This childcare overhaul will actually do very little for parents

The news this week that the Prime Minister has committed to abolishing the activity test for subsidised childcare is yet another step down the path of transforming a system that once delivered support to working parents into one that delivers universal early childhood education and care (ECEC).

The government claims these changes would give “working parents more choice and flexibility”. This is a puzzling claim,as you would think working parents would already qualify for the subsidies by meeting the activity test.

Perhaps the Prime Minister means that this would give currently working parents the choice not to work, but also not provide care for children? But it’s not clear what benefit would accrue to broader society if more parents chose thatoption.

The fact that this scheme will, according to the government’s figures, cost less than $500 million over five years, indicates this change may do relatively little for parental choice. After all, the childcare system as a whole will cost more than $15 billion next year.

Of course, universal ECEC has long been an ambition of the government; part of a long term agenda to fundamentally remake the childcare sector. It’s now clear they will pursue it regardless of the cost of the change, the efficacy of such a system or indeed whether parents actually want a universal ECEC system.

The government would be wise to rethink this ambition, as issues like cost, efficacy and parental need all suggestuniversal ECEC would not be a wise investment.

While the government’s current changes will cost a relatively small amount, the Productivity Commission estimated that a universal system would be much more expensive, noting that their model of universal ECEC would “come at a significant cost”.

Anyone who has been involved in the sector or watching the budget would know that costs have already been rapidly climbing for years. Governments on both sides of politics have poured billions into additional subsidies for parents, only for those subsidies to be consumed by additional fees.

The benefits to parents have been surprisingly limited.

On top of this, in part because of the professionalisation of the workforce as a result of the imposition of the quality framework by the previous Labor government, labour costs are going up as well.

It is unsurprising that university qualified educators would want to be paid salaries commensurate with their expertise. It is less clear that imposing these requirements were a good idea in the first place.

Indeed, at the heart of the system remains the fundamental contradiction caused by the fact that the system was set up to enable female workforce participation and is being retrofittedto deliver an educational entitlement to children.

The problem is simple. Childcare needs to be cheap, flexible and safe. However ECEC is different. It is expensive, especially if done well. It is also less flexible, particularlygiven that ECEC is typically delivered by an increasingly unionised workforce in a centre based environment.

Channelling subsidies towards centre-based care and away from less formal, more flexible environments has an impact on the availability of services.

On top of these issues there are real questions about the effectiveness of the quality framework in delivering actual education outcomes. Most of the quality markers focus not on what is taught, or how well, but on the qualifications of those doing the teaching.

While there is some evidence supporting the benefits of ECEC for older children, there is already substantial support for preschool attendance by both the Commonwealth government and states like NSW and Victoria.

However, the overall evidence in favour of ECEC programs is quite mixed. A 2022 study published in the American Psychological Association journal actually found that “children randomly assigned to attend pre-K had lower state achievement test scores in third through sixth grades than control children.”

As the quality framework has been in place since 2012 it should be easy to find out whether it has delivered lasting improvements in school performance, both for disadvantaged kids and the general school population.

Unfortunately, more than a decade on from the introduction of this framework, there is still no system in place for systematically assessing the outcomes of kids in ECEC against any objective criteria.

If ECEC is to be taken seriously (to the tune of tens of billions of dollars) then at a minimum it should be linked to an evidence-based curriculum with some level of assessment of students’ competence against those metrics and school readiness. Ideally, researchers should also be able to link these outcomes to NAPLAN achievement.

These questions are important not just because taxpayers should get outcomes from the billions ‘invested’ in the sector. It also matters because parents are saying this is not what they want and need.

CIS polling from 2019 found that just one third of parents in the childcare system rated early learning as one of the top three factors in selecting childcare. Instead 60% nominated warmth of care giving, 56% identified location and almost half selected costs.

In addition, more than 65% suggested that they would prefer to be able to use government subsidies for informal care, even if this meant they received a lower subsidy overall.

In 2023, the NSW Productivity Commission reported similarresults: families value choice and flexibility. By contrast the NSWPC found “quality is likely not a priority for them”.

In other words, most parents seem to prefer childcare that suits their employment needs. They view the system as one of workforce participation. Not a mini-school.

The transformation of Australia’s childcare sector into early childhood education has been marked by a significant increase in costs, while the benefits have largely been opaque to parents and taxpayers.

Much like other education sectors governments have continued to pour in money in the hope that this will fix the problems, perhaps it’s time to admit that more money isn’t the answer.

Simon Cowan is Research Director at the Centre for Independent Studies.