A Strategic Assessment of the Children's Services Industry

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STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRYcorporate chains reported the most concerns and the least confidence in the quality of the careprovided at their workplace.Another Australian study comparing the performance of for-profit and community-based longday care is the Review of the Early Childhood Teachers Interim Policy (Purcal and Fisher2003). This assessed a New South Wales policy introduced to deal with an apparent shortageof qualified early childhood teachers (ECTs) in New South Wales. Regulations in that staterequire an ECT to be employed in services licensed for more than twenty-nine children. Theinterim policy allowed services, in particular circumstances, to appoint a person studyingtowards an ECT degree or willing to enrol in such a course in lieu of an ECT, as an interimmeasure. The research showed that the interim policy, intended as a short term measure, wasbeing used by some providers to circumvent the regulation. Contrary to Departmentalrequirements, some providers abandoned their recruitment efforts once an interim approvalwas granted. In other cases, interim approvals were granted to new services, or to enableservices to increase child numbers – even though this was contrary to the intent of the policy.Privately-owned services were highly over-represented among services with interimapprovals. Such services represented 52 per cent of all those requiring ECTs, but 79.4 percent of those with interim approvals. Of the 176 interim approvals given at the time, morethan 84 per cent were held by private licensees. One company, which owned 4 per cent of thecentres requiring ECTs at the time, held 17.6 per cent of the interim approvals (Fisher andPurcal 2003).4.4 StaffingThe availability of suitably qualified staff willing to work in long day care centres will be amajor issue for the Commonwealth and State governments as they seek to extend and expandhigh quality early childhood services. International evidence suggests that for-profit providersemploy younger, less-qualified staff than do non-profit services, that these staff have higherturnover rates and that their pay and conditions are poorer.New Zealand research shows that for-profit centres generally employ staff with lowereducational qualifications that non-profit services. Compared with community-based childcare services, for-profit services:• Employed less qualified staff• Held less frequent staff meetings• Had only the minimum annual leave entitlement• Had higher rates of teacher turnover• Staff described workload as excessive• Staff less likely to regard selves as part of decision-making team in all areas (policyand pedagogy) (Mitchell, 2002; Mitchell & Brooking, 2007)A Canadian survey of staff in day care centres found that the extent of staff qualifications in1998 varied widely across the provinces (Doherty et al., 2000a: 37). However, staff in notfor-profitcentres reported higher levels of training than those working in for-profit centres(Doherty et al., 2000a: 38). There are shortages of trained staff in every jurisdiction inCanada. This has forced provincial/territorial governments to grant exemptions to individualprogrammes so that they can continue to operate without trained staff. Allprovinces/territories are attempting to develop initiatives to deal with these shortages.Increased funding is not one of the options currently being contemplated.39
STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRY4.5 Affordability and escalating pricesThe issue of affordability is an important one in the current debate about extending serviceson a universal basis. This is especially the case as children from disadvantaged backgroundsuse child care and preschool services less frequently than their peers. As demonstrated insection 2.4, low family income, Indigenous and CALD status, geographic location anddisability all affect the likelihood of children attending early childhood services.We have not been able to identify international research on mixed markets that specificallyexamines the issue of affordability and escalating prices. In Australia, publicly availableCommonwealth data on the costs of child care are minimal. They tend to show similar costs(fees) between the sectors. There are two issues here, however, that need to be kept separate:• Affordability of services to parents• Value for money (the connection between fees charged and cost components).Recently, for example, some providers have been criticised for fee rises coinciding with theincrease in the CCTR. There is obvious potential, in a scheme such as the CCTR, forprofiteering. More needs to be known about the reasons for the rise in prices. Are increasedfees the result of increases wages, enhanced conditions and/or the employment of more highlyqualified staff, for example, or are they due to business pressures and/or the desire to increasethe surplus (in non-profit settings) or profit (in for-profits)? Without such information, it isdifficult for governments to know whether they are getting value for money.4.6 Free preschool in private centresBoth New Zealand and the UK have experienced difficulty in delivering ‘free’ preschool toparents through privately-owned centres. Private providers resisted this, arguing thatgovernment compensation was inadequate. Currently, around 70 per cent of New Zealand’sprivate providers offer free preschool, but not necessarily the full twenty hours which thegovernment aimed to deliver. ABC Learning Centres have chosen not to deliver governmentfunded‘free’ preschool education to New Zealand parents (Mitchell, 2008).The UK has experienced problems in delivering free preschool. A survey in 2005 showed thatover a third of parents were paying for ‘free’ early education (Bryson, Kazimirski andSouthwood, 2006). Despite the availability of 12.5 hours per week of free preschool, morethan a quarter of families who were using less than their full quota reported that they still paida fee (Butt et al., 2007: 81). Some providers argued that government funding was insufficientto cover the cost of 12.5 hours of preschool and so they needed to top-up the fee or only offerthe 12.5 hours as part of a larger package. In response to this situation, a new Code ofPractice was introduced in 2006 mandating that parents should not be charged in any way forthe free preschool entitlement. Despite the Code of Practice, anecdotal reports suggest thatparents continue to be charged for their free entitlement (Hill, 2008). Quebec similarlyintroduced new legislation after finding some parents were charged additional amounts, abovethe $7 daily fee for ECEC services.4.7 ConclusionThe mixed market is an important, ongoing feature of the Australian ECEC industry and iscrucial to this strategic assessment. International evidence and the small number of studiesconducted in Australia to date suggest that service quality may be lower in for-profit than innon-profit services. However, such research needs to be treated with caution. Services ofhigh quality can be found in all sectors in Australia and, given the rapidly changing regulatoryenvironment, further research is needed to test the relevance of international studies and to40
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A Strategic Assessment of the Children's Services Industry

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