What the Labor Election Win Means For The Childcare Sector

With the Labor Party winning the 2022 Federal Election, the early childhood and care (ECEC) sector in Australia looks poised for a shot in the arm, as much in terms of aid and restructuring as affordability for families. ECEC was a central element of Mr Albanese’s policy agenda in the run-up to the election and will remain central to overall policy within the portfolio of Amanda Rishworth MP, the longtime Shadow Minister for Early Childhood Education and Development. The following article details the newly-elected government’s proposed policies for the ECEC sector and what impact they may have in the short, medium and long term. 

Quick Recap

In a pre-election interview, Amanda Rishworth MP made it clear that should the ALP go on to form the government, immediate action would be taken on three initiatives:

• Action recommendations from ACECQA workforce strategy – In October 2021, the Australian Children’s Education & Care Quality Authority (ACECQA) released its National Children’s Education and Care Workforce Strategy which included recommendations to address staffing shortage in the sector. These recommendations will be closely examined to see how they can boost the workforce in the sector.
• Develop a new whole of Government ECEC strategy – Steps will be taken to begin the creation of a dedicated early years strategy to ensure proper administration of funding of programs as well as the formalisation of policies, initiatives and plans to help achieve ECEC outcomes.
• Instruct the Productivity Commission (PC) to examine 90 per cent CCS subsidy for all families plan – As part of its Cheaper Childcare Plan, the Labor party has pledged to replace the current child care subsidy (CCS) eligibility requirements with a universal 90 per cent subsidy for all families.
• Accordingly, the ALP will appoint the Productivity Commission to conduct a feasibility assessment to examine mechanisms to make this a reality.

Short-term Impact

Based on the above-declared initiatives, it is not likely that there will be any direct change to the calculation of child care subsidy or day-to-day ECEC administration, in the days and weeks following the Election.

Medium-term Impact

From 1 July 2023 proposed changes to CCS income eligibility levels and subsidy percentages will come into effect with families earning between $354,305 and $530,000 per annum benefitting from the former and families at the lower end of the socio-economic spectrum benefitting from the latter.

Once the Workforce Strategy review, the Early Years Strategy and the Productivity Review are completed, the outcomes will have a definite impact on the ECEC sector, in 12 months and up to 36 months from now.

If the Productivity Commission implements the 90 per cent childcare subsidy for all, then there will be significant changes in the current subsidy structures as well as pricing and provider transparency requirements. These in turn will impact not only business as usual practices across the sector but financial dynamics too.

Long-term Impact

The full impact of the reviews and their outcomes will be felt after 36 months. If the spirit of Labor’s vision underpins policy recommendations emerging from the reviews and or/strategies, then the ECEC sector is likely to experience the following changes:

• a shift away from an affordability emphasis of policy towards a quality emphasis
• an increase in overall demand levels as more families benefit from a 90 per cent subsidy threshold
• an easier ECEC workforce landscape as the government removes bottlenecks preventing new talent from joining early childhood and care services.

How Much Will Change

The ALP’s $5.4 billion childcare subsidy boost, which incidentally was also Albanese’s biggest pre-election commitment, lies at the heart of the newly-formed federal government plans to prop up government-funded childcare subsidies. Before the election, Albanese said his policy for cheaper childcare would drive productivity, delivering “a return” to the federal government without fuelling inflation. Mr Albanese argued every dollar spent on childcare adds at least $2 to the economy because it boosts workforce participation.

However if past experiences are anything to go by, the ALP’s promised $5.4 billion childcare subsidy aid might only lead to a marginal increase in the workforce. This is because an Australian Institute of Family Studies review of the $3.4 billion Jobs for Family package – the last major injection of taxpayer funds into childcare – found the only minimal change to the employment-to-population ratio of mothers with children under 10, beyond what would have occurred due to population growth and the strong jobs market.

The government spending was found to have had diverse effects on parents’ participation in employment; while on balance the effects were positive, they were small. The August 2021 study said overall trends for the much smaller package were “not inconsistent with historical trends in the workforce participation of families with children”.

Nevertheless, the ALP’s promised childcare subsidy aid is now expected to benefit around 1.26 million families across the country. Also independent public policy think-tank, Grattans Institute believes that the infusion would reduce some economic barriers to getting parents back into the workforce.

Other Issues

Here’s a look again at some other ECEC sector issues in the run-up to the 2022 federal elections, and ALP’s stance on the same:

• Childcare Fee Regulation: The ALP said it will request the Australian Competition and Consumer Commission (ACCC) to design a price regulation mechanism that will keep down out of pocket childcare costs for families. However, the party did not offer any further details on the matter.
• Need for greater transparency: In order to provide more transparency in the ECEC sector, the ALP had offered to - ban non-educational enrolment inducements, force large providers to publicly report revenue and profit, and provide real-time fee data quality ratings to families.

However, no further detail was provided on how the party intended to define ‘large providers’ or formulate and implement the above transparency measures.

• ECEC services accessibility - A substantial part of the country includes regional and remote areas where people have difficulty getting access to quality ECEC services. In fact, a 2021 study by the Mitchell Institute for Education and Health Policy at Victoria University concluded that 35 per cent of all Australians live in “Childcare Deserts” or communities that suffer from a structural undersupply of childcare services. With regard to improving accessibility to ECEC services, no specific measures had been announced by the Australian Labor Party

The Australian Government is the main source of overall funding for child care services, primarily through fee subsidies, while state and territory governments regulate child care providers and set quality standards agreed to under the National Quality Framework. As such, political configurations at local, state and national levels deeply impact society and will continue to remain important foci of interest of the citizens of the country.

References:
Labor Election Win, What It Means For ECEC, The Sector 
Workforce Return For Childcare Buck. AFR 
Where Do Major Parties Stand, The Sector 
Australian Childcare Deserts Latest Reports, The Sector