Australia’s early childhood education and care (ECEC) system is in crisis. The Albanese Government has made universal childcare a legacy-building priority, campaigning to remove barriers to access and to lower costs in the hopes of creating a system similar to Australia’s public schooling. This is important given the average cost for centre-based care in Australia is $124 per day (before subsidies). However, availability and affordability are only part of the problem. Recent sexual abuse charges against a Victorian childcare worker have highlighted ongoing challenges with the safety and quality of care.

The system requires more than reactive measures. Instead, Australia should embed a care-centred reform paradigm for ECEC policy that has consistently prioritises ethics over profit.

ECEC as business in Australia

The Child Care Act 1972 sparked the beginning of Commonwealth involvement in childcare. The Act was monumental, setting a new norm in Australia for the government to play an active role in the provision of care services. Funding provided by the Act was administered through supply-side measures that channelled support directly to providers and was only available to not-for-profit, mostly community-run services. The Act was (in part) developed in response to the increasing participation of women in the workforce, meaning more young children needed care.

Over time, as women’s workplace participation continued to rise, so did the need for more childcare services. In 1991, the Commonwealth Government sought to encourage childcare expansion through the extension of government subsidies to for-profit providers. This dramatically shifted the ECEC landscape, from a sector tightly regulated by government, to one dominated by for-profit businesses and free-market principles.

According to the Productivity Commission’s 2024 inquiry report, for-profit providers now account for almost 70 per cent of centre-based day care services and roughly 50 per cent of the full spectrum of early education and care services provided in total.

The limits of a for-profit ECEC system

An overreliance on for-profit services to administer childcare is not compatible with the government’s aims to develop an affordable, accessible and high-quality ECEC sector in Australia.

Serving the interests of families and investors, for-profit services have dual interests. This encourages cost-cutting measures at some providers, such as operating with insufficient educator-to-child ratios, failing to provide staff with appropriate training and serving cheaper, lower-quality foods to children. Further, a lack of incentives for businesses to operate in regional and remote areas has left many families stranded in childcare deserts, with limited or no access to services.

A string of policies have attempted to address these issues. These include the administration of the Child Care Subsidy (and previous measures alike) to alleviate the costs for families, the introduction of a National Quality Framework to regulate providers and a Community Child Care Fund to encourage services to open and remain in regional and remote areas. However, the current state of the ECEC system demonstrates the limited impact of such approaches.

These policy responses (and a handful of others) have operated on the underlying premise that ECEC is a commodity to be bought and sold in the market, with government to step in only when there is complete market failure.

The shift from state to market responsibility (i.e., marketisation) has proven successful for some services (for example, the privatisation of Telstra or the introduction of superannuation). However, chronic problems in ECEC suggest that a market-led approach is not sufficient to deliver services in this sector.

ECEC, as an integral social and economic infrastructure, is meant to support one of society’s most vulnerable groups: young children. Therefore, within the ECEC system, market failures cannot be reduced to a simple economic calculation of unmet demand and unrealised profit. Rather, the human impact of poor quality, unaffordable or inaccessible care should be underscored to encourage an alternative policy frame.

An ethics of care in ECEC policy

An ethics of care is a moral theory emphasising the relational nature of human beings, advocating for emotion and sympathy to be guiding principles, and urging society to respond to the needs of others to foster solidarity and cooperation. Some proponents of the marketisation approach are against infusing moral theory into public policy by implying that it is ideologically driven and a barrier for service efficiency.

However, when we think of some of Australia’s most successful social policy programs, such as universal healthcare or free public schooling, these are fundamentally intertwined with an ethics of care: citizens pool together their resources to contribute to the greater good. While these systems also integrate some free-market principles (for example, the public-private partnership of Medicare or the school choice model), these integrations would not have been possible without strong government policy direction, grounded in the notion that these services are a social right (i.e., actively embodying an ethics of care).

Academics,  advocacy groups and think tanks propose that government proactively use policy levers to push towards a national system of universal, free (or exceptionally low fee paying), high-quality services. Universal does not mean that all are required to engage with the service – but rather, all can rely on it being available, affordable and of a high standard. The case for a universal ECEC system by its very nature, encourages the adoption of an underlying ethics of care.

The path forward

First and foremost, to achieve a high-quality, universal system, an ECEC Commission needs to be established. This would create an independent, national body overseeing the system, enforcing standards and driving reform from a legislative basis. This would enable governments (state and federal) to become active system stewards with clear roles and responsibilities.

It is both unrealistic and unfavourable to ban for-profit providers from the ECEC sector entirely. For-profit providers should still exist, but regulation of services needs to be much more invasive. Currently, quality controls and safety are divided across states and territories, providing little consistency and coordination.

A National Commission would have the statutory authority to eliminate providers who put profits over children’s safety. This should be complemented through measures that centralise quality functions, such as creating a national register for Working With Children Check (WWCC) holders to prevent abusers from offending across state and territory lines, building on recent safety reforms at the state and federal levels.

Further, a Commission could act as the vehicle to embed and protect a universal entitlement to early learning through the introduction of a fixed-fee system. By replacing the current Child Care Subsidy system, which reimburses families with a proportion of their ECEC fees, the fixed-fee system would instead, allow the government to directly reimburse costs to providers and have families provide payment contributions at a capped rate. This would significantly shift the approach to ECEC funding from a demand-side to a supply-side model, substantially reducing costs for families and directly addressing the issue of price gouging.

Additionally, funding needs to be diverted to not-for-profit and community providers to grow the percentage of these services within the sector. These providers have consistently been reported as providing higher-quality services, however their scarcity in availability makes them difficult to access for families who would otherwise elect to use them.

Crucially, the issues of quality and availability cannot be sufficiently addressed without improving educator workforce and pay conditions. While the Wage Justice for ECEC Workers Bill 2024 demonstrated steps in the right direction, the Commonwealth should take a more proactive approach through specific efforts to support workforce attraction and retention.

The bottom line

The importance of establishing a universal ECEC system cannot be understated. It is integral for children, families and the broader Australian society. The policy solutions laid out complement the Commonwealth’s existing priorities to address productivity and develop a sustainable care economy. However, success for the future of ECEC in Australia is contingent on a renewed vision for the sector through the adoption of an ethics of care paradigm that would lay the foundations for effective policy change.

Isabella is a PhD candidate and Research Officer at the Sydney Centre for Health Societies, within the School of Social and Political Sciences at the University of Sydney. Her PhD research investigates the ways in which insufficient Early Childhood Education and Care policies have acted as a barrier to gender equality. Isabella also recently completed a 12-month secondment as a Research Associate at the Australian Public Policy Institute.

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