An ABC Four Corners investigation revelead many Australian childcare centres are not meeting regulatory standards, with most being for-profit services, despite receiving government support through childcare subsidies. Poor-quality services and bad pay and working conditions are driving good educators away from the sector, according to Professor Marianne Fenech from the Sydney School of Education and Social Work and Professor Gabrielle Meagher from Macquarie University.
Data from Australia’s childcare regulator consistently shows for-profit childcare services are, on average, rated as lower quality than not-for-profit services.
Inquiries suggest this divergence is due to staffing levels, qualifications and pay. In 2023, the Australian Competition and Consumer Commission (ACCC) found large for-profit providers spend significantly less on staffing than not-for-profit providers.
Childcare subsidies haven’t always worked in this way. “Operational subsidies” were introduced in 1972 through the historic Child Care Act, which set the precedent for Australian governments to fund childcare.
This aimed to support women’s workforce participation through an expanded, high-quality childcare sector. Subsidies at the time were only available to not-for-profit services and required the employment of qualified staff, including teachers. In these ways, Commonwealth funding positioned childcare as a public good, like school education.
Then, in 1991, federal government subsidies were extended to for-profit providers. This prompted dramatic changes in the childcare landscape, leading to a dominance of for-profit centres.
Today, more than 70% of all long day-care centres are operated by private providers. Between 2013 and 2023, the number of for-profit long daycare services jumped by 60%, while not-for-profits only grew by 4%.
There are 25 large long daycare providers in Australia and of these, 21 are run for profit. Large for-profit providers impact sector quality in several ways.
Many have disproportionately high numbers of staffing waivers, granted by regulators, permitting them to operate centres without the required number of qualified staff.
Large for-profit providers also serve investors as well as families. So there are extra incentives to cut costs and maximise profits.