Reducing the red tape around childcare

The recent Select Senate Committee on Red Tape on Childcare aimed to identify and address issues relating to the regulation on the early childhood education and care sector. Former Victorian Regulatory Authority compliance manager and solicitor Mick Ogrizek discusses the findings, and provides a perspective on where the Committee fell short.

 

The recent Select Senate Committee on Red Tape on Childcare raised some important issues in relation to the amount of red tape that the early childhood education and care (ECEC) sector is subject to.

 

Before addressing the recommendations of the Committee, it is worth clarifying what ‘red tape’ actually is, as it is a term used frequently, and sometimes flippantly. The Committee, on pages 2 and 3 of its final report, quoted the following description of red tape:

 

“Excessive regulation or ‘red tape’ stifles job creation, reduces investment, lowers innovation and lessens productivity. Red tape refers to the counterproductive restrictions or reporting requirements placed on individuals, businesses and organisations that deliver less public benefit than the costs of complying with and enforcing those restrictions or reporting requirements.”

 

The Victorian Auditor-General’s Office adopts a slightly broader definition, defining red tape “…as the excessive, unnecessary or confusing burden imposed on organisations and individuals as a result of regulation.” I prefer this definition as it not only picks up regulation that is unnecessary, but also ineffective regulation.

 

The principle underpinning the objective of red tape reduction is simple: get rid of unnecessarily or ineffective regulation to make it easier for those subject to regulation to comply with the regulations that support the objectives of those regulations.

 

Recommendations of the Senate Committee

In October 2016, the Senate established the Select Committee on Red Tape to inquire into and report on the effect of restrictions and prohibitions on business on the economy and community. One of the areas it reviewed was the effect of red tape on the childcare sector. The Committee published an interim report on 15 August 2018 making a number of recommendations.  In December 2018 it produced its final report.

 

The final report reiterated the same recommendations made in the interim report on the effect of red tape on childcare (page 44):

 

• Recommendation 1:the committee recommends the Australian Government, through the Council of Australian Governments, expeditiously work toward reducing the regulatory burden in the family day care sector, including by removing limits on the number of educators in each service.

 

• Recommendation 2: the committee recommends that the Australian Government, through the Council of Australian Governments, promote and/or develop an evidence-base for staffing ratios and staffing qualifications in ECEC, as a quality component of the National Quality Framework (NQF).

 

• Recommendation 3: the committee recommends that, following establishment of the evidence-base for staffing ratios and staffing qualifications in ECEC, the principles of the NQF be reviewed to ensure they appropriately reflect the evidence-base.

 

• Recommendation 4: the committee recommends that, in reviewing the principles of the NQF, Australian, state and territory governments recognise that formal qualifications are not the only prerequisite for the provision of high-quality childcare, as this can also be provided by parents.

 

• Recommendation 5: the committee recommends that the Department of Education and Training provide a detailed annual report to the Department of Jobs and Small Business, to provide greater transparency about red tape reductions in ECEC.

 

• Recommendation 6: the committee recommends that the Department of Education and Training and the Department of Jobs and Small Business report in greater detail on the regulatory effect of implementing the Child Care Subsidy, including in relation to the Activity Test.

 

• Recommendation 7: the committee recommends that the Australian Government review the objectives of fee assistance to ensure that it is actually targeting maternal workforce participation and children from disadvantaged backgrounds.

 

Comment on the recommendations

 

While the work of the Committee was useful in highlighting the issue of red tape and its effect on the ECEC sector, its recommendations seemed to be somewhat superficial.

 

This can be seen within a number of the recommendations. In relation to Recommendation 1, the Committee seems to have adopted the view of Family Day Care Australia (FDCA) that, in particular, two regulatory requirements: coordinator-to-educator ratios (1:25), and caps on the number of educators registered, are examples of “…excessive regulatory restriction of market competition which ultimately will universally limit the number of educators within family day care services across Australia and affect the choices available to Australian families…educator caps unfairly limit family day care educators’ ability to choose a service to register with and has the potential to severely limit the viability of the family day care sector.” (pages 11-12 of Interim Report). There does not appear to be any evidence in support of this view provided by the Committee or in submissions to the Committee.

 

Recommendations 2-4 appear to challenge the current educator-child ratios and educator qualification requirements. The Committee was of the view that the evidence was inconclusive in relation to the appropriate ratios and necessity of qualifications (page 17 of the Interim Report). In one paragraph they seem to suggest that educators don’t need to have any qualifications at all:

 

“The committee further notes that an alternative to formal childcare is for children to remain at home with their parents who usually have no formal qualifications in early childhood education. Arguments in support of higher qualifications for childcare workers, if they result in fewer children receiving early childhood education due to resulting costs, cannot be supported.”

 

The Committee, by these recommendations, did not appear to advance the debate on the appropriate ratios and staff qualifications at all. Moreover, it did not assess the costs and benefits of such regulation in a broad economic and social context, rather it focused on a narrow basis as regulation being a cost imposed on business.

 

The need for red tape reduction

 

One of the comments made in the Committee’s final report was that (at page 23):

 

“For this inquiry, the committee found a high level of in principle support for regulation in the childcare sector, but not necessarily for the volume and breadth of regulation. The committee agreed that wherever possible red tape should be identified and eliminated, especially as the recently introduced Child Care Subsidy scheme matures.”

