Even for a government as cack-handed as this one, childcare investment should offer that rare combination of good policy and good politics. Especially as the Coalition enters denialist mode and defies the conclusions of both the Productivity Commission (PC) and the business community that expanding access to childcare delivers a substantial return on taxpayer investment.
Traditionally the policy debate around childcare has focused on the benefits to workforce participation and how to maximise the number of parents — viz. mothers — returning to the workforce via increasing access to childcare and altering the taper rate of childcare subsidies.
But the review of childcare and early childhood education by the Productivity Commission released in September shifts the focus somewhat to the direct benefits to kids — our future citizens, workers and employers — of greater access to what the PC calls “early childhood education and care” (ECEC). The shift is at the very start of the PC report:
Early childhood education and care can improve outcomes for children — particularly those experiencing disadvantage and vulnerability — throughout their lives and deliver net community benefits. ECEC is also a critical enabler of parents’ participation in the labour force. Governments should work towards creating a high-quality universal ECEC system that is accessible, within the means of all families, equitable and inclusive for all children.
The PC recommended removing impediments to greater access to ECEC so that “all families with children aged 0–5 years who choose to use ECEC should be able to access at least 30 hours or three days a week of high-quality ECEC, for 48 weeks a year”.
That means ending the link between workforce participation and access to care — “the [childcare subsidy] activity test should be removed. Children’s participation in ECEC should not depend on their parents’ activity,” the PC urged, bluntly. And the government should further reduce the taper rate and weight subsidies for low-income families.
Where will the extra ECEC services envisaged by the PC come from (beyond the increase in childcare worker salaries the government has provided)? “Supply will respond in many areas to deliver this benchmark, in particular once additional subsidies are implemented. But in persistent ‘thin’ markets or communities with complex needs, the Australian government should provide additional funding to enable the establishment of appropriate services and, where necessary, ensure their ongoing viability.” That particularly applies to Indigenous children, who “are under-represented in ECEC”.
That’s the guts of what Anthony Albanese announced this week. The activity test will be dumped from January 2026. A “Building Early Education Fund” will provide grants for new centres in outer suburbs and regional and rural communities. A “Three Day Guarantee” is now government policy. And the government will investigate an “Early Education Service Delivery Price”, presumably preparatory to a more substantial reform of childcare subsidy arrangements.
The case of the investment in ECEC is so clear even the Business Council acknowledged it, emphasising the “long-term economic benefits … particularly for children from vulnerable and disadvantaged backgrounds” and that ECEC can “maximise the human talent pipeline of our nation.”
The Coalition, however, is having none of it. Labor has “rehashed a failed childcare policy”, according to Angus Taylor yesterday. “Removing the activity test benefits a small number of families, at the expense of hundreds of millions of dollars to the taxpayer.”
If Taylor, or the Coalition’s buffoonish education shadow Sarah Henderson, had read the PC report, they’d be aware it’s the activity test that failed (the PC: “It has probably discouraged some from working”), and led to low-income families having to pay for unsubsidised childcare. The PC recommended ditching the test because, out of all the options it modelled, it best targeted increased funding (and reduced revenue) toward families that needed it, rather than higher-income households.
It’s hard to know whether the Coalition’s support for retaining the activity test is driven by fiscal discipline — difficult to believe given the hundreds of billions it plans to waste on nuclear power — or by hostility to low income families. It is, after all, the Dutton style to prefer identifying people to demonise rather than make policy work better. But the Coalition’s formal position is now that children — and, in the long-term, the community — should be deprived of the benefits of early childhood education because their parents are assessed as not worthy. The fact that the Coalition will go to the election telling outer suburban and regional communities that it will be withdrawing funding for more childcare services is likely to be something Labor will constantly draw attention to.
Indeed, the Coalition will go the election as the first party in decades actively promising to cut childcare and childcare funding. On the other hand, Labor, backed by the Productivity Commission and even the business community, is investing in “long-term economic benefits” and “maximising the human talent pipeline of our nation”. Even this shambolic outfit can’t mess that up… surely?
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