Goodstart delivers on commitment to “quality ECEC” despite difficult year says 2023 Annual Report

Goodstart Early Learning, Australia’s largest provider of early childhood education and care (ECEC) services, continued to invest heavily in quality, inclusion and its team against the backdrop of a second consecutive year of challenging operating conditions, its 2023 Annual Report has revealed.

Quality – as measured by services rated at or above the National Quality Standard – stood at 98 per cent, targeted social purpose investment spending reached a new record of $54.2 million and Goodstart team members continued to enjoy the benefit of materially higher than award strategies across 2023. 

However a modest rise in revenues, largely driven by tempered enrolment performances and a below inflation fee increases, was not sufficient to offset ongoing spending patterns, contributing to the group recording an operating deficit of $1.6 million for the year. 

“Despite a financially challenging year, we have maintained our focus on our children, our people, and our families,” Chair Paul Robertson AO said. 

Dr Ros Baxter, Goodstart’s incoming new CEO said that since commencing in her role as CEO in March 2023 she has “learned so much about Goodstart’s unwavering commitment to high quality early education and care for all children, and especially to make a difference for those children who need us the most.” 

Sector leading quality ratings sustained amidst social purpose investment spend

Goodstart reported over 98 percent of its centres assessed as holding a rating of Meeting or above the National Quality Standard in FY2023, with 38 centre’s ratings lifted from Meeting to Exceeding during a reassessment, a significant achievement in today’s assessment and rating environment. 

The strong quality performance was underwritten by Goodstart’s Teaching and Learning team, a forty five strong group of professionals tasked with providing expert advisory service to centre teams, providing support during assessment and rating and giving intensive support to centres where required.

Educational leaders and early childhood teachers continued to benefit from ongoing initiatives such as Goodstart’s first ever national conference for Educational Leaders and its dedicated Teacher Professional Program that provides mentoring support for both new graduates and established teachers.

Investment in targeted social purpose investments was robust across the year with $23.1 million spent on professional development (up 21 per cent on 2022) and $11.8 million on inclusion programs (up 23 per cent year on year). In addition, the inclusion spend for children with additional needs rose substantially from 2022 with $4.2 million spent, up 39 per cent. 

“Goodstart continues to support a higher proportion of children who may be vulnerable, when compared with the sector average, including children with a disability or developmental delay, First Nations children, children living in families with a low-income, or living in a regional or remote community,” Ms Baxter said. 

Investment in people yields positive engagement and improved turnover 

Goodstart, which has in excess of 15,000 employees, continued to build on its employee value proposition through a range of financial and non-financial measures, some of which were built upon further in 2023. 

Educator wage rates rose 5.6 per cent as at July 2022, and a further 7.0 per cent as at July 2023, just after the end of Goodstart’s financial year, a move that makes the wage of Diploma qualified educators around $3,100 per annum above award rates. 

In addition, early childhood teachers’ starting salaries are now on average of $2,500 per annum higher than those in public schools, with Goodstart also seeing a corresponding increase in the pipeline of teachers and educators jump via offering 800 traineeships, doubling their migration program and supporting a further 350 educators to upgrade to teaching qualifications. 

Staff costs saw an increase of 8 per cent in 2023 and now represent around just under 75 per cent of centre revenue generated across the year, highlighting the Group’s substantial contribution to its team from a financial perspective.

“While staff vacancy rates continued to rise across the sector, our vacancies have begun to stabilise and our most recent Goodstarter survey has shown positive results including that our people would recommend us as an employer to family and friends,” Ms Baxter said. 

Tough operating conditions overshadow quality, inclusion and team successes

Goodstart’s top line performance was impacted materially across the financial year due to a severely disrupted 2022 enrolment pipeline caused by COVID-19, leading to weaker performance in the first half of its financial year, and increased competition, ongoing workforce shortages and cost of living pressures impacting demand impacting performance in the second. 

Although actual occupancy was not disclosed, Goodstart did note that as at June 2023 occupancy levels were ahead of the same point in 2022, but still not more than those recorded prior to COVID-19 in 2019. 

The challenging enrolment backdrop combined with a meaningfully below inflation fee increase were not sufficient to make up for quality, inclusion and team related spending programs and general cost increases which contributed to the Group recording an annual operating deficit of $1.6 million, and net deficit, after financing costs, of $85.3 million, in the financial year. 

Goodstart sustained CAPEX and maintenance investment across its portfolio with around $53.6 million spread across leasehold improvements, plant and equipment and work in progress with the cost supported by a new variable rate term loan facility of $80 million, of which $35 million has been drawn down. 

Looking ahead Goodstart noted that it “remains optimistic that 2024 will yield operational rewards due to our unwavering focus on our purpose and continuous investments in our people, practice and quality uplift and enhanced child outcomes.”

To access the 2023 Annual Report please click here.