Childcare and early childhood learning

• 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 families use a mix of formal ECEC and informal, non-parental care.
• The number of formal ECEC services has expanded substantially over the past decade. Over the same period, Australian Government funding has almost tripled to around $7 billion per year, and now covers two thirds of total ECEC costs. Despite this, many parents report difficulties in finding ECEC at a location, price, quality and hours that they want.
• Current ECEC arrangements are complex and costly to administer and difficult for parents and providers to navigate. There are over 20 Australian Government assistance programs, some poorly targeted. Assessing service quality is cumbersome and time consuming.
• The benefits from participation in preschool for children's development and transition to school are largely undisputed. There also appear to be benefits from early identification of, and intervention for, children with development vulnerabilities.
• The National Quality Framework must be retained, modified and extended to all Government funded ECEC services. To better meet the needs and budgets of families, the range of services approved for assistance should include approved nannies and the cap on occasional care places should be removed. All primary schools should take responsibility for outside school hours care for their students, where demand exists for a viable service.
• The Commission's recommended reforms will achieve, at minimal additional cost, an ECEC system that is simpler, more accessible and flexible, with greater early learning opportunities for children with additional needs. The reforms would also alleviate future fiscal pressures, establish a system that is easier to adapt to future changes in ECEC, and tax and welfare arrangements. Assistance should focus on three priority areas:
  • mainstream support through 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 benchmark price for quality ECEC. In regional, rural and remote areas with fluctuating child populations, viability assistance should be provided on a limited time basis.
  • support the inclusion of children with additional needs in mainstream services, delivery of services for children in highly disadvantaged communities and the integration of ECEC with schools and other child and family services.
  • approved preschool programs funded on a per child basis, for all children, regardless of whether they are dedicated preschools or part of a long day care centre.
• Additional workforce participation will occur, but it will be small. 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 powerful disincentives for many second income earners to work more than part time. Shifting to the recommended approach is nevertheless estimated to increase the number of mothers working (primarily of low and middle income families) by 1.2 per cent (an additional 16 400 mothers).
• Overall, more assistance will go to low and middle income families and their use of childcare is expected to rise. However, high income families who increase their work hours may also be better off. Enabling the lowest income families (those on Parenting Payments) some access to subsidised childcare without meeting an activity test may boost ECEC participation and improve child development outcomes for this group, but this comes at the cost of potentially higher workforce participation.

• Preliminaries
  • Cover, Copyright, Letter of transmittal, Terms of reference, Contents and Abbreviations and explanations
• Overview - including key points
• Recommendations and findings

Volume 1

Part A: Background

• Chapter 1 About the inquiry
  • 1.1 Background to the inquiry
  • 1.2 What has the Commission been asked to do?
  • 1.3 Desired features of an ECEC system
• Chapter 2 ECEC service providers
  • 2.1 What services are being provided?
  • 2.2 Approved service providers
  • 2.3 Registered care providers
  • 2.4 Other service providers
• Chapter 3 Family use of ECEC
  • 3.1 The nature of non-parental care in Australia
  • 3.2 Why is non-parental care needed?
  • 3.3 Future demand for ECEC services
• Chapter 4 Government assistance to ECEC
  • 4.1 Funding to meet the objectives of ECEC
  • 4.2 Australian Government assistance
  • 4.3 State and territory government assistance
  • 4.4 Local government assistance

Part B: Outcomes of ECEC

• Chapter 5 Childhood learning and development
  • 5.1 What facilitates children's learning and development?
  • 5.2 How are Australian children doing at present?
  • 5.3 Meeting the development needs of children
  • 5.4 What are the benefits to the individual and the wider community from attending ECEC?
• Chapter 6 Workforce participation
  • 6.1 Why are we interested in the workforce participation of parents?
  • 6.2 Current workforce participation patterns and trends
  • 6.3 What scope is there for increasing the workforce participation of mothers?
  • 6.4 Workforce participation and future ECEC needs
  • 6.5 Supporting the workforce participation of parents through family-friendly arrangements

