reported that in Sweden and Norway, every child receives subsidised ECEC, 'regardless of family income, enabling both parents to engage in paid work'. The Parenthood submitted that:
If the average Australian woman had the same workplace participation patterns after having children as the average Swedish woman, she would earn an additional $696,000 over her working life; and retire with an additional $180,000 in superannuation. Mums in Sweden being able to more consistently participate in paid work after having children is a result of having access to the infrastructure that enables mothers and fathers to equitably and sustainably combine work and care.
The for-profit childcare system
3.43
Concerns were raised with the committee about how the for-profit provision of care is having a detrimental impact on both the quality and availability of ECEC services.
3.44
According to the Mitchell Institute at Victoria University, private childcare providers can be for‑profit and receive government support, with about 50 per cent of childcare providers now being private and for-profit, and 35 per cent private and not‑for‑profit. A further 11 per cent are managed by state or local governments and four per cent by non-government schools.
3.45
In examining the availability of childcare across the country and determining the expansive existence of 'childcare deserts', the Mitchell Institute formed the view that the 'underlying principles of the childcare system' encourage providers to 'establish services where there is the lower risk and the greater reward'. The institute continued that:
One way of illustrating this is to explore the correlation between price and accessibility.
… Often these areas of higher supply and higher fees are also areas of greater advantage. For instance, in Greater Melbourne, the area with both the highest fees per hour and the highest average number of childcare places per child is Stonnington-West. This area includes some of Melbourne's most affluent suburbs such as Toorak, South Yarra and Armadale.
[The analysis] suggests that there is an incentive for providers to operate in advantaged areas where they can charge higher fees, even if there is greater competition. This leaves more disadvantaged areas with lower levels of childcare accessibility. As a consequence, Australia is not fully capitalising on the long-term benefits to children from more disadvantaged backgrounds of high-quality early learning.
3.46
This is an important argument given the evidence of how access to quality care is especially important to disadvantaged children. A similar argument was put forward by the Roundtable, which suggested the current ECEC is 'hampered by the market-based model', as it 'incentivises service delivery in urban areas and the higher socioeconomic areas'. This was at the expense of less profitable locations:
…. leading to childcare 'deserts' in lower socio economic areas and in regional locations. The current market-based system is one of the most expensive in the world, yet services are poorly distributed, many do not reach minimum standards and the sector faces labour shortages, unfilled vacancies and difficulties in recruitment.
Childcare deserts
3.47
In March 2022, the Mitchell Institute examined access to centre-based daycare for children across Australia, and presented findings which measured the supply of childcare across the country, compared with potential demand (the number of children living in each neighbourhood).
3.48
The Institute found that childcare access is highly dependent on where people live, with about nine million Australians living in neighbourhoods classified as 'childcare deserts'—areas where there are less than 0.333 childcare places per child, or, in other words, more than three children per one childcare place. The Institute observed that 'families in regional areas are the most at risk of suffering from poor access' and found 'concerning correlations between access to childcare and socio-economic status'.
3.49
The Mitchell Institute reached several important conclusions directly relevant to the committee's work. The Institute concluded that systemic problems exist and that profit potential drives ECEC provision in some locations, with significant implications for workforce participation:
Current settings result in the low provision or an absence of provision [of early learning facilities] in many areas. Regional and remote areas are especially at risk. About one million Australians have no access to childcare at all. The population centres most likely not to have any childcare accessible within a twenty‑minute drive are towns with a population under 1,500.
When examining the relationship between cost and relative access, we found that areas with the highest fees also generally have the highest levels of childcare accessibility. This suggests that providers are not only establishing services where there are greater levels of demand, but where they are likely to make greater profits.
There is also an association between the accessibility of childcare and female workforce participation. Female parents with a child aged under 5 years who live in a childcare desert have lower levels of workforce participation.
While lower levels of female workforce participation in an area will affect demand for childcare, it may also be that difficulty in accessing childcare leads to parents and carers choosing not to participate in the workforce while their children are young.
One of the many functions of ECEC is to enable greater workforce participation. However, it is not clear that the current approach is fully supporting this aim.
3.50
Childcare deserts reflect the fact that access to care in childcare in regional locations is restricted compared to urban locations, with children from regional locations more likely to start school with learning development vulnerabilities.
