A Strategic Assessment of the Children's Services Industry

STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRY4 Mixed markets in children’s services4.1 Market mechanisms in social policyThe issue of ‘mixed markets’ is critical to a strategic assessment of the children’s servicesindustry in Australia. In this country, as in the UK, Canada and USA, centre-based child careis provided by both for-profit and non-profit providers. As discussed in Section 1, most careand education in Australia is provided by State government or non-profit providers. It is onlyin the long day care sector that for-profit providers predominate, accounting for some 73 percent of services across the country (SCRGSP, 2008). There are significant differencesbetween the States: Queensland has the highest proportion of for-profit care (83 per cent) andTasmania the lowest (29 per cent). The national figure is broadly similar to the proportion offor-profit child care in the USA and UK. The exceptional feature of the Australian market isits high level of concentration in the hands of a single owner. While there are no officialfigures, a single company is reported to own up to twenty-five per cent of all Australian longday care places. This represents a level of concentration of child care centre ownershipunparalleled in other countries. In the UK, the largest 40 providers together own about 10 percent of all places (Pricewaterhouse Coopers 2007; Cohen and Harker 2006). In the USAnational chains collectively own 13 per cent of all centres (Sosinsky et al. 2007).Market strategies in early childhood are closely associated with the English-speaking liberalmarket economies. Although several European countries have long histories of private (i.e.non-state) involvement in community services, these services are generally owned by cooperatives,religious groups and similar not-for-profit bodies. The only Continental Europeancountry to have made a major foray into market provision of ECEC is the Netherlands. Thesystems regarded as being of the highest quality internationally (Sweden and Denmark) arealmost entirely based on public provision; there is some private, non-profit provision, but forprofitsplay a negligible role. European governments that provide educationally-orientedservices for preschool aged children rely overwhelmingly upon public (government) andprivate non-profit services.The market model in early childhood has attracted considerable international attention inrecent years. For example, in 2006, the journal Children in Europe devoted a special issue tothe theme, ‘Managing the Mix: Public and Private Sectors in Early Childhood Services’. Ayear later, researchers at the University of East London formed the Centre for the MixedEconomy in Child care:• To generate greater knowledge about early childhood education and care provisionin countries which employ mixed economies of welfare and education services.• To explore the contribution to young children’s well being within mixed economiesof child care.• To develop an international and multi-disciplinary approach to exploring mixedeconomies of child care.4.2 Markets in human servicesThe appeal of markets in human services is part of a broader suite of changes in state-societyrelations, particularly in English-speaking countries. Similar developments have occurred inother human services including aged care provision, hospitals, disability services and prisons.In considering the impact of the mixed market on Australian children’s services, it is worthexamining the reasons for the switch from exclusive support of non-profit providers (thebipartisan position in Australia until the early 1990s) to support for a mixed market. Private32