Three productivity myths are holding back education & care reform

Fiona Alston

Aug 18, 2025

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At this week’s Economic Reform Roundtable, Treasurer Chalmers should embrace education and care as a key lever to drive productivity, grow our skilled workforce and reduce social inequity now. Our joint submission makes the case to put investment in inclusion and growing quality community services at the top of the agenda.

Australians expect three outcomes from government funded education and care:

children are set up for everyday success, at school and in life
families can access high quality services where they need it, when they need it
services deliver quality programs that unlock the full potential for children, families and our communities.

However, three deeply held but inaccurate myths mean these outcomes are not enjoyed by all children, families and communities:

Myth 1: Education and care is an expensive investment in long term child development, workforce and productivity gains; it doesn't produce a direct return on government investment in the short term.

Reality: Early education provides twice the bang for government buck via immediate returns through increased workforce participation as well as progressive lifelong benefits for children.Myth 2: The Australian Government can subsidise the education and care market, but cannot ‘intervene’ in this market.Reality: Lack of intervention in the education and care market means we are missing opportunities to grow quality services that set children up for success, maximise workforce participation, and build communities’ economic resilience.

Myth 3: A ‘one size fits all’ approach to growing new services is easier and cheaper than listening to local communities, especially in regional and rural communities.

Reality: Communities know what they need from education and care services. We need a system that values them as active participants to grow sustainable high quality services.

Australia is undertaking the most comprehensive reform of education and care at a time when the Federal Budget is under significant pressure. However, the case for investment is clear with a 2:1 return on every dollar invested.

After a generation of sector advocacy, governments now recognise the central role of education and care as a foundational investment in the economic and social fabric of our country. However, our asks to the government must be more than increased funding – we need a plan that delivers investment where it is needed to deliver maximum value for families, communities and government, with a focus on short and medium term returns.

Two investments can immediately kick start Australia’s productivity:

Firstly, we can unlock the capacity of our regional towns and cities by fixing child care deserts. The Federal Government can expand the Building Early Education Fund to grow community managed not-for-profit services in regional and rural communities. This will create vibrant resilient economies by attracting young families, growing new employment and keeping essential services local.

Secondly, we can invest in families with children with additional needs by improving inclusion support. The most effective time to invest in families is in the early and middle years. When children with additional needs can access the hours of high quality education they need, they are set up for everyday success at school and in life, and their families can work the hours they want.

It’s just over one year since the Prime Minister announced the 15% pay increase for long day care educators and teachers. This momentous change did not happen by accident and shows the power of our sector to deliver major reform quickly and effectively. For the 200,000+ educators and teachers who are benefiting from the pay rise, it has been life changing. Already this investment has seen a 25% drop in staff vacancies, improving quality and access for children and families.

The evidence is clear that education and care is a smart investment in our nation, now and in the future. We now need the Federal Government to prioritise key reforms that will both boost productivity and create the system that families need.

Authors Daniela Kavoukas CEO of Community Child Care Association and Michele Carnegie CEO of Community Early Learning Australia.

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