3.51
It was observed in evidence that market failure in childcare occurs especially beyond outer metropolitan areas—supply in regional and remote areas would therefore need to be created to implement a universal childcare system, as 'even the not-for-profits can't find a way of making it work in the bush'.
Female workforce participation
3.52
It was made clear to the committee that limited availability and high costs of ECEC directly impact the opportunity for carers of young children, and primarily women, to engage in paid employment.
3.53
Dr Mary Crawford, President of Graduate Women Queensland, presented research to the committee noting women who want to work—or work more—are disincentivised by the high cost of ECEC, with Australian ECEC costs as a share of family income among the highest in the developed world.
3.54
To overcome these barriers, Dr Crawford called for the introduction of universal preschool, particularly given the fact that raising young children was one of the biggest barriers to women's entry into paid employment. Dr Crawford outlined the benefits of this approach:
It would have benefits to the children themselves. Of course, we know about early intervention and so on. It would also provide an opportunity for and normalise women's return to work. It would also mean that it's not just for women who can afford to access preschool and early childcare.
3.55
In its examination of 'childcare deserts', the Mitchell Institute found that 'regions where more people live in a childcare desert also have lower levels of workforce participation for females' with a child under five in the home. The Institute noted that there could various, complex factors for this association:
Lower levels of female workforce participation in an area will affect demand for childcare. It may also be that difficulty in accessing childcare can lead to parents and carers choosing not to participate in the workforce while their children are young.
The interaction between demand and supply of childcare will affect families and carers differently. There is a need for further research to understand how access to childcare is influencing workforce participation and the decisions parents and carers are making, especially females, regarding employment. This is particularly important in terms of understanding barriers that some may experience based on location and lower access to childcare.
3.56
In its Starting Better report, the CPD pointed to research showing that more affordable preschool in the year before school resulted in additional hours of paid work, and more parents joining the workforce. The Front Project estimated that increased workforce participation would increase tax revenue by more than $292 million in one year'.
Child Care Subsidy
3.57
The Child Care Subsidy (CCS) is the main form of government financial support for childcare costs, with a subsidy paid directly to childcare centres to reduce the fees paid by parents. The CCS is available for centre-based daycare, outside school hours care, family daycare and in-home care.
3.58
As outlined in the Interim Report, access to the CCS depends on a family's income, the hourly rate cap based on the type of approved childcare used, the child's age, the number of children in care, and the hours of activity a carer and their partner do (otherwise known as the activity test).
3.59
The Family Assistance Legislation Amendment (Cheaper Child Care) Bill 2022 was passed in late November 2022, and will implement more affordable childcare from July 2023. As part of these changes $4.5 billion will be allocated to, among other things:
lift the maximum CCS rate to 90 per cent for families earning $80 000 or less (currently 85 per cent up to $72 446);
increase CCS rates, with the CCS rate tapering down by one per cent for each additional $5000 of family income, until it reaches zero for families earning $530 000 (currently, the CCS progressively decreases to zero for incomes over $356 756); and
invest $33.7 million to increase subsidised ECEC to a minimum of 36 hours per fortnight for families with First Nations children.
Calls to increase the CCS
3.60
There was some support offered for the recently announced increase to the CCS. However, the evidence to the committee suggests that further reform is needed.
3.61
For example, while welcoming the increase of CCS rate to 90 per cent, G8 Education argued that the subsidy rate should be increased to 95 per cent for low-income families.
3.62
Similarly, in its 2020 report into cheaper childcare, the Grattan Institute called for a boost to the CCS, and a change to its design so that second-earners could take home more pay from additional hours at work. The institute called for a 95 per cent subsidy for low-income households, tapering for family incomes over $68 000. The institute suggested that:
This would be a major economic reform. We estimate that higher workforce participation from this additional $5 billion a year in childcare spending would boost GDP by about $11 billion a year. This is on par with the estimated economic benefit from cutting the company tax rate to 25 per cent.
3.63
In supporting broader access to the CCS, the Grattan Institute noted that the CCS was the 'single biggest policy lever the Commonwealth Government has to boost the workforce participation of women with children'.
