Why there’s more to universal childcare than affordability

9 December 2024 | Deborah Brennan

Just on that topic, I want to make a brief comment.

Australia has experienced very rapid growth in women's labour force participation in recent decades.

The participation rate of mothers with children below school age rose from 54% in 2009 to 72% in 2023, and mothers are increasingly likely to work full-time. Father's participation is barely impacted by the presence of children, and that's why I haven't explicitly called it out here.

It seems that ECEC has been very effective in supporting women's paid work, although undoubtedly there is more that could be done.

But ECEC is not only about workforce participation.

Each year at the beginning of their school careers, one in five children in Australia is assessed as being developmentally vulnerable. In some parts of Australia the rate is two in five children, or around 40%.

That's 60,000 children who start school behind the line every year. And we know that children who start behind generally stay behind.

Yet evidence suggests that participation in quality ECEC can have a significant impact in reducing developmental vulnerability and getting children off to a good start.

It is, therefore, no exaggeration to say that the lives of thousands of children could be transformed by access to quality ECEC, especially services that are connected to health and other support services.

Disadvantaged children are missing out right now for a whole range of reasons. Some are excluded by the work activity test, others due to cost. Our research shows low-income families face out-of-pocket costs that are higher as a proportion of their income than better-off families.

And others miss out because there are no services in their area, there's a lack of cultural safety, or services can't get the resources they need to cater for children with disability.

The central recommendation of the PC report is that every child should be able to access at least 30 hours or three days a week of quality ECEC, regardless of their parents' employment. To support this goal, our recommendations address not just affordability, but also quality, inclusion, supply, and overall governance of the system.

With regard to affordability, we've recommended removal of the work activity test, and increased investment in the childcare subsidy so that around half of all families would be eligible for a subsidy of 90% or more.

The measures we've proposed would reduce out-of-pocket costs for almost all families, but those experiencing poverty and disadvantage would benefit the most. Early childhood education and care would effectively be free for families on incomes below $80,000, and that's around one-third of Australian families with young children.

This is our preferred option because in comparison with the others we consider, it concentrates benefits on those who are most disadvantaged and thus has the greatest potential to maximise public benefit.

It goes along with investments in quality, inclusion, supply and governance. The preferred option has a hefty price tag: an additional $4.7 billion on top of the $14 billion that's spent on childcare subsidy each year at the moment.

But it is not as expensive as alternatives examined in our report: a 90% subsidy for all families, or other options such as $10 a day, which I know has wide appeal - and I do understand why.

But affordability of childcare is not the end of the story, and that's a key part of my message.

During the inquiry we consistently heard that removing cost as a barrier is a necessary but not sufficient condition for increasing access. For that reason, we give a great deal of attention to quality inclusion and the expansion of supply.

It's vitally important that the conversation about ECEC is not limited to affordability.

If we don't address these other issues, we're not going to have a universal system. And that means that we have to consider trade-offs. And this was something that I found very challenging during the inquiry.

We had to go beyond stating a preferred option to really looking at the numbers and thinking about the concept of public benefit.

If we lived in a world where there were no fiscal constraints, we'd have everything. We'd have a high-quality system that is low cost or free and that supports the inclusion of every child, and we'd ensure that supply was provided in every community.

Perhaps we'll find ourselves there one day and I'll be very happy if we do.

But in 2024, for the reasons I have outlined here, I stand by the option that we have put forward.