Volume 2

Part C: Evaluation and options for improvement

• Chapter 7 Regulation of ECEC providers
  • 7.1 Rationales for regulating ECEC
  • 7.2 The National Quality Framework
  • 7.3 Other regulations affecting ECEC
• Chapter 8 ECEC Workforce
  • 8.1 The ECEC workforce
  • 8.2 Pay and conditions
  • 8.3 Recruitment, retention and workforce shortages
  • 8.4 Training and development
• Chapter 9 The market for ECEC services
  • 9.1 The market-based delivery of services
  • 9.2 How responsive is the supply of services?
  • 9.3 Do price rises reflect growth in costs?
  • 9.4 The structure and performance of ECEC markets
  • 9.5 The impact of government assistance on ECEC markets and prices
• Chapter 10 Accessibility and flexibility
  • 10.1 How accessible are current arrangements?
  • 10.2 How common are ECEC vacancies?
  • 10.3 Accessibility for different child age groups
  • 10.4 Geographic characteristics of access issues
  • 10.5 How flexible are current arrangements?
  • 10.6 Use of home-based care options for greater flexibility
  • 10.7 Provider trials of alternative flexible arrangements
  • 10.8 Summing up
• Chapter 11 Affordability
  • 11.1 How much do families pay for ECEC?
  • 11.2 How does the CCR cap affect affordability?
  • 11.3 Is childcare becoming more or less affordable?
  • 11.4 The design of current assistance arrangements for families
  • 11.5 Sustainability for taxpayers
• Chapter 12 Preschool
  • 12.1 Current methods of preschool delivery
  • 12.2 Funding for preschool services
  • 12.3 Key issues in the delivery of preschool services
• Chapter 13 Children with additional needs in ECEC
  • 13.1 Children with a disability
  • 13.2 Children from migrant and refugee families
  • 13.3 Indigenous children
  • 13.4 Children at risk of harm or neglect
  • 13.5 Adequacy of programs targeting children with additional needs

Part D: Funding, impacts and implementation

• Chapter 14 Funding options
  • 14.1 The criteria for evaluating funding options
  • 14.2 What are the main funding models?
  • 14.3 Approaches to child-based subsidies
  • 14.4 Achieving objectives while managing the cost
  • 14.5 Desirable design features
• Chapter 15 A new approach to funding
  • 15.1 Funding for mainstream services
  • 15.2 Funding for children with additional needs
  • 15.3 Preschool program funding
• Chapter 16 Potential impacts of recommended changes
  • 16.1 Uncertainty in the cost and use of ECEC services
  • 16.2 Recommended approach to funding the system
  • 16.3 Estimated cost of the funding options
  • 16.4 How the cost to families is estimated to change
  • 16.5 Estimates of the effect on workforce participation
  • 16.6 Estimates of changes in use of ECEC services
  • 16.7 Estimates of the fiscal impact for government
  • 16.8 Longer term impacts
  • 16.9 Trade-offs will be required
• Chapter 17 Transition and implementation
  • 17.1 Why we need to think about transition and implementation
  • 17.2 Implementation of funding changes for mainstream services
  • 17.3 Implementation of funding changes for additional needs children
  • 17.4 Implementation of funding changes for universal preschool access
  • 17.5 Implementation of changes to the NQF
  • 17.6 Some system-wide administrative changes
  • 17.7 A pathway to implementation
  • 17.8 Evaluating changes in the ECEC system
• Appendix A Inquiry conduct and participants
• References

Please note: The following appendices are supplementary to the inquiry report and are not available in the printed copies. 'Appendix A Inquiry conduct and participants' is in Volume 2.

• Appendix B Current assistance measures (PDF - 294 Kb)
• Appendix B Current assistance measures (Word - 84 Kb)

• Appendix C Workforce participation data (PDF - 598 Kb)
• Appendix C Workforce participation data (Word - 824 Kb)

• Appendix D Estimating the potential to increase labour supply (PDF - 369 Kb)
• Appendix D Estimating the potential to increase labour supply (Word - 173 Kb)

• Appendix E Effective marginal tax rates (PDF - 513 Kb)
• Appendix E Effective marginal tax rates (Word - 368 Kb)

• Appendix F The National Quality Framework (PDF - 298 Kb)
• Appendix F The National Quality Framework (Word - 127 Kb)

• Appendix G International approaches to ECEC (PDF - 478 Kb)
• Appendix G International approaches to ECEC (Word - 194 Kb)

• Appendix H The costs and viability of childcare operations (PDF - 400 Kb)
• Appendix H The costs and viability of childcare operations (Word - 257 Kb)

• Appendix I A benchmark rate for ECEC assistance (PDF - 573 Kb)
• Appendix I A benchmark rate for ECEC assistance (Word - 584 Kb)

• Appendix J What is needed in a cost-benefit analysis? (PDF - 676 Kb)
• Appendix J What is needed in a cost-benefit analysis? (Word - 419 Kb)

The following errata have been issued for this inquiry report. The chapters and appendices on the website have been amended to reflect these errata.

Download the errata

• Errata - Childcare and Early Childhood Learning (PDF - 229 Kb)
• Errata - Childcare and Early Childhood Learning (Word - 98 Kb)