Australia’s early learning and childcare system has become outdated and expensive.
Although it’s an essential service, government funding has failed to keep pace, leaving families out-of-pocket with expenses and creating unequal access to appropriate, high-quality early learning and childcare.
Parents, educators, experts, people from all sides of politics and all walks of life have come together to support the Thrive by Five Campaign and its aim to ensure every Australian child can benefit from high quality, universally accessible and affordable early learning and childcare.
Reform of the early learning and childcare system will drive workforce participation, particularly for women, boost productivity and GDP, boost our nation’s education performance, and give children the best possible start in life.
Early childhood development
During the first five years of life, the human brain develops to 90 per cent of an adult’s size. This makes the early years critical for lifelong learning and wellbeing.
The quality of the physical and social environments during the early years, both at home and in the early learning system, is vital to a child’s healthy development.
Early learning can help give children the best start in life, impacting on their future health, wellbeing, working potential and social participation.
Every child should start school ready to learn, with the opportunity to fulfil their potential.
This is not currently the case, and evidence shows children who enter the school system developmentally vulnerable often do not catch up with their peers.
The first five years of a child’s life are fundamentally important. They are the foundation that shapes children’s future health, happiness, growth, development and learning achievement at school, in the family and community, and in life in general.
Early learning reform delivers for families and the economy
The cost of early learning and childcare in Australia is amongst the highest in OECD countries, representing a major cost of living pressure for many households, impacting on family budgets and the workplace participation of parents.
Reducing out-of-pocket costs for working families will flow directly into increased household spending.
A high quality, universally accessible and affordable early learning system will allow an extra 98,800 parents, mainly women, to get back into the workforce, boosting productivity and the economy.
In 2019, The Front Project & PwC found that for every $1 invested in the early learning system, Australia receives $2 back over the child’s life. In 2014, PwC estimated a $10.3 billion cumulative benefit to GDP by 2050 from children receiving quality early learning, and a $13.3 billion increase to GDP from increased participation of vulnerable children in early learning.
Not intervening early in a child’s development costs the Australian taxpayer up to $15.2 billion each year through higher costs later in the education, child protection, health, social welfare and justice systems. Not to mention the human toll it takes on individuals, families and society.
The Activity Test means the children of single parents often get no Child Care Subsidy and are therefore their children are excluded from the early learning system.
Early childhood educators need support to deliver quality care
Early childhood educators are essential workers and deserve the respect and working conditions to ensure children the best possible education and care.
Early educators remain amongst the lowest paid workers in Australia despite being qualified and delivering a critical and valuable service.
As a result of low pay and conditions, staff turnover is high (up to 30%). This disrupts educator/child relationships and has an impact on quality and parent confidence in the system.
As a result of low pay and conditions, there is a skills shortage in the early learning system.
We should respect early educators and provide a fair wage and secure working conditions. Only in these circumstances can the early learning and childcare system attract and retain trusted staff that can nurture the development of our children.
We need an urgent, national early learning workforce strategy that outlines the current state of play and offers innovative, effective solutions to support educators in their jobs, expand their training and deal with the workforce expansion needed in coming years.
Key Supporting Messages
Gender equality will not be achieved without universally accessible, high quality, affordable early learning
Reforming Australia’s out-dated childcare funding arrangements will create lifelong economic advantages for women.
One of the most effective ways of increasing the capacity of women to engage in paid work is to provide universal access to high-quality, affordable early learning and childcare.
Many Australian women don’t work more than three days a week because that is the tipping point where the cost of care becomes unreasonably expensive when compared with earning potential.
As a result, these women experience difficulty when they try to increase the amount they work and face lifelong challenges through lost earnings and low superannuation.
Many women drop out of the workforce because of the cost of early learning and childcare.
Early learning can be a key driver of the recovery from the pandemic
The pandemic crisis has demonstrated that where there’s political will, Australian governments can act quickly on major reforms.
Governments all over Australia are looking at how they can help economies recover from the pandemic, and the numbers show us that investing in early learning and childcare boosts the economy, eases financial pressure on families and helps kids maximise their potential.
The federal government’s creation of temporary free childcare showed the value of affordable, accessible early learning in supporting families and expanding their working capacity while stimulating the economy.
The August 2020 Grattan report calculated that investing $5 billion more per annum in the Child Care Subsidy will grow GDP by $11 billion annually through greater workforce participation and deliver $150,000 in higher lifetime earnings for the typical Australian mother.
