New report reveals the hidden cost of Australia’s early childhood sector: instability, churn and rising risk

Australia's rapid expansion of early childhood education and care (ECEC) has significantly increased the number of available childcare places, but new research warns that growth has also been accompanied by high levels of provider turnover, workforce churn and growing risks across the system.

A new report from Victoria University's Mitchell Institute, The price of a place: Instability, risk and the hidden cost of Australia's early childhood education and care system, examines how Australia's approach to expanding early childhood education and care has reshaped the sector over the past 25 years.

The research shows the number of childcare places has increased from around 190,900 to more than 720,000, with the expansion driven overwhelmingly by private for-profit providers.

Private for-profit operators now account for 74 per cent of long day care places nationally.

While that expansion has substantially increased supply, the researchers argue Australia's approach to growing places and controlling costs has also contributed to underlying weaknesses, particularly low pay and high workforce turnover.

One of the report's most striking findings relates to changes in approved providers.

According to the Mitchell Institute, 32 per cent of all childcare centres have changed providers since 2013, increasing to more than 40 per cent among for-profit centres.

An approved provider is the legal entity responsible for operating an education and care service.

A change in approved provider does not necessarily mean a service has closed, nor does it automatically mean children's day-to-day experiences have changed.

However, the scale of movement identified by the researchers raises questions about organisational stability within a system in which continuity and relationships are important components of quality.

The report argues that stability should be given greater consideration when evaluating the performance of Australia's ECEC system.

The research also highlights significant workforce instability.

The median hourly wage for educators was reported at $34.30, compared with $62 for schoolteachers and a median hourly wage of $42.40 across the broader economy.

Income tax data analysed by the researchers found 52 per cent of childcare jobs were held for less than one year, compared with 25 per cent of jobs in the school sector.

According to the Mitchell Institute, the combination of high staff turnover and comparatively low pay means Australia's ECEC workforce has characteristics more closely resembling the retail and hospitality sectors than education.

The implications extend beyond workforce management.

Stable relationships between children and educators are an important feature of high-quality early learning environments, making workforce retention relevant not only to employers but to children's experiences of education and care.

The report also provides insight into what instability can look like for individual educators.

Sherry, an early career teacher who worked across two long day care centres for four years before moving to sessional preschool, described conditions she considered unsustainable.

She said she had received limited support as a graduate teacher and experienced difficulties accessing professional development.

"I experienced the impact of poor management first-hand," she said.

"I was left to work alone with 11 children, and six of them had additional needs."

Her experience provides one example of the workforce pressures considered by the researchers as they examine the broader structural settings underpinning Australia's ECEC system.

The report also examined recently published Australian Government regulatory data, identifying a notable difference in enforcement activity between provider types.

Centre-based services operated by large private for-profit providers, defined as organisations operating 25 or more services, were more than three times as likely to have an enforcement action recorded as services operated by other large providers, including not-for-profit organisations.

The Mitchell Institute reported the difference as 229 per cent.

The finding requires careful interpretation.

Enforcement actions cover a broad range of regulatory responses, ranging from quality measures through to safety breaches. The presence of an enforcement action does not therefore, on its own, establish the nature or severity of the underlying issue.

Nevertheless, the difference identified between provider types adds another dimension to the report's examination of how Australia's ECEC market is structured and how different ownership models operate within it.

Lead author and Mitchell Institute Director Professor Peter Hurley said Australia's policy settings had successfully driven significant growth in the number of childcare places while seeking to contain costs.

But he argued those mechanisms had also produced unintended consequences for the sector.

"Australia has used sophisticated approaches from the research on markets and economics to grow the number of places while keeping costs down," Professor Hurley said.

"But these approaches bake-in the deficiencies of low-pay and high turnover and put enormous strain on the sector."

Professor Hurley said the system could ultimately reward providers capable of producing an hour of care at the lowest possible cost while meeting minimum standards.

The report calls for a greater balance between policies designed to increase the supply of places and keep costs down, and the needs of children, families and communities.

Mitchell Institute Research Fellow and report co-author Dr Melissa Tham said addressing the challenges facing ECEC would require looking beyond short-term solutions.

"To get the most out of the ECEC sector, we need to look beyond short-term fixes and examine the fundamentals of how the sector runs," Dr Tham said.

"Children benefit from rich environments and trusted relationships. Stability should be recognised as an important feature of a high-quality early childhood education and care system."

That proposition is particularly relevant as governments continue to pursue reforms designed to expand access to early learning.

Increasing the number of available places remains important, particularly in communities experiencing shortages, but the report suggests supply cannot be considered in isolation from the stability of the workforce and organisations delivering those places.

For providers, policymakers and regulators, the findings add another dimension to ongoing conversations about workforce sustainability, governance, quality and the future structure of Australia's ECEC system.

The report does not suggest that private investment or expansion is inherently incompatible with high-quality early childhood education and care.

Instead, it raises questions about whether Australia's existing market settings sufficiently recognise and support stability alongside accessibility and affordability.

For providers, the findings place renewed attention on educator retention, professional development, organisational culture and the continuity of leadership and governance.

For policymakers, they raise broader questions about whether future reforms can continue expanding access while creating conditions that support a more stable workforce and service system.

The findings around enforcement activity also warrant further consideration, particularly as governments and regulatory authorities increase their focus on child safety, provider governance and regulatory compliance across the sector.

Australia's early childhood education and care system has changed substantially over the past 25 years.

More than half a million additional childcare places have been created, providing significantly more families with access to early learning and enabling greater workforce participation.

But the Mitchell Institute's research argues that the success of the system cannot be measured by the number of available places alone.

The stability of the organisations operating services, the educators working within them and the relationships children experience also matter.

As Australia considers the next phase of ECEC reform, the report presents a challenge for policymakers: how can the system continue to increase access and manage affordability while also creating the conditions necessary for a stable, sustainable and high-quality early childhood sector?

The answer, according to the researchers, requires looking beyond short-term solutions and considering the fundamental structures and incentives shaping the system.

The full Mitchell Institute report, The price of a place: Instability, risk and the hidden cost of Australia's early childhood education and care system, is also available through Victoria University here.