Productivity Commission Falls Short: ECEC Needs Radical Reform

Deb Brennan is Professor in the Social Policy Research Centre, UNSW. She has written extensively on social welfare, family policy and gender and politics

The Abbott Government was elected with no clear policy on early childhood education and care (ECEC). Once in office, it asked the Productivity Commission to sort it out. 

The Commission was asked to make ECEC ‘more flexible, affordable and accessible’, to modernise the system to take account of the 24/7 economy and to include nannies in the mix of taxpayer-funded services.

Somehow, it was to achieve this within the current funding envelope – clearly an impossible task.


There is no doubt that Australian ECEC needs reform. 

For many parents, childcare is hard to find, expensive and inflexible.  Many work outside of ‘standard’ hours, making it difficult to use services that operate 8 am-6 pm.

The system is not working for early childhood educators either.  Many face onerous working conditions and are paid little more than the minimum wage, despite their training and the value of their work.


The Productivity Commission has recommended a single payment to replace the current confusing mix of subsidies.  The Early Care and Learning Subsidy would be paid to the approved provider nominated by parents.

All working families would be entitled to some subsidy for approved care. Families on incomes below $60,000 would be entitled to 90 percent of the ‘deemed costs’. Families above $300,000 would be entitled to 30 percent. 

Some low and middle-income families would benefit from this system, but only if they use services with relatively low costs.  Many high-income families would receive less subsidy than at present. The Commission’s suggestion is thus quite redistributive. 

There are two big stings in the tail of the PC report, however. First, it recommends a tough ‘activity test’ which would exclude most children unless both parents were working (or looking for work) for at least 24 hours per fortnight.  Children in very disadvantaged families would be excluded by this measure. 

The other big sting is that the Commission wants to reduce quality standards for children aged 0-3.  This would make services cheaper, but at considerable longer-term cost to children’s wellbeing.

It would also be a big blow to those who have worked to get recognition for the importance of training and professional standards. This would be a huge step backwards for ECEC educators, families and children.

At the same time, the Commission wants subsidies made available to families employing nannies.


It is time to stop tinkering round the edges – the system needs a radical overall. 

We need to lift our sights and aim for a universal ECEC system based on high quality, low-cost provision. There are some great international examples. Many countries now provide a core of free ECEC, with parents paying modest fees for additional hours. 

In Sweden, Finland and Norway all children are entitled to a place for a certain number of hours. In England, all three and four year olds are entitled to 15 hours per week free childcare.

New Zealand provides 20 hours at no cost to parents. In Québec, most parents pay a flat $7 per day; low-income families don’t pay fees.  Since this policy was introduced, women’s employment has skyrocketed, child poverty has halved, and government tax revenue has increased dramatically.

Investing in the early years is one of the smartest moves that governments can make.  Good ECEC policy benefits children, supports parents’ workforce participation and provides decent, well-paid jobs for educators. 

Labor needs to develop a comprehensive ‘early years’ strategy embracing parental leave, ECEC and family payments. This should promote the wellbeing of all children and families and build both a more productive workforce and a more inclusive and cohesive society.



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