High quality, universally accessible and affordable early learning is the answer to Australia’s sluggish economy and creating a brighter future for our children.
Key facts and statistics
- 90% of the size of a person’s brain is developed by the age of five. During this time we learn social, interpersonal and cognitive skills that will help them lead healthy, happy lives (NSW government and Educational Council report).
- A universally accessible, high-quality early learning system would allow an extra 98,800 parents to get back into the workforce. In 2019, 98,800 parents reported not being in the workforce for a childcare service-related reason, with 91,000 stating that the cost of childcare was the major barrier (ROGS 2021).
- A universally accessible, high-quality early learning system could lead to a 13 per cent increase in hours worked by second income earners (mostly women) with young children (Grattan Report).
- A universally accessible, high-quality early learning system could generate an estimated 160,000 and 210,000 additional working days a week – the equivalent of 30,000-40,000 full-time jobs. (KPMG Report and the Canberra Times).
- Investing in the early years has considerable long-term impacts. Children who accessed some ECEC were less likely to be developmentally vulnerable compared to those who didn’t (19.8% vs 39.8%) (Productivity Commission).
- One in five children in Australia are considered developmentally vulnerable at the time they start school. 21.7% of Australian children start school developmentally vulnerable. These children are more than twice as likely to be found in low-income communities as in high-income communities. They are also more than twice as likely to be Indigenous than non-Indigenous (AEDC National report and Mitchell Institute)
- High quality ECEC is known to benefit children from disadvantaged backgrounds, who have been found to have greater cognitive and behavioural development deficits at school entry (research article).
- ECEC reduces later contact with the criminal justice system. The lifetime cost of access to government services for people with complex needs, that may have been prevented with early intervention, in Australia is estimated at between $900,000-$5.5 million (Lifting our game and Baldry et al, 2012).
- The percentage of children in Australia enrolled in 3 and 4-year old early childhood education and care is below OECD averages (67% compared to 79% for 3-year-olds; and 85% compared to 87% for 4-year-olds). Australia relies on private funding for 3–5-year-old early childhood education and care (ECEC) significantly more than other OECD countries. 36% of total investment on ECEC privately funded compared to an average of 18% for other OECD countries (OECD data).
- Participating in high-quality early learning and childcare has significant benefits children. Children exhibit better language skills, fewer behavioural problems and more positive parent-child interactions, that extend into their primary school years (Educare, AIHW, Lifting our Game).
- A 2012 Treasury working paper estimated that a 1% increase in the net price of childcare leads to a decrease in the employment rate of 0.06%, and to partnered women working 0.1% fewer hours (Treasury).
- Before COVID-19, the federal government’s employment projections to 2024 showed employment for childcare workers was expected to increase by 20%, childcare managers was also projected to rise by 20%; and early childhood teachers by 16%. During COVID-19, the National Skills Commissions ‘Jobs in Demand’ survey has regularly listed child carers as the most in demand profession in the country (Government Labour Market data and Jobs in Demand survey).
- Australia has the fourth-highest rate of part-time work rates across the OECD (OECD).
- Mothers are more likely to reduce work time to part-time than fathers (37 percent against five percent) to buffer the family from rising childcare costs (AIFS).
- In Washington D.C., subsidised childcare has been expanded to cover all children. As a result of this policy, maternal employment rates increased by 12 per cent, with 10 per cent of the increase directly attributable to the program (American Progress).
- In 2019, The Front Project & PwC found that for every $1 invested in ECEC, Australia receives $2 back over the child’s life. In 2014, PwC estimated a $10.3 billion cumulative benefit to GDP to 2050 from children receiving quality ECEC, and a $13.3 billion increase to GDP of increased participation of vulnerable children in ECEC (The Front Project and PwC).
- The number of families not working because of childcare costs has jumped by 21.7 per cent (The Age).
- Making childcare cheaper (investing $5 billion more per annum in the CCS) would boost GDP by an estimated $11 billion annually, and deliver $150,000 in higher lifetime earnings for the average Australian working mother. A universal 95% subsidy for ECEC would boost GDP by $27 billion annually at a cost of $12 billion (Grattan Institute).
- PwC found a $6 billion net benefit to GDP by 2050, based on a 0.09% increase in labour force participation from a 5% reduction in the net price of ECEC (PwC).
- In 2018, KPMG developed a ‘workforce disincentive rate’ measure of deterrents to full female workforce participation. It found halving the gender participation gap would grow annual GDP by $60 billion over the next 20 years and lift cumulative measured living standards by $140 billion over the same time period (KPMG report and KPMG report).