Government ECEC initiatives
3.64
The following section outlines a number of current government initiatives which are aimed at supporting ECEC engagement and participation, and presents some of the evidence received about how these programs could be reformed to the benefit of both children and childcare providers.
Early Years Strategy
3.65
Noting the importance of early intervention, the Australian Government has announced the development of a new Early Years Strategy, to:
Create an integrated, holistic approach to the early years and increase accountability for the education, wellbeing and development of Australia's children, especially those experiencing vulnerability and disadvantage.
3.66
According to the Department of Education, one of the key aims of the Early Years Strategy is to ensure focus on areas where it is most needed—including First Nations children, and children experiencing vulnerability or disadvantage. Providing these children with the 'best opportunities to support their learning and development' would, according to the Department of Education:
… improve lifetime outcomes for them and their families, including through strengthened workforce participation.
3.67
The Department of Education submitted that through the examination of programs and ECEC funding, the Australian Government will look at ways to reduce program and funding silos across departments, and better integrate and coordinate functions and activities across government.
3.68
The National Early Years Summit was held at Australian Parliament House on 17 February 2023 to bring together 'parents, community organisations and representatives from across government, non-government, academic and business sectors to discuss the development of the Commonwealth Early Years Strategy'. The Department of Social Services has also opened consultation on a discussion paper to ensure the forthcoming strategy 'gets it right for Australian children and families'.
Current inquiries and reviews
3.69
On 9 February 2023 the Prime Minister announced the establishment of a Productivity Commission inquiry into Australia's ECEC sector, to be led by Professor Emerita Deborah Brennan AM. Minister for Early Childhood Education, the Hon Anne Aly MP, advised that the outcomes of the inquiry are expected to 'to be a huge part of our [government's] reforms in early childhood education and care', and supporting 'affordable, accessible, equitable and high-quality ECEC that reduces barriers to workforce participation and supports children’s learning and development'.
3.70
The inquiry will include consultations with state and territory governments and the ECEC sector, as well as with the Closing the Gap Early Childhood Care and Development Policy Partnership on matters relating to First Nations children, families, and services. The inquiry is due to report to government by 30 June 2024.
3.71
The Australian Competition and Consumer Commission is also currently conducting a Child Care Price Inquiry, looking into the market for the supply of childcare services, including costs, locations, quality and competition and how these factors impact childcare provider viability, quality and profits. An interim report is due in June, with a final report due in December 2023.
Preschool Reform Agreement
3.72
The committee notes that several states have introduced three‑year‑old preschool (discussed later in this chapter), with the Australian Government funding four-year‑old preschool. Recent reforms around preschool funding have seen the cessation of the Universal Access National Partnership Agreements, and implementation of the Preschool Reform Agreement (PRA).
3.73
The PRA, announced as part of the 2021–22 Budget, is a four-year national reform agreement to 'strengthen the delivery of preschool and better prepare children for the first year of school', and to improve preschool enrolments, attendance and participation.
3.74
The Department of Education observed that while 96 per cent of children were enrolled in 600 hours of preschool in 2019—an increase from 12 per cent in 2008—such enrolment rates did not 'always translate to full participation or maximum use of the 600 hours'. Despite the high enrolment figures in 2019, only 72 per cent of those families used the full 600 hours per child, with lower numbers for First Nations and disadvantaged children.
3.75
Under the PRA, the Australian Government will provide $1.84 billion to the states and territories, from 2022 to 2026, via a per child contribution (around $1340 in 2022). The Department of Education explained that this funding will support the delivery of 15 hours of preschool a week (600 hours a year), for all children in the year before they start school. The Department continued that:
Under previous agreements, states and territories could use Commonwealth funding flexibly to support the provision of universal access. This resulted in different costs for families across Australia.
Under the new agreement, state and territories must pass on the Commonwealth's per-child contribution to benefit children in the setting in which they attend.
This reform is designed to create greater funding equity for families and children across Australia.
3.76
In addition, the Department of Education advised that from 2024, the Australian Government would work with state and territory governments to establish new bilateral preschool attendance targets, and 'to develop, trial and implement a preschool outcomes measure'. These reforms will be supported by an additional $28.7 million to 'improve the quality and transparency of preschool data available nationally', and to develop a new Preschool Performance Framework.
