A report from Australia’s consumer watchdog has recommended urgent reform of childcare policies to improve the affordability and accessibility of care, noting that market forces alone are not meeting the needs of all children and families.
The Australian Competition and Consumer Commission (ACCC)’s 12-month inquiry made eight recommendations from its 31 findings listed in the report.
The report from the inquiry revealed how market forces are failing to meet the needs of Australian families in accessing care, as well as how disadvantaged groups are disproportionately unable to afford and access childcare services.
The inquiry involved detailed analysis of cost and pricing data in relation to childcare services in Australia. Leaders of the inquiry also engaged with childcare providers, educators, parents and guardians for feedback on the current systems in place.
The ACCC’s Chair Gina Cass-Gottlieb said while the Cheaper Child Care reforms from July 2023 reduced out-of-pocket expenses for all types of care, the government must steer clear from a “one size fits all” policy approach.
“When applied across the childcare sector, this current approach will continue to leave some households without adequate, affordable, and accessible childcare options,” Cass-Gottlieb said.
“We’ve recommended the Government consider a mix of different regulatory measures to improve outcomes for households in diverse circumstances and locations across the country, particularly for lower income families, households living in remote locations, children with disability or complex needs and culturally and linguistically diverse families.
“Childcare is an essential service for Australian families. It enables parents and guardians to work, train or study and offers inclusive and safe early learning opportunities for young children.”
Who gets to access care?
The ACCC’s report found certain groups in Australia are able to afford and access childcare easier, while others miss out on the essential service.
Major cities and more advantaged areas in the country have a greater ability and willingness to pay for childcare services, resulting in increased profit margins for childcare providers.
There are labour shortages affecting the entire care sector across the country, but having a greater impact on regional and remote areas, First Nations communities and children with disability, complex needs or experiencing disadvantage.
The ACCC recommended the government consider providing funds or grants to childcare providers in these areas to assist families who are in need of care services but cannot afford it or access it.
During the inquiry, the ACCC conducted roundtable discussions with First Nations community members. They noted the complex administrative processes involved in accessing the Child Care Subsidy offered by the government discourages First Nations households from applying, especially because of the trauma many First Nations people have from navigating previous government systems.
“Feedback from First Nations people and our market analysis about how childcare markets are working for these communities are examples of why a single policy approach will not address the needs of all children and communities,” ACCC Chair Gina Cass-Gottlieb said.
Decline in services
In the last five years, the number of family day care and in-home services has declined significantly across the country. Since 2018, there were 116 closures of family day care services, while 19 in home care services closed.
Cass-Gottlieb from the ACCC said these closures disproportionately affect minority groups in Australia, including culturally and linguistically diverse households, low income households, families in remote areas and caregivers that work non-standard hours.
“Family day care is an important alternative childcare choice for many families as it may offer more flexible hours of care, adjustable session lengths or better cater to cultural and linguistic needs,” Cass-Gottlieb said.
‘A truly universal’ system
Georgie Dent, the CEO of the not-for-profit advocacy organisation The Parenthood, said she welcomes the findings of the ACCC’s inquiry, but notes there is still work to be done.
“The ACCC’s findings affirm that early childhood education and care is a cornerstone of our society, impacting the development and education of children, as well as the lives and working patterns of parents and families, and the economy,” Dent said.
“The report confirms, however, that there are huge disparities around the country in terms of accessibility and affordability of early childhood education and care.
“Unfortunately the ACCC’s findings make clear that it is children from lower socio-economic households, as well as First Nations children, and children living in remote areas, that miss out the most.”
The ACCC’s report is the ninth in two years that has recommended the government to abolish the Activity Test, a test that allows households access to the Child Care Subsidy based on the amount of work or “activity” is done.
Dent from The Parenthood said the Activity Test “failed to incentivise parents to work as it was designed” and instead disadvantaged children who need care the most.
“Australian children and families deserve a truly universal early childhood education and care system that is high quality, accessible, affordable, inclusive regardless of postcode, income or socioeconomic status,” Dent said.
“The time for action is now.”