Government announces Productivity Commission inquiry to focus on more flexible, affordable and accessible child care

The Australian Government today announced the establishment of a Productivity Commission Inquiry into Child Care and Early Childhood Learning.

The Government is delivering on its priority commitment to task the Productivity Commission with an inquiry into how the child care system can be made more flexible, affordable and accessible.

The Inquiry will identify how the current system can be improved to make it more responsive to the needs of parents.

We want to ensure that Australia has a system that provides a safe, nurturing environment for children, but which also meets the working needs of families.

Our child care system should be responsive to the needs of today's families and today's economy, not the five-day 9am-5pm working week of last century.

The Inquiry is the first public examination of child care and early years learning since the 1990s.

The Productivity Commission will conduct public hearings and invite submissions as part of the Inquiry process. The community and childcare sector will be able to put forward their ideas to the Inquiry.

Australian families need a system that is not only affordable, but ensures people can work flexible hours whilst knowing that their children are receiving high quality child care.

The Government wants Australian families to have more choices when it comes to the decisions they make about the care of their children. Parents need more choices as they move in and out of different types of child care due to their changing personal, economic and working circumstances.

We want a child care system that is more capable of responding to the dynamic and individual needs of parents.

The Productivity Commission Inquiry into Child Care and Early Childhood Learning is part of the Australian Government's plan for a stronger economy.

A more flexible and responsive child care system will lift workforce participation and is part of the Government's plan to deliver a strong and prosperous economy.

The Commission will report by the end of October 2014.

Terms of reference

The Australian Government is committed to establishing a sustainable future for a more flexible, affordable and accessible child care and early childhood learning market that helps underpin the national economy and supports the community, especially parent's choices to participate in work and learning and children's growth, welfare, learning and development.

The market for child care and early childhood learning services is large, diverse and growing, and it touches the lives of practically every family in Australia. Almost all children in Australia participate in some form of child care or early learning service at some point in the years before starting school. In 2012, around 19,400 child care and early learning services enrolled over 1.3 million children in at least one child care or preschool programme (comprising around 15,100 approved child care services and 4,300 preschools). The Australian Government is the largest funder of the sector, with outlays exceeding $5 billion a year and growing. It is important that this expenditure achieves the best possible impact in terms of benefits to families and children as well as the wider economy.

The child care and early learning system can be improved because:

• families are struggling to find quality child care and early learning that is flexible and affordable enough to meet their needs and to participate in the workforce
• a small but significant number of children start school with learning and developmental delays
• there are shortfalls in reaching and properly supporting the needs of children with disabilities and vulnerable children, regional and rural families and parents who are moving from income support into study and employment
• services need to operate in a system that has clear and sustainable business arrangements, including regulation, planning and funding
• there is a need to ensure that public expenditure on child care and early childhood learning is both efficient and effective in addressing the needs of families and children.

The Australian Government's objectives in commissioning this Inquiry are to examine and identify future options for a child care and early childhood learning system that:

• supports workforce participation, particularly for women
• addresses children's learning and development needs, including the transition to schooling
• is more flexible to suit the needs of families, including families with non-standard work hours, disadvantaged children, and regional families
• is based on appropriate and fiscally sustainable funding arrangements that better support flexible, affordable and accessible quality child care and early childhood learning.

Scope of the inquiry

In undertaking this Inquiry, the Productivity Commission should use evidence from Australia and overseas to report on and make recommendations about the following:

1. The contribution that access to affordable, high quality child care can make to:
   1. increased participation in the workforce, particularly for women
   2. optimising children's learning and development.
2. The current and future need for child care in Australia, including consideration of the following:
   1. hours parents work or study, or wish to work or study
   2. the particular needs of rural, regional and remote parents, as well as shift workers
   3. accessibility of affordable care
   4. types of child care available including but not limited to: long day care, family day care, in home care including nannies and au pairs, mobile care, occasional care, and outside school hours care
   5. the role and potential for employer provided child care
   6. usual hours of operation of each type of care
   7. the out of pocket cost of child care to families
   8. rebates and subsidies available for each type of care
   9. the capacity of the existing child care system to ensure children are transitioning from child care to school with a satisfactory level of school preparedness
   10. opportunities to improve connections and transitions across early childhood services (including between child care and preschool/kindergarten services)
   11. the needs of vulnerable or at risk children
   12. interactions with relevant Australian Government policies and programmes.
3. Whether there are any specific models of care that should be considered for trial or implementation in Australia, with consideration given to international models, such as the home based care model in New Zealand and models that specifically target vulnerable or at risk children and their families.
4. Options for enhancing the choices available to Australian families as to how they receive child care support, so that this can occur in the manner most suitable to their individual family circumstances. Mechanisms to be considered include subsidies, rebates and tax deductions, to improve the accessibility, flexibility and affordability of child care for families facing diverse individual circumstances.
5. The benefits and other impacts of regulatory changes in child care over the past decade, including the implementation of the National Quality Framework (NQF) in States and Territories, with specific consideration given to compliance costs, taking into account the Government's planned work with States and Territories to streamline the NQF.
6. In making any recommendations for future Australian Government policy settings, the Commission will consider options within current funding parameters.

Process

The Commission is to undertake an appropriate public consultation process including holding hearings, inviting public submissions and releasing a draft report to the public.

The final report should be provided before the end of October 2014.