3.77
As discussed later in this chapter, evidence was received by the committee in support of extending the PRA to children from the age of three, in line with the approach now being taken in some jurisdictions.
Inclusion Support Program
3.78
The Child Care Safety Net, a government initiative, provides extra support for vulnerable children. Part of the Safety Net is the Inclusion Support Program (ISP), which provides approximately $133 million per year to:
… support to mainstream [ECEC] services to build capability and capacity to include children with additional needs (such as disability, challenging behaviours, serious health conditions, including mental health and trauma related behaviours) alongside their typically developing peers.
3.79
The ISP, via its Inclusion Development Fund (which has an annually capped funding allocation set every financial year), provides four discrete funding subsidy streams, for:
immediate/time-limited support—short-term employment of an additional educator;
an additional educator—long-term employment of an additional educator;
family daycare top up—to allow eligible family daycare services to include children with additional needs, where including the child results in the educator being unable to enrol the maximum number of children as allowed
innovative solutions support—to provide innovative, flexible; and responsive solutions to inclusion where barriers have been identified.
3.80
The Department of Education noted that the ISP is not a disability program, but rather one which prioritises children with additional needs—which may include disabled children. While supporting mainstream ECEC providers to improve their capacity and capability to provide inclusive practices for all children, the Guidelines for the ISP note that it is also aimed at providing:
… parents or carers of children with additional needs with access to appropriate and inclusive ECEC services that assist those parents or carers to increase their activity including work, study and training.
3.81
Ms Kelly Millar, National Social Policy Manager at Goodstart, explained to the committee that the ISP is the 'only Commonwealth funding stream that funds additional educators above ratio in rooms', which is important for children with a disability, developmental delay or other support needs.
3.82
Goodstart noted that by supporting children with additional needs to engage with early childhood education this program also supports the increased workforce participation of working carers. However, Goodstart noted that in a 'market-based delivery model with many for-profit providers, there are multiple disincentives' for the enrolment of children with higher support needs and to this end, the ISP was not meeting its objectives.
3.83
Goodstart explained that the funding under the ISP for an additional educator was capped at 25 hours per week, 'which generally does not align to the family's CCS activity test result or to the child's enrolled hours'. Goodstart was of the view that this therefore:
… limits the workforce participation of parents of children with an inclusion support need, who we know have lower workforce participation than other parents and will frequently report having their hours cut by ECEC providers to match the 25hrs that an additional educator is funded. In terms of child development and safety, it is also counter-intuitive with evidence showing these children are more prone to injury and may benefit from more hours of early education.
3.84
Additionally, Goodstart suggested that the educator wage subsidy provided by the ISP has not been indexed since 2016, and therefore the subsidy loses value as wages increase. Goodstart concluded that as the ISP is not meeting its core objectives, 'children and families are not being supported in the way they deserve' and some children cannot enrol due to inadequate support and funding.
3.85
In summary, Mr John Cherry, Head of Advocacy with Goodstart explained that improvements to the ISP were needed to:
… support children with inclusion needs to participate in early learning, which provides vital support for parents with caring responsibilities for children with additional needs to participate in the workforce. Support people need to be funded for all the hours that the child attends, and the funding rate needs to be indexed to reflect increases in wage costs since 2015, which is the last time it was set.
3.86
It was Goodstart's view that improving the ISP would be 'one of the most effective changes that could be made to support families balancing work and care responsibilities'. Goodstart recommended the following steps to improve the program:
increase the educator wage subsidy to align with the award and index annually;
match educator funded hours to a child's enrolled hours, 'so families have confidence their child receives the support they need' while they undertake their other responsibilities; and
implement an Access and Continuity Guarantee to ensure children have timely access to funding and support upon enrolment and during transition periods.
Preschool reform in Australian jurisdictions
3.87
Across Australia, some jurisdictions are starting to implement reforms to their kindergarten and preschool funding arrangements, in order to increase enrolments and participation and improve learning outcomes. These reforms are also seeing these services being extended to three-year-olds, with many benefits forecast to flow from this earlier access for children, their carers and the broader Australian economy.
3.88
The amendments being made in various jurisdictions are detailed below.