- In 2019 KPMG outlined possible reforms to the Child Care Subsidy (CCS) that could conservatively boost GDP by almost $678 million per annum at a cost of $368 million (KPMG).
- In 2016, Nobel Prize winning economist James Heckman found that in the United States high quality 0-5 programs for disadvantaged children can deliver a ROI of 13% per year (James Heckman).
- In 2011, the UK Institute for Public Policy Research made the case for universal childcare, calculating a return to government over four years of £20,050 for every mother who returns to full-time work after a year of parental leave (UK Institute for Public Policy Research).
- Universal early childhood education (ECE) produces a 1:2 return on investment in Australia, with $4.75 billion worth of benefits to children, their communities, government and business (The Front Project).
- Childcare costs rose by about 145% in real terms between 2002 and 2019 (Melbourne Institute).
- Enrolment in preschool in the year before school has fallen for three years in a row across Australia, from 92.4% in 2016 to 87.7% in 2019 (Productivity Commission and ROGS 2021).
- Participation in preschool has declined, significantly in some states. Nationally in 2019, 87.7 per cent of children were enrolled in a preschool program in the year before school, down from 88.5 per cent in 2018. Children from low socio-economic areas, non-English-speaking backgrounds and children with disability are still under-represented in preschool enrolment (Productivity Commission report 2021).
- High-quality early childhood services are more concentrated in high-income than low-income areas. For example, almost three-quarters of preschools in high-income communities exceed the National Quality Standard (72 per cent), compared to only half (50 per cent) in low-income communities. The benefits of attending preschool are greater for vulnerable children, so currently those most likely to benefit from quality early learning are least likely to receive it (ACECQA 2020 and ECA report 2019).
- Skilled, quality early childhood educators are the key ingredient in quality early learning programs. Many early childhood services struggle to attract and retain skilled educators, with pre-COVID staff turnover estimated at up to 30 per cent. Staff waivers are more likely to be needed in rural and remote services, and in low-income than high-income communities (this research, this research, ACECQA and ACECQA).
- Wages for educators remain unacceptably low. Beginning educators could earn more at a call centre, than they do for the ‘essential service’ of educating and caring for children (Doreen Blyth).
- For an average family, costs of early learning account for over five per cent of disposable income. This may sound small in real terms, but is one of the highest in the OECD (AIFS, Productivity Commission 2021 and OECD).
- Both children and adults suffer when families are under stress. The proportion of families experiencing stress tripled under COVID-19, from eight to 24 per cent. Even before COVID, two in five Australians (39.5 per cent) often or always felt rushed, rising to over half of women with caring responsibilities. The OECD’s Better Life Index has ranked Australia 33 out of 40 OECD countries for time that people spend on personal care and leisure (HCDC, Melbourne Institute, ABS, ABS and OECD).
- Australia’s fertility rate has reached a record low, continuing a long-term decline. Anecdotal evidence suggests that childcare costs are a disincentive for having more children (New Daily, ABC and Financy).
- A UNICEF report revealed Australia has fallen to be ranked 32nd of 40 OECD countries for child wellbeing (UNICEF 2020).
- Childcare costs are increasing: the average per-hour expenditure on childcare increased by 51 per cent in real terms between 2002-03 and 2016-17. In the 2017 HILDA survey, almost half of parents of children under 5 reported difficulty with the cost of childcare, compared with just over a third in 2002 (Grattan Institute).
- The number of families not working because of childcare costs has jumped by 17 per cent in the last 12 months (Grattan Institute).
- Median weekly out of pocket expenses on private expenditure on ECEC increased from $110 in 2008/9 to $154 in 2016/17, a real increase of 30% (Mitchell Institute).
- The cost of childcare has risen faster than the cost of housing or electricity. In the last decade (2010-2020) out of pocket childcare costs rose 55% AFTER government subsidies. Only two items rose faster than childcare – the cost of tobacco and the cost of health care. Electricity costs rose by less than half (24%), housing by 21%, education (other than ECEC) by 39%, insurance costs by 35% (ABS CPI data).
- 16% (almost one in six) of childcare centres do not meet early learning quality standards (ACECQA report).
- Australian governments are spending $15.2 billion each year on high-intensity and crisis services for problems that may have been prevented had we invested earlier and more wisely. Governments in Australia are spending $15.2 billion each year on late intervention. This equates to $607 for every Australian, or $1,912 per child and young person (Minderoo Report).