 

The annual surveys undertaken by ACECQA on regulatory burden confirm that many approved providers agree that there is significant burden under the NQF. In the latest survey, 18 per cent perceived it as being very burdensome (the top ranking). This figure increased over the last survey, despite a number of measures introduced in 2017-18 to reduce red tape. I believe there is more to be done to reduce the amount of red tape in the regulation of childcare, particularly within the areas outlined below.

 

Red tape and the childcare regulatory system

 

Although the introduction of the Education and Care Services National Law (National Law) in 2012 was a step forward, there are still a number of issues that need to be addressed to streamline the broader ECEC regulatory scheme:

 

• Elimination of two levels of childcare regulation. In most states and territories there are still two regulatory schemes in operation: the National Scheme, and a State Scheme. For instance, in Victoria most services are regulated by the Education and Care Services National Law but around 400 services are still regulated by Victorian Children’s Services Act 1996.

 

• Streamlining of Building and Planning Requirements.  Currently those building a new childcare centre (or renovating a building to convert it to a childcare centre) must comply with the National Construction Code, state/territory planning laws, local planning policies, and the National Law and Regulations. There is a need to consolidate these requirements or at least ensure all states/territories have common requirements, particularly in relation to planning, consistent with the National Law and Regulations. For instance, New South Wales has its own separate Child Care Planning Guideline that interprets and applies premises-related provisions of the National Regulations.

 

• Greater consistency between National Law and Commonwealth Childcare Subsidy Requirements. Although concerned with different aspects of childcare regulation (service provision versus payment of subsidies), the requirements of the two regulatory schemes overlap and cause confusion to approved providers and services in relation to their compliance requirements (particularly in relation to the maintenance of records). Where possible, there is a need for the National Law requirements and Commonwealth Government requirements to be consistent and compatible with each other.

 

Red tape and the National Law and Regulations

 

Although some reform has taken place in this area (abolishing of certified supervisor certificates and streamlining of National Quality Standard in 2018), there is much that could be done to reduce red tape for approved providers, services and educators:

 

• Simplification. Some provisions in the National Law and Regulations are unnecessarily prescriptive, burdensome, and/or confusing. This results in non-compliance because provisions are either too difficult to understand or to comply with to the letter. For example:

 

Regulation 90:  sets out the practices that the service’s medical conditions policy must address. It is verbose (over a page), badly drafted, confusing and ambiguous. It would be more easily understood if it was written as a principle based provision.

 

Sections 173-174 and regulations 173-174: detail the matters that must be notified to the Regulatory Authority. The provision is inconsistently drafted, includes multiple cross references to other provisions, has a number of different timelines for notifications, and intermingles notifications involving risks to children (most important) with less urgent, administrative, notifications. In short, by simply reading the provisions (which are located in two locations: the National Law and Regulations) it is difficult, or at least time consuming, to work out what has to be notified and when.

 

Provisions relating to what records and documents are required to be kept by services are also onerous, confusing, duplicitous, located in multiple areas, and could be simplified. For instance, in the case of approved providers of family day dare services, they are required to keep almost 50 separate pieces of information. The National Regulations are disproportionately preoccupied with prescribing documentation.

 

The Productivity Commission in 2015 identified the need to simplify the assessment and rating system, as it was seen as inflexible and complex, and some changes were introduced in 2018. That simplification has not gone far enough. The National Quality Standard (NQS) consists of seven quality areas, 15 standards, and 40 elements. With so many components to be assessed it is a challenge for both services and assessors. The current NQS still sets far too high a standard, particularly when services are struggling to comply with the minimum regulatory standards with 19,808 confirmed breaches of the NQF recorded for 2017-18, up from 15,221 the previous financial year. ACECQA’s annual Regulatory Burden Survey has also consistently indicated that approved providers see Quality Improvement Plans and the assessment and rating visits as the most burdensome administrative requirements.

 

The provisions relating to Early Childhood Teachers (ECTs) are confusing and burdensome. The requirements in regulations 129-135 are an attempt to regulate for quality by introducing the requirement to have ECTs, over and above other staff requirements. The National Regulations do not stipulate what the function of an ECT is and introduces additional ratio requirements.  There is a need to clarify the role of ECTs and to integrate it with other staffing requirements. From 1 January 2020, even a higher standard will be imposed as there will be an additional requirement for centre-based services to have a second ECT (or “suitably qualified person”) when 60 or more children preschool age or under are being educated and cared for.

 

• reducing Inconsistency between jurisdictions. Inconsistency between jurisdictions is most evidenced in educator to child ratios (r.123) where a number of jurisdictions have different ratios and even where ratios are similar there are many jurisdiction specific exceptions and variations.  For example, there are different provisions when educators are on “breaks”. This must be particularly confusing to those larger approved providers that operate across jurisdictions. Similarly, different requirements apply in regard to ECTs.

 

Need for comprehensive review remains

There is great scope to further improve the NQF by eliminating red tape. In this way, services will be better able to comply with the National Law and Regulations and therefore better focus on the protection of the safety, health and wellbeing of children, and on the educational and developmental outcomes for children. It is hoped that the upcoming Review of the NQF undertakes a comprehensive review of red tape subsisting under the current regulatory scheme, to achieve these outcomes.