Victoria
3.89
In its 2020–21 Budget, the Victorian Government announced funding of $773.8 million for ECEC over 202–21, and a further $302 million across 2021–22 to roll out three-year-old kindergarten. In doing so, the Victorian Government noted that for every one dollar invested in ECEC, Australia receives two dollars back over the course of a child's life, 'through higher productivity and earning capacity, and reduced government spending on health, welfare and crime'. The Victorian Government also drew attention to research finding that two years of quality kindergarten will have the following positive impacts on children:
better cognitive and social skills when they start school;
higher exam scores at 16 years, including better grades in English and maths;
more developed social and emotional outcomes at age 16; and
children are more likely to take more final year exams and go on to higher academic study.
3.90
The Victorian Government recently announced $9 billion in funding to expand its kindergarten programs. The funding will support the following initiatives:
from 2023, free kindergarten will be available for all Victorian three- and four-year-old children at participating services in both standalone (sessional) services and long daycare (childcare) settings;
over the next decade, four-year-old kindergarten will transition to 'pre-prep' ––increasing to a universal 30-hour a week program of play-based learning for every four-year-old child in Victoria; and
fifty Victorian government-owned and affordable childcare centres will be established, in areas that have unmet demand to make it easier for families to access childcare; the first of the centres will be available in 2025.
3.91
The new Victorian kindergarten program will provide from five and up to 15 hours per week of a kindergarten program for three-year-olds, and 15 hours per week (600 hours a year) for four‑year‑olds. The Victorian Government notes that it is 'strongly encouraged' that all children attend kindergarten programs for two years before school, as a 'crucial part of their educational journey'.
3.92
It is forecast that the roll-out of the broader kinder program will allow 28 000 people to return to work, including 26 600 women. Further, the funding will be provided directly by the government to participating kindergarten programs, meaning families are not out of pocket. The Victorian Government explained to families that:
If your child attends a kindergarten program within a long day care setting, a $2,000 Free Kinder subsidy will offset the kindergarten program component of your out-of-pocket fees.
Long day care centres will be required to pass on the full amount to parents as a direct reduction in their out-of-pocket fees. This will provide a free program for some families and a significantly reduced cost for other families, depending on service fees, number of days attended, and the amount of Commonwealth subsidy received.
New South Wales
3.93
The New South Wales (NSW) Government's 'Early Years Commitment' includes a $5.8 billion investment to introduce a new, universal pre‑kindergarten year in the year before primary school, to be fully implement by 2030. The NSW Government has said that this new approach will actively consider working carers and those working outside of core hours:
A key objective of Universal Pre-Kindergarten is to provide families with access to no-cost, high quality preschool, for more hours and more days per week, on days and at locations that work for them.
…
It will also include models that incorporate care beyond the hours of 9am and 3pm to support working families.
3.94
The NSW Government, through its Affordable and Accessible Childcare and Economic Participation Fund, will invest up to $5 billion over 10 years, to, among other things, target areas with low levels of childcare accessibility, and where there are the highest financial barriers to households accessing ECEC. NSW Treasury advised that active consideration will be given to making sure the fund is properly financed over the long‑term:
Because the Commonwealth childcare subsidy arrangements can change, the Fund is also designed to evolve over time to meet contemporary challenges and address gaps that may arise as Commonwealth policy evolves. To that end, the NSW Government will invest $775 million over the next four years. From 2026–27 onwards, and following a comprehensive evaluation, the NSW Government will invest an amount recommended by an independent expert to ensure NSW families have adequate access to childcare at affordable prices to maximise workforce participation, capped at $650 million per year indexed to CPI [consumer price index].
…
It is expected that this funding, together with Commonwealth Government reforms, will support the delivery of approximately an additional 47,000 ongoing and affordable childcare places, ramping up over several years.
3.95
As part of this investment, from 2023–24 childcare providers will be able to bid for funding through a competitive process, 'to help them deliver more accessible and affordable childcare'. In addition, the funding is intended to:
… expand infrastructure in overcrowded centres, establish new centres in childcare deserts, employ staff or reduce the fees passed on to parents facing some of the highest disincentives to return to the workforce because of childcare costs.
Support will be targeted at areas with low levels of childcare accessibility and where households face the highest financial barriers to working as a result of childcare costs.
