Unequal from the start: New report warns ECEC system leaves too many children behind

Children from disadvantaged backgrounds are falling behind before they even reach preschool, a new Mitchell Institute report has found, prompting calls for a major funding overhaul in Australia’s early learning system.

A new report from the Mitchell Institute shows that educational inequality in Australia begins as early as age two, with children from disadvantaged backgrounds falling behind well before preschool.

The report, Unequal from the Start: The achievement gap and the early years, highlights that children from lower socioeconomic backgrounds begin to trail their peers from more advantaged families long before school. By the time they start school, the gap is already substantial and continues to widen over time.

Data from the Longitudinal Study of Australian Children reveal that developmental outcomes are similar at birth. However, by age two to three, children from disadvantaged backgrounds are already falling behind. This gap is clearly visible by school entry and tends to grow as children progress through their education.

“Children from the lowest socioeconomic backgrounds who show strong early development are overtaken by their more advantaged peers,” the report states. “Without intervention, these gaps persist and grow.”

Call for a new approach to funding

The authors call for a shift to a child-centred, needs-based approach to early learning. While the Child Care Subsidy (CCS) aims to make services more affordable, it does not direct funding to the areas where it is needed most.

Services in wealthier areas can charge higher fees, allowing them to invest more in quality and resources. This creates a system that benefits children in advantaged locations. In contrast, children in disadvantaged communities often face poorer access and lower-quality provision.

The report recommends replacing the current market-based model with a cost-based model, supported by a funding principle known as proportionate universalism. Under this model, all children would receive access to early learning services, but those with greater needs would receive more support.

Place-based inequality persists

Access to early learning services varies widely depending on where families live. Many children in regional and remote communities live in “childcare deserts”, where demand for places far exceeds supply. In some cases, no local service is available at all.

The report recommends planning early learning services based on what children need, rather than where parent demand is highest. The authors advocate for integrated early learning hubs that combine education, health, parenting and social support services.

“A truly universal early learning system must be designed around children, not just the needs of the market,” the report states.

Early action is critical

The report reinforces the importance of intervention in the first three years of life. This is the stage when children are most vulnerable to developmental inequality and when support can have the greatest impact.

Despite increasing participation in early childhood education and care (ECEC), the system still lacks the targeted investment needed to close the gap. The authors argue that Australia now has a unique opportunity to create a fairer system as governments move forward with universal access reforms.

“We have the infrastructure, the research and the policy intent,” the report concludes. “What we need now is action and a fairer system.”

The full Unequal from the Start report is available via the Mitchell Institute website.