A Strategic Assessment of the Children's Services Industry

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STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRYfocused more on the delivery of ‘care’ to the children of working parents. In the 1990s, theChild care Act was amended to extend eligibility for subsidies to the users of private, forprofitchild care services. From 2000, most Commonwealth assistance has been deliveredthrough income-tested subsidies such as Child care Benefit and the Child care Tax Rebate.In most states, ECEC policy responsibility is shared between a number of departments,including health, community services and education (Press, 2006: 26). However, in SouthAustralia, Tasmania and Victoria, ECEC service policy is located solely within departmentsof education (DEECD, 2008; Press, 2006: 58). State and Territory governments areresponsible for funding and/or administering preschools, licensing of centre-based long daycare and other child care services, and implementing and monitoring national child carestandards.Australia has six broad service delivery models (SCRGSP, 2008: 3.14):1. Centre-based long day care (LDC) – primarily aimed at 0-5 year-olds, provided in acentre, and usually by a mix of qualified and other staff. Some centres may alsoprovide before and after school care and school and vacation care. Centres typicallyoperate for at least eight hours per day on normal working days, for a minimum of 48weeks per year.2. Family day care (FDC) – comprises services provided in the approved carer’s home.The care is aimed at 0-5 years old but primary school children may also receive carebefore and after school and during school vacations. Central coordination units in allstates and territories organise and support a network of carers, often with the help oflocal governments.3. Occasional care – comprises services usually provided at a centre on an hourly orsessional basis for short periods or at irregular intervals. Aimed primarily at 0-5 yearoldswith the centre employing a mix of qualified and other staff.4. Preschool – comprises services usually provided by a qualified teacher on a sessionalbasis in dedicated preschools. Preschool programmes or curricula may also beprovided in long day care centres and other settings. In Victoria, WA and Tasmania,the preschool programme is known as kindergarten.5. Outside school hours care (OSHC) – comprises services provided for school agedchildren (primarily 5-12 years old) outside school hours during term and schoolvacations. OSHC is increasingly also being provided before school times.6. Other services include those designed to support children with additional needs or inparticular situations (including children from an Indigenous or non-English speakingbackground, children with a disability or of parents with a disability, and childrenliving in regional and remote areas).Key ProvidersLong day care centres and preschools tend to have different forms of ownership andmanagement across Australia. Most notably, while nearly three-quarters of centre-based longday care is privately managed, among preschools half are government managed. This varieswidely across the states, however. For example, community managed long day care is morecommon than privately managed long day care in South Australia, Tasmania, ACT and NT.Preschools are overwhelmingly government managed in most states and territories, but inNSW and Victoria they tend to be community managed.7
STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRYTable 2.2: Proportion of State and Territory licensed and/or registered children’sservices by management type, 2003-04 (per cent)NSW Vic Qld WA SA Tas ACT NT AustCentre-based long daycareCommunity managed 19.8 21.4 15.2 33.5 46.9 51.0 65.4 65.7 23.7Privately managed 80.2 68.3 83.1 63.3 49.8 28.8 34.6 34.3 73.1Government managed 0.0 10.3 1.8 3.2 3.3 20.2 0.0 0.0 3.2Preschool 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Community managed 80.7 74.1 23.1 0.0 4.9 0.0 8.9 0.0 38.0Privately managed 8.7 8.1 22.9 0.0 0.0 26.5 0.0 0.0 10.8Government managed 10.7 17.8 54.0 100.0 95.1 73.5 91.1 100.0 51.2Source: SCRGSP 2002, 2008FundingThe 2002-03 Australian National Accounts report that expenditure on both child care andpreschool education by public and private sources was 0.45 per cent of GDP (OECD, 2006:270). Sixty-six per cent of the spending was public and 34 per cent private. The OECD(2007c: 206) publication, Education at a Glance, reported that in 2004, Australian public andprivate spending on pre-primary education was 0.1 per cent of GDP (this is spending onchildren aged from 3 years until school age). This was the lowest pre-primary educationalexpenditure in the OECD (a rank Australia shared with Korea); it compared with an OECDaverage of 0.5 per cent.The Australian Productivity Commission reports that total government expenditure onservices for children aged 0-12 years, which included both child care and preschool, was$3.03 billion in 2005-06 (SCRGSP, 2008: 3.7). This was an increase from $2.4 billion in2003-04 (SCRGSP, 2005: 14.6). The Federal Government’s contribution was largely directedtowards fee assistance for parents (Press, 2006; SCRGSP, 2005). The State and Territorygovernment component was mostly directed towards preschool education.It is estimated that families contribute 54 per cent, or $2 billion, annually, to the cost of longday care, family day care and outside school hours care. $1.8 billion is for children aged 0-4attending long day care or family day care (ACOSS, 2006: 9).AffordabilityTwo funding mechanisms from the Federal Government have been implemented to improvethe affordability of child care through fee subsidies to parents. The first, the Child careBenefit (CCB), is calculated based on family income, number of children receiving care forhow many hours and the form of child care used (DEERW, 2008a: 11). The highest rates ofassistances are paid to those with the lowest incomes. From 1 July 2007, the maximum rateof CCB is $3.47 per hour of care for one child, up to $173.50 per week.Child care Tax Rebate (CCTR) is based on different principles and has a differentdistributional impact. By rebating a fixed proportion (now 50 per cent) of out of pocket childcare costs, it ensures that the highest benefits go to those with the highest costs;disproportionately those with the highest incomes (Brennan, 2007b: 222). Families with verylow incomes who pay little or no income tax benefit least from the Child care Tax Rebate as8
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