3.96
The Early Years Commitment also includes $281.6 million over four years to address the 'ongoing shortages of qualified early childhood educators and teachers'. The funding is aimed at staff retention, and at attracting more staff to the ECEC sector through innovative pathways and financial measures including up to $25 000 in higher education scholarships for those studying early childhood teaching, and up to $2000 for those undertaking vocational education and training qualifications.
Queensland
3.97
Queensland recently introduced new kindergarten funding arrangements, with a $1 billion investment over five years, from 1 January 2023. The Queensland Department of Education will:
… provide funding to eligible kindergarten service providers to ensure greater access to a quality kindergarten program for Queensland children and to reduce out-of-pocket fees for many families from 2023.
3.98
The package has increased the government's annual investment in kindergarten from $130 million to $211 million per year, and will also provide:
$33 million to expand Kindy Uplift from 400 to 930 services;
$38.5 million to help remote and regional services attract and retain early childhood teachers; and
$95 million in support for families with children with disability.
3.99
The Queensland Education Minister, Grace Grace MP, said that:
Forty thousand children will benefit from reduced fees regardless of whether they attend a community kindergarten or kindy in a long day care.
That means a family with one child in kindy could save up to $3200 per year. And a family with two children in kindy could save up to $6400.
Fourteen thousand children will also be able to access completely free kindy: this will be for our most vulnerable and disadvantaged children in areas we know kids can miss out.
Currently, around 20,000 children have reduced kindy fees, and a very small number of them receive free kindy …
3.100
Unlike Victoria and NSW, Queensland's eligibility for funded care does not extend to three-year-olds, with funding eligibility limited to children aged four years. The Queensland Government made it clear that service providers should only 'offer non-eligible children (3-year-olds) places' in approved programs if places are available 'after finalising the enrolment of eligible children'. It continued:
Families are required to pay full fees and the Queensland Government will not offset costs. The out-of-pocket expense for families of non-eligible children must be based on the full cost of operating the program.
South Australia
3.101
In September 2022, the Government of South Australia (SA) announced a Royal Commission into that state's ECEC system, with a view to determining how ECEC services can best support the future success of children. It will also examine 'preschool for all three-year-old children and the supports families might need to access quality education and care, including out of school hours care at all ages'.
3.102
The terms of reference for the Royal Commission are to examine:
The extent to which SA families are supported in the first 1000 days of a child's life, focused on opportunities to further leverage ECEC to enable equitable and improved outcomes for SA children.
How universal, quality preschool programs for three- and four‑year‑olds can be delivered in SA, with considerations of accessibility, affordability, quality and how to achieve universality for both age cohorts. Consideration of universal preschool for three-year olds should be undertaken, with a view to such an approach commencing in 2026.
How all families can have access to out of school hours care at both preschool and primary school ages, including considerations of accessibility in all parts of the state, affordability and quality in public and private settings.
3.103
Rather than examining historical issues, the Royal Commission is seeking evidence from experts and from families, in order to 'provide advice to the government on delivering a high-quality early years system that is fit for the future'.
3.104
The Royal Commission will deliver its findings in August 2023. The committee encourages the National Cabinet and all jurisdictions to consider the recommendations made by the Royal Commission, and how these might be applied to the broader, national context.
ECEC access for three-year-olds
3.105
Evidence to the committee and other research strongly supports children accessing quality ECEC from three years of age, an approach being rolled out in several jurisdiction as detailed above.
3.106
Mr Cherry from Goodstart, welcomed the reforms to ECEC announced in NSW and Victoria, saying it was 'incredibly exciting' and that he hoped that the NSW and Victorian approach would became the new benchmark nationally. Mr Cherry noted the importance of national consistency on this issue—as the two years of ECEC access in NSW and Victoria could widen the education gap between those jurisdictions and the rest of the country. Mr Cherry said that those states were 'setting the benchmark and we would encourage all other states to follow'.
3.107
Ms Anne Twyman from the Department of the Education recognised the importance of preschool, and advised that the department was trying to get an accurate measure on 'the right dosage at the right age' for children to be attending preschool. Ms Twyman continued that:
International evidence has suggested that the earlier you can get children into play based learning, particularly disadvantaged children, the more they can reap benefits in the longer term. That goes to the benefits of access to a high quality preschool, which provides benefits in terms of greater educational outcomes and less access to more of the support services in later life.
