Childcare: Budgets and an Election

Apr 28, 2022
day care centre
Large financial interests are being lured to the sector by strong growth prospects underpinned by generous government subsidies. Image: Pixabay

In brief, childcare, especially long day care, has become highly lucrative for big business. About 80% of revenue comes from the Australian taxpayers. This corporate model means that 100s of millions are distributed to share-holders each year and a number of the largest companies pay no tax.

The March budget this year and the Labor Party reply suggest more of the same for childcare policy in 2022 and beyond. The coalition has once again adopted a narrow focus that views early childhood education and care as a workforce support, ignoring the staff that keeps the sector operating and skimping on quality drivers that improve child well-being and the immediate and long-term outcomes of a high-quality early-years-experience.

In May 2021 I commented, in Pearls and Irritations, on childcare in the federal budget. It was disappointing at the time that the dominant emphasis on childcare was fee relief to increase workforce participation. The government proposed raising the maximum childcare subsidy and announced the annual cap on support would be scrapped. The sole aim was to make services more affordable. At the time I suggested increasing the tax-payer funded family subsidy night provide short term relief but would not lead to reforms in overall services that Australia needs and as a HIC (high income country), can afford.

Problems I highlighted last year remain the same. The importance of early education and care experiences for children’s growth and development, the neglect of the early childhood workforce who are the most fundamental element of the industry and issues of access and affordability for families. These concerns are exacerbated by the situation that much of the taxpayer billions poured into the system go to line the pockets of private providers with very deep pockets. A study by the United Workers Union in 2021, titled Where does all the money go in Australia’s early learning sector? reported that the sector was turning over 14 billion a year. 11 billion of this was public funding and most went to the growing private sector (ACECQA, 2021). To quote the United Workers Union report:

Traditionally, private ownership in the sector was characterised by family and small to medium-sized businesses. Increasingly however, large financial interests are being lured to the sector by strong growth prospects underpinned by generous government subsidies. 20 per cent of revenue through Australia’s 8,300 long day centres -$1.7 billion per year – is collected by five large companies, three of which are based offshore. Parents may be surprised to learn that their local early learning centre is controlled by Swiss bankers or an American private equity behemoth (p. 3).

In brief, childcare, especially long day care, has become highly lucrative for big business. About 80% of revenue comes from the Australian taxpayers. This corporate model means that 100s of millions are distributed to share-holders each year and a number of the largest companies pay no tax.

Another problem directly related to the funding model is accessibility of services. Issues of accessibility were highlighted in March 2022 in a study carried out by the Mitchell Institute for Education and Health Policy at Victoria University. The report, Deserts and oases: How accessible is childcare in Australia? was the first comprehensive project in this area. Researchers mapped childcare accessibility for children birth-4 across the country. Findings indicated that ‘childcare deserts’ are disproportionately to be found in rural areas and areas where there are more economically disadvantaged families. In major cities there is more provision but still an estimated 28.8% of children live in childcare deserts. Surprise, surprise the report found that when the relationship between cost and access was examined it was determined that areas with the highest fees had the highest levels of provision. This is a case of policy failure at a basic level. The research on the significance of the first three years and the benefits of early education is convincing so not only is it more difficult for parents in some areas to participate in the workforce the children who should gain greatest benefit from a high-quality early education, are less likely to have access.

After the budget in 2021 I was concerned that the early childhood workforce had been completely neglected. This concern still exists now that we have just experienced another budget brought down by the Coalition that offers more of the same. Increased subsidies and removal of the childcare subsidy cap. Listening to the Labor Party reply to the budget there seems to be the same policy thrust with more money being offered towards fee relief for families. The Greens have a progressive policy that includes universal, free access to early education and care services and they also include improved pay and conditions for staff. They aim to phase out the private for-profit providers. I wish them luck.

In relation to developing a quality workforce a report on the early childhood workforce, Progressing a national approach to children’s education and care work-force, (ACECQA, 2019) identified the following issues, community perceptions of the sector negatively impact workforce supply and workforce retention is a critical issue, which affects service quality. The report was prepared before COVID ravaged the sector and these findings may be even more important now. Of particular concern for recruiting staff was the identified problem of low pay and limited career prospects.

With the election weeks away what does this mean for the various stakeholders involved in the early childhood sector? The biggest winners will be private providers and shareholders of listed companies. Many families will experience higher fee subsidies but problems of childcare deserts and higher ‘gap’ fees in wealthy areas will still exist. However, fee structures are complex. The daily rate for long day care in Australia ranges from 70-188 dollars per day. To add to the confusion long day care centres also offer integrated preschool programs for children of relevant age and preschool has different funding arrangements.

Preschool, fees for three and four- year-olds differ across the country and are impacted by the National Partnership Agreements for Early Childhood Education that have existed since 2008. Under these agreements children should have access to 15 hours of preschool per week, or 600 hours per year. The latest agreement was signed this year and is due to expire in 2025. The national partnerships promote universal access with an emphasis on the benefits accrued to children as future students and workers in the knowledge economy. There is also an associated Early Years Workforce Strategy which is a macro-directive policy document that is designed to guide governments and departments in the growth of a sustainable and high-quality workforce. Funded preschool programs are not always free and the daily cost of preschool is listed as $45-78 per day. 72% of children of appropriate age access some type of preschool program but the services offered vary. If the preschool program is sessional (half day) it does not provide workforce support. This false demarcation between policies and funding for childcare and preschool has dogged policy thinking and confused government support for early childhood programs for many decades in Australia.

To return to the budget and the looming election the policy of handing out public monies to providers is discriminatory as not all families have equal access, the quality of provision is threatened by staffing problems and the staff themselves are under-paid, over-worked, in many cases under-qualified and under-resourced. Lack of government support for pay rises, training and increased recruitment and retention threatens the sector. This is another short-term fix based on the hope that parents who enjoy more generous fee subsidies might vote for the party offering the most short-term relief. Such cash splashes are not the way to build a sustainable system that will help improve Australian society and economy into the future.

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