In 1969, then-Prime Minister Gough Whitlam stated, “We are all diminished when any of us are denied proper education. The nation is the poorer—a poorer economy, a poorer civilisation, because of this human and national waste.” Although Whitlam was talking about tertiary education—this was part of his policy speech when his government abolished university fees, a major reform that had hugely beneficial outcomes across the entire country and economy—his words ring even more true when applied to early childhood education and care (ECEC).
The early years of a child’s life are crucial, laying the foundation for educational success, job opportunities, health outcomes, and more. Much of a child’s brain development occurs before they start school, making opportunities for early learning vital.
When young children miss out on education, everyone suffers. Children lose critical opportunities during the most formative years of their life, parents struggle to balance work and care with long lasting impacts on their careers, and the economy loses out on billions worth of increased productivity and taxes.
This isn’t new knowledge. Many countries provide universally accessible, high-quality early education, largely because they understand the wide ranging benefits. From Norway and Finland to Canada and Germany, advanced economies across the globe understand the importance of investing in their youngest citizens through high quality, accessible and affordable ECEC.
Unfortunately, Australia lags behind, with families spending more on ECEC than most developed countries. In 2022, Australian families spent up to one-sixth of their income on ECEC, placing Australia 26th out of 32 OECD countries in affordability. Unsurprisingly, this affects those on the lowest incomes the most.
The issues go beyond affordability. A shortage of available places, particularly in regional and rural areas, and an underpaid, overworked workforce leaving the sector in droves, compound the problem. Complex, disconnected funding arrangements and unclear roles and responsibilities between government levels further contribute to a system that fails children and families.
Whitlam’s words are true: the nation is poorer because of inadequate access to early education and care. Recognising this, the Federal Government has taken steps to address it.
Within 100 days of taking office, the government initiated multiple inquiries into the ECEC system. Federal Education Minister Jason Clare announced that Prime Minister Anthony Albanese aims to build a universal early education system, something akin to the landmark reforms of his predecessors like Medicare and superannuation. “Just like we’ve got a universal retirement system called superannuation, one of the legacies he wants to leave is a universal early education system,” Mr. Clare said.
We’ve since seen a commitment to increased wages for early childhood workers, superannuation added to paid parental leave, and another childcare subsidy increase. It’s progress, but it hasn’t had the kind of effect on affordability and accessibility they had hoped.
The ACCC inquiry into childcare services found the market failing on both fronts. The childcare subsidy did not reduce prices as intended, with fees rising faster than inflation and wages. It recommended the government look at different forms of price regulation and options for supply side funding, particularly to address the lack of services for regional and rural communities. The Productivity Commission’s draft report echoed these findings, recommending 3 days a week of free childcare for families earning less than $80,000.
The Centre for Policy Development report, “Growing Together,” outlines a vision for a better ECEC system. This system would support children’s development and help families balance work and care by offering at least three days of education and care per week for a low set fee, free for low-income families. Instead of complex subsidies, the government would directly fund providers, ensuring accessible services for all families.
Government involvement is crucial. They should act as system stewards, overseeing quality, addressing workforce shortages, and delivering services, particularly in underserved areas and indigenous communities. Clear roles and responsibilities between federal and state governments would enhance collaboration and information sharing.
Prime Minister Anthony Albanese and Treasurer Jim Chalmers hailed the report, calling a universal model both “desirable and possible.” With the final Productivity Commission report due to government this week, there is now a clear blueprint for a universal ECEC system. This could be one of the government’s most transformative reforms, fostering a stronger economy, a more productive workforce, and a brighter future for all Australians.
Although it will require time, commitment, and significant investment, the long-term returns will be immense. CPD’s research estimates that investing in ECEC could generate up to $18.8 billion annually in tax revenue and savings, along with a $10 billion boost to GDP each year. Within a generation, a better ECEC system will save on health and crime costs, create stable, rewarding jobs in early childhood education, and equip children to thrive throughout their lives.
By creating affordable, high-quality early education and care accessible to all families, the government can leave a lasting legacy. This reform will be admired as a fundamental part of raising a family in Australia. Something we can look back on in the coming decades and recognise as an intractable part of what it means to have a child and raise a family in Australia.
Andrew Hudson is the CEO of the Centre Policy Development (CPD), an independent policy institute that advances long-term wellbeing in Australia and the region.