Increasingly divergent trends in LDC and preschool evident in latest ROGS report

The Productivity Commission has released the early childhood education and care (ECEC) component of its Report on Government Services (ROGS) series 2019/20, providing a complete snapshot of the ECEC sector’s performance in key areas such as participation, funding, costs and compliance. 

The report, which is released annually, is designed to provide information on the equity, effectiveness and efficiency of government services, including ECEC, in Australia.

This year’s report confirmed, amongst other things, that childcare funding levels via the Child Care Subsidy system continued to move higher, with new record levels set. Long day care (LDC)attendance and long day care hours attended also set new records, with gains also recorded in the Aboriginal and Torres Strait Islander and low income children cohorts. 

Fee levels in the child care space rose again, albeit at a slower pace than last year, recording a 4 per cent increase. Net out of pocket costs now represent around 5 per cent of disposable income for families.

Trends in the preschool setting were less encouraging, with Government funding commitments lackluster, and the percentage of children enrolled substantially below last year’s levels, markedly so in some states. That being said, the increase of three year olds enrolled in preschools is viewed as a positive.

On the plus side, confirmed breaches and serious incidents recorded were lower across preschool settings compared to last year, a performance that wasn’t matched in the LDC, OSHC) and family day care (FDC) spaces, all of which saw increases, and in some states substantial increases of confirmed breaches and serious incidents.  

Please see below for a full summary of key elements of this year’s report: :

• Total funding – All Government funding of ECEC in the 2019-20 period reached record levels again, up to $10.5 billion, a significant move from the $9.9 billion recorded in the previous year. The increase was overwhelmingly driven by Federal Government spending in the Child Care Subsidy (CCS) space which saw a 6.7 per cent increase year on year to $8.5 billion.  

• Universal Access funding – The Commonwealth funding contribution through the National Partnership on Universal Access to Early Childhood Education, the funding stream that supports states and territories to increase participation rates in preschool fell marginally in 2019-20 to $433m million, compared to $439 million in the prior year. Although overall spending levels are consistent with the last several years, there have been marked differences at the State and Territory level, with Queensland, in particular, seeing substantial contractions in spending for the fourth year running. 

• Children enrolled in approved child care services – Demand for child care services continued to rise with the percentage of children now enrolled in an approved child care service now reaching 45.1 per cent, a new record. The proportion of children has increased steadily over the last 10 years, with last year’s 0.7 per cent increase consistent with previous years. This year the one year and three year old age cohorts were the key contributors to overall growth. 

• Children enrolled in a preschool program in the year before school – The percentage of children enrolled in a preschool program in the year before school fell 3.3 per cent compared to last year, with 87.7 per cent of all children enrolled in 15 hours or more per week. The fall is most pronounced in non-Government preschools, but is also evident in preschools programs within LDC centres. NSW continues to have the lowest percentage of children enrolled at 84.2 per cent, although this level is similar to last year. Both QLD and VIC recorded substantial falls in preschool participation this year down to 87.8 per cent and 84.8 per cent of children respectively.

• Three year olds enrolled in a preschool program – The number of children enrolled in a preschool program in the two years before school continues to trend higher in both absolute and relative terms. An important driver of this has been in Victoria where despite the three year olds kinder program not having been fully rolled out, enrolment levels are still materially higher. 

• Childcare fees and out of pocket expenses – Centre based services saw fees rise by four per cent this year, lower than the five per cent gain recorded in the 2018/19 period. Out of pocket costs as a percentage of disposable income before subsidy rose slightly to around 18 per cent this year, however after subsidies are taken into account were five percent of disposable income, an increase on last year, but still below the 2017/18 levels pre CCS. 

• Hours of attendance per week – LDC hours of attendance rose to a new record in 2020 to 30.0 hours on average per week, with the longest attendance levels being recorded in the Northern Territory, with 36.4 hours, and the ACT at 31.5 hours. FDC attendance continued to fall and is now down to 23.4 hours per week. OSHC, like LDC, recorded a new record, rising to an average of 10.3 hours per week.

• Aboriginal and Torres Strait Islander attendance at child care and preschool – The proportion of children aged from birth to five years of age from Aboriginal and Torres Strait Islander backgrounds attending child care services increased to four per cent this year. This was a new record level, albeit just, with last year’s percentage of 3.9 per cent the previous high watermark. From a preschool perspective, attendance jumped substantially in 2019/20. 

• Low income families attendance at child care – The proportion of children aged from birth to five years of age from low income backgrounds attending child care services rose to 24.3 per cent, up from last year but still not above the previous high recorded in 2015 at 24.5 per cent. From a preschool perspective attendance was down slightly for this cohort compared to last year. 

• Confirmed breaches at NQF approved ECEC services – With the exception of the preschool setting, confirmed breaches this year were higher across the ECEC sector, with long day care and family day care reporting large increases across the states and territories. The bulk of the increase in the LDC setting appears to have been driven by NSW and the ACT, although it is unclear from the data what specifically has been driving these increases. From an FDC perspective, a change in reporting methodology in NSW created a very substantial increase in breaches reported. Overall for the sector, and taking into account the changes, breaches per 100 services are now at 156.1 up from 132.4 last year. 

• Serious incidents at NQF approved ECEC services – The total number of serious incidents reported in 2019-20 rose 2.8 per cent compared to this year, a slower rate of growth than last year. In terms of service types LDC incidents rose by seven per cent this year but preschool, OSHC and FDC all recorded falls. From a state perspective the ACT recorded the most incidents per 100 services, up 9 per cent to 176.5, and the VIC the least at 86.6 per 100 services.

For more information on this year’s release, including reports and data sets please click here.