PwC report shows for every dollar invested in ECEC, two are returned

A landmark Australian study has unequivocally demonstrated the value of investing in the early years, showing a clear correlation between investment and economic boosts to the nation, also highlighting that further work is needed.

The new study, A Smart Investment for a Smarter Australia, commissioned by The Front Project, was produced by PwC. An Australian first, the study analyses the benefits of early learning in the year before school, and clearly shows that investment in early childhood education boosts productivity and increases workforce participation, while addressing developmental vulnerability in children.

It represents the first comprehensive Australian analysis of the economic impact of early childhood education, examining the impact of the current Australian system, which provides an early childhood education program for 15 hours a week, delivered by a Bachelor-qualified teacher, in the year before school.

The analysis is based on data for children who attended early childhood education in 2017, with the economic analysis exploring the measurable costs and benefits for children, governments, families and business as a result of attendance at early learning.

Using the best available Australian and international research to estimate the impact of early childhood education on early school achievement, and the likely uplift in children’s achievement at Year 3 and throughout the rest of their education, the report adds to a growing body of evidence and advocacy about the importance of the early years.

Whilst previous research, both in Australia and internationally, has outlined that the early years of a child’s life presents a window for learning and development unlike any other, and that between three and five there is a unique opportunity to accelerate the development of skills and abilities such as communication, literacy, numeracy and problem-solving, this report places the research in the Australian context and draws on both societal and economic benefits, building a strong case for continued investment in the space.

The PwC research shows that for every dollar invested in early childhood education programs, two dollars is returned, broken down as follows:

+$997 million to children themselves, through a lifetime of increased earnings.

 

+$1,463 million to families, due to increased earnings gained by returning to the workforce earlier and boosting hours in the year their child attends early childhood education as well as the impact of a shorter career gap.

 

+$1,507 million to government, over the lifetime of the child, from increased tax revenue and decreased expenditure on health, justice and welfare.

 

+$319 million to business and the economy, from the productivity boost of a more educated workforce.

 

Although the current system is delivering outcomes and benefits, the authors said, there is room for improvement. PwC analysts said an increased return on investment could be achieved through:

• Investing in quality, and elevating the number of services who achieve a rating of meeting (or above) the National Quality Standards;

• Committing to ongoing funding: ongoing funding commitments from the Commonwealth Government will lead to improved service viability, planning, job security and quality;

• Increasing access: ensuring children in disadvantaged communities have access to quality early childhood education. They have the most to gain yet are the least likely to attend and the least likely to experience high-quality learning;

• Offering two years: analysts noted that Australia is one of the few OECD countries not offering two years of preschool, putting the country at risk of falling further behind on international benchmark tests, like the Program for International Assessments;

• Investing in research: the report highlighted the need to build more evidence on the impact of the current Australian early childhood education system, particularly the short and long-term impacts on school achievement, social and emotional skills and health and wellbeing outcomes.

Jane Hunt, CEO of The Front Project, said the report was an important source of affirmation about the value of investing in quality early education for business, governments and families.

Early learning, Ms Hunt said, was not only about ensuring that children could achieve success in life, but also in ensuring economic stability as the world of work becomes more complex. “We know that 65 per cent of children today will do jobs that have not been invented yet, so the reality is that our children will need to learn how to learn – early education does this,” she said.

Lisa Chung, Chair of The Front Project’s Board said the report reveals the enormous opportunities created later in life that result from sound and stable investment in the early years. “Succeeding in future workplaces will require agile, lifelong learners, who are comfortable with continuous adaptation and a willingness to change industries or sectors,” Ms Chung said. “It’s possible to train people in new information and contexts, but without teams who can learn and re-learn, innovation and efficiency suffer.”

Emphasising the role of the early years in establishing the foundational skills needed to engage in life-long education and succeed through career changes, Ms Hunt lauded the report for making available the data that shows Australia’s universal early childhood education policy could double the return on investment.

“That’s higher than many of our nation-building infrastructure projects. The benefits of early education can be seen immediately, and returns continue as those children become adults,” Ms Hunt said, adding that the data highlights the importance of governments committing to ongoing funding for the National Partnership Agreement.

 

Speaking on the value of the report, PwC Chief Economist Jeremy Thorpe said the research also analysed the substantial impact early learning has on children’s development.

“Using the best available Australian and international research we were able to estimate the impact of early childhood education on early school achievement, and then the likely uplift in achievement at Year 3 and throughout the rest of their education,” Mr Thorpe said.

“The evidence suggests that if early childhood education puts students ahead at the start of primary school, the benefits will increase as they progress through the education system.”

Touching on the impact of the availability of early years services, as they relate to workforce participation, Ms Hunt said that the data highlights the significant benefits for families, business and the broader economy, with parents able to return to work sooner or increase their hours when quality early years options are available to them.

“Early childhood education leads to higher household earnings, as well as the advantage of a reduced career gap,” Ms Hunt said. “Parents keep their skills relevant and improve their employability as well as contributing to their superannuation, and all this occurs while providing the best foundation for their child.”

The full report is available to view here. Further information about The Front Project, an independent national enterprise working to improve quality and create positive change in Australia’s early childhood education system, is available here.

A summary of the report, specific to early childhood education and care (ECEC) services has been prepared, and can be found here.