Productivity Commission releases highly anticipated ECEC final report with affordability and workforce in spotlight

The Productivity Commission (PC) has released its final report into the Australian early childhood education and care (ECEC) sector nearly three months after it was handed to the Treasurer and just over eighteen months after it was commissioned.

The report’s release marks the end of an extensive period of research, consultation and review by the PC, and the Australian Government, and culminates in a set of final recommendations designed to help policy makers craft an ECEC system that is affordable, accessible, equitable and high-quality.

Speaking at the Early Childhood Australia Annual Conference in Brisbane, Jason Clare MP, Minister for Education welcomed the report’s release and thanked the Commission for their extensive efforts over the review period. 

“We will review the recommendations in this report and we will go through it to identify what are the things we need to do to set our children up for success. That’s what we are doing now, going through all of the recommendations.” Mr Clare said in the post presentation press conference. 

Mr Clare declined to comment on any specifics within the report but made it clear that the Government will make a formal response to the report’s recommendations in the  next few months with expectations high that ECEC related pre-election policy announcements would be forthcoming thereafter. 

Final report includes 56 recommendations: affordability and workforce most prominent

The final report contains 56 recommendations, up from 32 in the draft report, spread across ten key focus areas that includes, but is not limited to, affordability, workforce, children’s outcomes, inclusion and labour force participation. 

Notably, the affordability paper and workforce papers contained between them around 43 per cent of all recommendations highlighting their centrality in the success of any reform agenda. 

With regards to affordability, new measures recommended by the PC include:

• Removing the activity test
• Raising the subsidy rate for families with annual income at or below $80,000 to 100 per cent of the fee, up to and including the hourly rate cap
• Taper down the CCS rate from 100 per cent by one percentage point for every $5,000 above an adjusted taxable income of $80,000
• Increase the Higher Child Care Subsidy rate to 100 per cent for families with an annual income at or below $140,000
• Taper down from 100 per cent by one percentage point for every $5,000 above an income of $140,000
• Families with an adjusted taxable income of $580,000 and above would be ineligible for child care subsidy (CCS)

Other key affordability recommendations included setting the default CCS withholding amount to 0 per cent, increasing the ACCS (transition to work) CCS rate to 100 per cent – up to the rate cap – and reviewing CCS eligibility for restricted or temporary residents. 

Overall, should these recommendations be implemented the PC forecasts a 10 per cent increase in demand in low and middle socio-economic areas at a base cost of around $5 billion for the CCS changes alone.

PC maintains calls to improve not replace CCS model and create new ECEC commission 

Consistent with findings and recommendations detailed in its interim report the PC reiterated its position that improving components of the current funding model would support universal access.

“These reforms would address the shortcomings identified in the current model and create an equitable approach to funding that centres the needs of children,” the Commission notes on Page 48 of its report. 

“More comprehensive change risks imposing high costs without obvious additional community benefits.”

Against that backdrop the PC highlights the importance of a new model of system stewardship that would mitigate the current lack of effective coordination mechanisms across governments and limited government accountability for system-wide outcomes.

Specifically, the PC called for an independent ECEC Commission to oversee adherence, compliance and accountability to a new set of national agreements for ECEC agreed to by the Australian and state and territory governments. 

To access the Productivity Commission’s final report into ECEC please click here.