So we know it has benefits. We're certainly trying to get the year before fulltime school right, so we're working with states and territories on what the outcomes can look like, so we have a body of information in Australia that can tell us what is best for Australian children. As we look overseas, we're looking at OECD figures et cetera around what works for disadvantaged children, what works for children aged three and what works in play based learning.
Childcare during COVID-19
3.108
Steps taken at the height of the COVID-19 pandemic demonstrated that free and more accessible childcare can successfully be implemented, with positive benefits for parents and children.
3.109
Temporary adjustments were made to ECEC in light of the pandemic, with new funding arrangements and a relief package implemented, providing free childcare for families during the early stages of the pandemic.
3.110
As explained by the Department of Education, ECEC services were considered 'essential' during the height of the pandemic and they therefore remained open, allowing parents to continue their workforce participation. However, attendance was impacted, which 'had consequences for workforce participation and longer-term sector viability', with particular negative impacts on mothers and people working part-time or casually. The department observed that:
During lockdowns and again during the initial Omicron wave, attendance declined significantly. Recognising that childcare is a key enabler of workforce participation, the Australian Government invested around $3.2 billion to keep services open and viable through the first two years of the COVID-19 pandemic.
3.111
The committee was presented by evidence about the benefits of the free childcare provided during the pandemic and, in some cases, increased attendance. Ms Kelly Millar from Goodstart said the organisation observed:
an increase in average days, particularly for vulnerable children (including First Nations children, and those at risk of abuse or neglect; and that
the removal of administrative burdens through Centrelink encouraged attendance from more vulnerable cohorts and also removed stigma, as childcare was free for everyone.
3.112
Contrary to the experience of Goodstart, Ms Michele Arcaro, Assistant Secretary with the Department of Education, said that 'most providers did see a significant drop in the number of children attending, despite the fact that childcare effectively was free'. However, Ms Arcaro pointed to anecdotal evidence suggesting that some parents utilised childcare more during this period, because the administrative burden had been reduced.
3.113
Mr Weatherill drew attention to how attitudes about childcare shifted during the pandemic. He remarked on the shift over the last decade from viewing ECEC not just as an element of employment policy, but as an early-learning system. He continued, explaining that:
What we saw during COVID was that the school based education system does two things. It educates children, but it also looks after children while parents are at work … The big conceptual leap is that we need to think about the childcare system as an education system that does two things. It creates a developmental system for children, but it also is a place where children can go when parents are working or dealing with other issues in their lives.
Support for early childhood educators
3.114
The committee received extensive evidence about how Australia's ECEC system must be supported by specialised, properly remunerated and supported childhood educators.
3.115
As argued by the Community Child Care Association (CCCA), the play-based learning outcomes derived from ECEC are 'guided by pedagogical theories and practice and are delivered by a highly specialised workforce of trained educators and teachers', with educators playing 'a vital role in enhancing children's learning and development'.
3.116
However, it has been clear for some time that the ECEC workforce—and the working carers they support—has been undervalued, underappreciated, and under‑resourced.
3.117
Mr Cherry outlined to the committee the issues that Goodstart was having with staff retention. Through exit surveys, the organisation had learnt that overall, the three main reasons for people leaving childhood education were low pay, burnout and lack of professional recognition. Mr Cherry pointed out that:
We've been working under high-stress environments since the beginning of the pandemic, and our staffing shortages have been getting worse and worse and worse. As you can imagine, once a centre starts going bad with staff vacancies, it increases the pressure on everyone who's left behind, and it just gets worse. Pay is also part of that.
3.118
As noted by the Parenthood, the female-dominated ECEC workforce is 'contracting at an unprecedented and alarming rate'—with more than 6600 vacancies in July 2022. The Parenthood stressed that:
The quality of the ECEC workforce has a direct impact on the experiences of children. It is vital to address the supply and retention of suitably qualified teachers and educators, particularly in rural and remote areas, to ensure there is a pipeline of future educators and teachers to deliver the early education children need, and that parents need in order to work and provide for their families.
