Path to Universal Childcare

Finance
 18 Sep 2024

The Productivity Commission has released its final childcare inquiry report, and it charts a solid course towards high-quality universal early childhood education and care.    

BY HEJIRA CONVERY, KINDICARE

SEPTEMBER 18, 2024

The Productivity Commission’s final inquiry report was handed to the Australian government almost three months ago, but today, we’re happy to see this document being released to the public.  

This three-volume report contains lots of findings and recommendations that the government can use to improve our early childhood education and care (ECEC) system, and the Productivity Commission officially recommends a move towards universal ECEC.  

They envisage an affordable, accessible, inclusive and high-quality ECEC system; and although great change takes time, their final report says that by 2036, every child should be able to access at least 30 hours, or three days, per week of this quality ECEC, for 48 weeks per year. 

In the meantime, the Productivity Commission has some excellent suggestions when it comes to reform, including free childcare for some families, and a removal of the Child Care Subsidy (CCS) Activity Test for all.  

You'll find the full report here, but if you’d like to skip to the meaty parts, then here are four key points contained in the final inquiry report.  

1. The Commission says affordability challenges need to be addressed as a matter of priority.  

ECEC is a huge expense for many families, and although the CCS does reduce out-of-pocket fees, there’s a recognition that affordability is still a barrier to ECEC entry.  

To help, the Productivity Commission says the Australian government should increase the maximum rate of the CCS to 100% of the hourly rate cap for families with an income of up to $80,000 per year. 

And for families earning up to $140,000, with multiple children aged five and under in ECEC, they call for the Higher Child Care Subsidy to also be increased to 100%.  

The report says both subsidy rates should then reduce by one percentage point for every additional $5,000 a family earns, meaning a family on $90,000 would get a 98% CCS rate.  

The final inquiry report also recommends that the CCS Activity Test be removed completely.  

There have been widespread calls for this to happen, as reported by KindiCare last year, and the Productivity Commission agrees with these calls and says children’s participation in ECEC should not depend on their parents’ activity.    

KindiCare’s Founder and Chief Executive, Benjamin Balk, welcomes the recommendations for lower income families, and particularly those with more than one child under five in care.  

Mr Balk says, “Many people forget that Australia’s birth rate is decreasing, and part of the reason for this is the cost of living in our major capital cities. This puts pressure on people to delay having children, space out when they have children, or decide not to have children at all.”  

Mr Balk explains that, “Making changes to the current subsidy rates is far easier for the government to execute than undertaking broader reform of ECEC funding and structure,” and free childcare will certainly ease those cost of living pressures for some families.  

2. The Productivity Commission also recognises that help is needed to make ECEC more accessible everywhere, as well as for everyone.  

The report tells us that nearly 50% of one-year-olds, and around 90% of four-year-olds, are enrolled in ECEC – which is great – but there are plenty of areas where childcare places are scarce, unaffordable or not inclusive of all children. 

In childcare deserts, such as rural and remote areas, there are simply not enough spots to meet demand. 

And the report says that the children who are most likely to benefit from ECEC (those experiencing vulnerability or disadvantage) are less likely to actually experience it. 

For these reasons, the report recommends that the Australian government provides extra funding to establish and sustain ECEC services in areas where places are thin on the ground or community needs are complex.  

It also recommends that the Australian government sets up an ECEC Inclusion Fund which will allocate needs-based funding to ECEC services to ensure all children can enjoy the benefits of ECEC in their formative first five years. 

3. The Productivity Commission confirms that quality goes to the heart of universal ECEC, and steps should be taken to set a high bar for services. 

Although it’s great to have a high quantity of ECEC places, quality is a cornerstone of the universal ECEC vision, and the report says that by 2030, the proportion of ECEC services rated ‘Working Towards the National Quality Standard’ should be halved from 10% to 5%, and a service should not be allowed to hold this rating for any longer than two years.  

Having more services rated Meeting or Exceeding National Quality Standard is good for children, families, educators and society.

And the final inquiry report calls for regulators to be adequately resourced to assess quality, crack down on poor quality services, and generally support quality improvement in ECEC.  

4. It’s also acknowledged that workforce challenges need to be addressed as a priority.  

The government’s announcement of a 15% pay rise for educators over two years is a great step forward, however, money isn’t everything. 

The Productivity Commission says governments need to focus on accelerated qualification pathways and consistent registration requirements to help with workforce challenges. 

And when it comes to remuneration, Mr Balk says, “We do need to see a far more concrete multi-year policy from the federal government on what happens to support childcare educators, providers and families beyond the short-term, two year wage fix. 

“We need to see how long-term employment conditions and wages for early childhood educators will work.” 

There are certainly plenty of decisions yet to be made and reforms undertaken.

However, it is great to see the Productivity Commission charting a path towards universal ECEC that’s affordable, accessible, inclusive and high-quality, and we look forward to seeing what the government does next, with the recommendations of the Productivity Commission and ACCC in hand.