Free ECEC would ‘pay for itself’ new report from Centre for Future Work finds

The investment required to implement free early childhood education and care (ECEC) would ‘pay for itself’ by unlocking female labour supply, boosting GDP and growing government revenues by billions of dollars, a new report from the Australia Institute’s Centre for Future Work has found.

The report has been published as the nation considers key election issues, including the cost of living, with political experts saying that the implementation of free ECEC would ease pressure on families while boosting the economy. 

Key findings of the report include:

• Australia spends less on ECEC funding than other developed countries while parents fees are higher than in other developed countries (meaning parents are paying more and getting less) 

• If Australia matched Nordic countries’ levels of funding, 292,000 new jobs would be created
• If Australia’s women participated in full-time employment to the same degree as women in Nordic countries the GDP would be boosted by $132b per year
• The economic activity supported by expanded funding for public and non-profit ECEC centres would boost Australian GDP by a further $35b
• Government funding for public and non-profit childcare generates one-third more employment and GDP than funding for private for-profit firms
• The combined boost to GDP would create an additional $48b in government revenue, more than the cost of providing the childcare services in the first place.

“This is a program that literally pays for itself,” report author and Senior Economist at the Australia Institute Matt Grudnoff said.

“This would create tens of billions of dollars in new GDP, hundreds of thousands of jobs and billions of dollars in government revenue – above and beyond the cost of providing those services in the first place.”

Having a high-quality, easily accessible non-profit ECEC sector, he continued, would facilitate the expanded paid work effort of hundreds of thousands of Australian women, helping close the gender pay gap.

“At a moment when employers are complaining about a labour shortage, there is an obvious answer: support hundreds of thousands of women to increase their labour supply,” he said.

In order for this expanded ECEC offering to be done correctly, he continued, funding “must be directed to not-for-profit and public centres which put top priority on quality – not subsidising the profits of private investors who see children as a profit centre, not a social priority.”

“Childcare is a significant cost-of-living issue for many families with many spending more on childcare than groceries or utilities. This is one of the smartest investments we could make for parents, for employment and for our society. It’s a no-brainer.”

The report, The Economic Benefits of High-Quality Universal Early Child Education, compares ECEC funding levels in Australia to other OECD countries and can be accessed here.