Australia’s childcare and early learning system has become overly complex, heavily regulated and poorly aligned with its stated objectives: supporting child development and enabling parents to work. A new approach is needed – one that restores market responsiveness, reduces red tape and empowers parents and communities to shape the care their children receive. 

This report aims to provide a balanced view of the present state of the Australian childcare system and some recommendations for reform. The main focus is childcare as a composite good, rather than early education alone. It finds that while public spending on childcare exceeds $14 billion annually, accessibility and quality remain uneven, with regional 'childcare deserts' persisting and fees continuing to rise.

Drawing on evidence from Australian and international research, the report concludes that government involvement is warranted mainly where clear public benefits exist – such as improving care for disadvantaged children – but that excessive intervention has distorted the market. 

It proposes that Australia’s childcare market would perform better with reduced regulatory interference, greater transparency for parents and innovative use of digital platforms to support quality assurance.

Thematic structure

1. Charting the history and present status of childcare markets and the Australian government’s involvement in them.
2. Considering how one might try to calculate a return on investment for government spending on childcare.
3. Examining the regulatory context and quality assurance system for childcare.
4. Looking abroad and in Australia at what has been experienced and what is known about different approaches to organising childcare. 

The report provides recommendations for both major reform (Tier 1) and for beyond the top-priority reforms (Tier 2). Three major reforms form the foundation of a proposed model:

1. radically modify the process for qualifying new educators
2. decentralise the childcare quality verification process
3. strongly recommend family daycare rather than institutionalised care for infants and toddlers, when not cared for by their own family.