3.119
The CPD's Starting Better report also found that workers in the ECEC system are not properly valued and supported, directly impacting on service quality:
Australia's dedicated early childhood workforce is mostly made up of women. Conditions vary, but generally, they are among our lowest paid professionals. Underinvestment in skills development and limited options for career progression has led to high staff turnover. This workforce churn holds back the quality of education and care.'
Wages and conditions in the ECEC sector
3.120
A large body of evidence was presented to the committee about the low rates of pay in ECEC, and the consequences of low pay for service provision. Making childcare more affordable will not increase provision unless the wages and labour supply issues are addressed.
3.121
Many submissions pointed to the low pay rates, the lack of reward for education, skills and experience relative to other occupations, and the absence of a fully developed classification structure and pay relativities comparison for the ECEC sector. These issues emerged as a priority concern in a number of submissions.
3.122
The Australian Council of Trade Unions (ACTU), for example, submitted that ECEC needed to be 'delivered by highly skilled, properly paid and securely employed educators' The ACTU argued that low pay in the care economy was 'endemic', and pointed to a 2021 United Workers Union survey which found that 85 per cent of ECEC educators said it would be difficult for them to find $400 in an emergency.
3.123
The Australian Education Union voiced its concern about the role of governments in prohibiting wage growth for public ECEC educators:
… governments have the power, as funders and employers of public educators, to directly affect the salaries, working conditions, and professional autonomy of its educator workforce. However, the majority of state and territory governments have introduced legislative or executive‑ordered pay caps and pay freezes on educators' pay and have adopted positions during collective bargaining that fail to improve teachers' working conditions and continue to impose burdensome workloads and excessive hours of work on educators.
3.124
Mrs Michele Carnegie, Chief Executive Officer of Community Early Learning Australia, spoke to the issue of both pay and labour supply. Ms Carnegie made a number of suggestions for immediate action to improve wages and conditions for early childhood educators, including:
a government funded wage subsidy of 15 per cent while the FWC reviews the award, so that 'we can address the immediate acute workforce shortage and establish a stable workforce that is suitably remunerated';
enabling overseas qualified educators and teachers access to Australian workplaces to fill vacant positions; and
growing community-managed ECEC services, so that 'children and families can benefit from low fees and high quality'.
3.125
The Roundtable called for the implementation of strategies to 'sustainably fund and support a highly skilled properly paid care workforce'. Specifically, the Roundtable argued for higher remuneration for early childhood educators 'in recognition of the skilled nature of the work they perform and the important role they play in children's lives and development'.
Childhood educator wage subsidy
3.126
In light of the significant and long-standing issues with low rates of pay for childcare educators, there were calls for an overall increase to early childhood educator pay, and for more timely assistance through an immediate educator wage supplement.
3.127
For example, Goodstart called for improved pay and conditions, 'starting with an immediate increase in wages through a government‑funded subsidy', which would segue into broader remuneration reform.
3.128
Goodstart was of the view that 10 000 additional educators were needed, to deliver the extra ECEC places available due to the reforms of the Cheaper Childcare Bill. Goodstart proposed wage supplements of five to 10 per cent of wages, be paid to all teachers and educators in long daycare centres:
… to commence as soon as possible to secure the workforce ahead of [the 2023] reforms. The Commonwealth should seek an assurance from the States that these supplements would be exempt from payroll tax, which would simplify administration considerably. Providers should be required to pay the supplements into staff as wages or improved conditions.
3.129
Mr Cherry suggested that the 10 per cent wage supplement should be funded by government, and made clear that Goodstart would:
… love to provide a pay rise to our educators to match school rates, but a 20 per cent to 30 per cent pay increase would involve a fee increase of 15 per cent to 20 per cent, which would simply make childcare unaffordable for families.
… Ten per cent is not enough. But, in the context of a tight budget and the environment we face, we think it would be enough to stabilise our workforce.
3.130
Ms Pauline Vamos of Chief Executive Women, also called for an 'immediate, interim 10 per cent wage supplement' for educators in ECEC, to complement other reforms such as increases to the CCS and removal of CCS activity tests.
3.131
More broadly, Goodstart called for all reforms to be accompanied by 'significant investment in the ECEC workforce', especially as childhood educators were often parents and carers themselves, and the ECEC workforce was 'pivotal to lifting our economy'.