Childcare and early childhood learning: draft report

Early childhood education Child care Children Social equality Australia

The Productivity Commission is seeking submissions on this draft report for an inquiry seeking to make childcare and early childhood learning more affordable, flexible and accessible.

Key points

  • Formal and informal Early Childhood Education and Care (ECEC) services play a vital role in the development of Australian children and their preparation for school, and in enabling parents to work. Many parents use a mix of care types and/or choose to care for their children at home.
  • The number of ECEC services has expanded substantially over the past 5 years. Australian Government funding has escalated to around $7 billion per year, and covers two thirds of total ECEC costs. However, many parents report difficulties in finding ECEC at a location, price, quality and hours they want.
  • ECEC issues are just some of a broad range of work, family and financial factors which influence parent work decisions. The interaction of tax and welfare policies provide disincentives for many second income earners to work more than part time.
  • The benefits from participation in preschool for children's development and transition to school are largely undisputed. There also appear to be some benefits from early identification of, and intervention for, children with development vulnerabilities.
  • The National Quality Framework for ECEC services must be retained, modified and extended to all Government funded services. To better meet the needs and budgets of families, the range of services approved for assistance should include approved nannies and the cap should be removed from occasional care places. All primary schools should be directed to provide outside school hours care for their students, where sufficient demand exists for a viable service.
  • Government assistance should focus on three priority areas:
    • Mainstream support should be a single child-based subsidy that is: means- and activity- tested, paid directly to the family's choice of approved services, for up to 100 hours per fortnight, and based on a reasonable cost of delivering ECEC for each age of child in different ECEC types. In regional, rural and remote areas with fluctuating child populations, viability assistance should be provided on a limited time basis.
    • Children with additional needs should have access to a 'top-up' subsidy to meet the additional reasonable costs of service. Services should have access to assistance to build capacity to provide ECEC for: individual additional needs children, for children in highly disadvantaged communities and to facilitate the integration of ECEC with schools and other services.
    • The Australian Government should continue to support the states and territories for all children to attend an approved preschool program in the year prior to school.
  • Given the broader welfare settings, recommended changes to ECEC assistance and accessibility can only do so much to improve workforce participation.
    • Labour supply is estimated to rise by 0.4 per cent (an additional 47 000 workers).
    • The cost to Government of the preferred settings for ECEC assistance is estimated at $8 billion per year. This is slightly above the forward budget estimates, but the Commission has also included analysis for assistance arrangements that are likely to be within the Government's ECEC funding envelope.
    • The GDP impact is, at most, 0.4 per cent (an additional $5.5 billion).
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