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Well, it was one of the first bills introduced to Parliament, a move to improve standards in childcare.

The legislation follows shocking allegations of abuse in Victorian childcare centres and growing alarm over the loose regulation of a sector that's become, well, critical for families.

Both sides of politics look set to agree on new powers to carry out spot checks and strip funding from centres that aren't up to scratch.

A national register of childcare workers is also set to be agreed by federal, state, and territory governments when they meet in a couple of weeks.

But is it enough?

Or does the childcare sector need a more fundamental overhaul?

Is it time to reconsider the role of for-profit providers who now dominate the sector?

That's what I'm keen to explore.

I'm David Spears on Ngunnawal Country of Parliament House in Canberra.

Welcome to Insiders on Background.

Well, Andrew Hudson is the Chief Executive of the Centre for Policy Development, a think tank that's been working on options to address problems in childcare.

Andrew, welcome.

Hi, David.

Thanks.

Great to be here.

So can you start by giving us your sense?

How would you describe the current childcare sector in Australia?

Yeah, well, and David, if I may, I mean, this is both professionally important to me.

You know, CPD has worked on early learning reform for many years.

It's also personal.

You know, know, I've got three young children who've been through the early learning sector in Australia, including one child who's still in early learning.

So it's an issue that I'm really passionate about.

And it sort of touches on everybody, right?

We've all either got kids or know someone with kids.

It affects everybody now.

Totally, totally.

And I think to your question,

you know, this is not a sector in crisis, right?

We have an early learning system in Australia that is very good, especially by global standards,

and

which has been improved on considerably in recent years by this government.

And I think what we've got to remember here is the value of early learning.

It is extremely important for children, especially in those two years before school.

It's really not childcare, it's education.

They are learning.

We know there's so much of that brain development that happens before school.

And it's really critically important that kids get educated

before they go to school.

You know, early educators are actually even more adept than parents at picking up developmental delay.

And so, if we can get those children that need extra help,

if we can get them identified before school, it's critically important.

So, the sector is really, really important.

It is important, and we've certainly seen under this government, and Anthony Albanese in the election campaign made it clear he wanted this to be his legacy, a push to universal, to get to universal access of affordable childcare.

So this growth of the sector, largely through making childcare subsidies to parents more

generous, more meaningful, that's been the focus, that's been the emphasis of expanding access to affordable childcare.

Has that been the right goal to aim for?

Absolutely.

And this is something that CPD has championed for many years.

And I think there was a really important piece of legislation earlier this year, the Three-Day Guarantee Act, which civil society have really called for for many years.

And it was modelled off

a 2021 CPD report starting better.

And I think what was really important about that is it's changed the kind of philosophical underpinning.

No longer should this be seen as child minding or childcare.

Now, it's really seen as early learning.

And

what that act did, as you know well, is got rid of the activity test.

And that's so important because

there's really a growing understanding that

early education is a human right.

It shouldn't be dependent on whether parents are working or studying.

We would never dream of saying that in order to access primary education, your parents need to work or study.

So I think that was a really important move.

And we're on the right direction, right?

And I think

we do need to move towards a universal system where every child in Australia can receive three days a week of early learning.

And it needs to be affordable, it needs to be high quality

and

we need to be able to access it.

But this is the thing, this is the thing, you mentioned high quality.

Has quality

been,

I guess, a second order concern when it comes to making childcare more accessible and affordable by growing the sector?

Has quality become a lower priority?

Well, we wouldn't say so.

We would say actually a universal system enables higher quality.

And we can get into all the details,

but

we would say that the government should be funding operators directly, that there should be a low or set fee for parents to pay.

And the government's looking into this, right?

The Education Department is looking at the reasonable price of high quality childcare.

So explain to us what you're talking about there, this suggestion, and how it differs to the current way that childcare is funded.

Well, I guess we would sort of say there are five key elements, right?

So changing the way that you fund services.

So we would recommend getting rid of the childcare subsidy and replacing it with

funding that is delivered directly to providers that should be based on the reasonable cost of high quality delivery.

And as I said, the Education Department's looking into that at the moment.

We would also say that there should be extra loadings for children with special needs.

Secondly, affordability.

We've got to improve affordability for families.

And so that we would say there should be a low or set fee, so free for perhaps families earning under $120,000 a year or whatever it is,

and $10,000 or $20 a day

for other kids.

We've got to simplify the system and make it more affordable.

Thirdly, we've got to build more services, right?

Only 21% of kids in Australia are able to access three days a week of early learning.

And that's where this new $1 billion building early education fund comes in that the government is looking into.

We've got to build out more early learning centres.

Fourthly, and critically, we've got to support and build out the workforce.

They've received a 15% pay increase, which is great, but we do need better paid

and we need a larger workforce.

And lastly, and really importantly, we need a clear vision, a clear purpose of kind of the system that we want, and a clear split of responsibilities between the federal and state governments.

I think we forget too often.

This is the state governments really

are rolling out these programs.

Education obviously is a responsibility for states.

Okay, so just to pick up on this idea of shifting from the subsidies going to parents to the government directly funding childcare centres or childcare providers, a couple of things here.

Would this still leave room for the for-profit providers in the sector?

Yes,

absolutely.

And I just want to be really clear about the advantages of the government directly funding.

It would give them more control over the system.

And I think that's really important because it gives them more control over quality and price.

And what we've seen recently is that price has gone up very considerably.

You know, the government invested a lot more in the childcare subsidy recently, but the price is going to keep on going.

You know, we're already spending,

you know, whatever it is, $16 billion a year, the federal government's spending on childcare.

That's going to continue to rise unless the government has more control over that.

But on the for-profit operators,

a vast majority of them, again, are providing high-quality

early learning,

and they are a huge feature of our system.

But motive is really important.

So there are a fringe

number of for-profit operators that appear to be in the system with the motive of profit.

And I don't think we want our children being educated by operators that are solely motivated by profit.

Again, we wouldn't accept that in primary or secondary education.

So there is a bit of an issue there.

So, how do you stop that?

How do you find those who are purely motivated by the profit and get them out of the sector?

Yeah, well, I think this system that we're moving to

where the government defines the reasonable price of high-quality early learning does that.

I think it will do that, and this new universal system would do that.

So, it sounds a bit like the Gonski approach in schools, you know, finding the resource standard that needs to be provided and funding that.

Well, and this isn't radical, right?

We do it in health, we do it in other systems,

and the government's already looking into it.

So I think we can do it.

And I think, yeah,

I often say it's a triple win, really.

It's a win for the economy, it's a win for parents, and it's a win for kids.

So, yeah, we do need to look into this.

But the other point that's really important, David, is not-for-profit operators at the moment are being driven out of the system.

You You know,

over the past decade, 95% of new operators are for-profit operators.

So we need to do something to bolster the

not-for-profit operators and public operators.

We need them in the system.

They are an important part of the system.

And how do you do that?

Would this new model that you're suggesting give them greater ability to survive?

I think so.

And this $1 billion building early education fund that the government is setting up is really designed to give those public and not-for-profit operators the capital to be able to set up new early learning centres, especially in areas, the so-called deserts, in the areas where there isn't enough at the moment.

And so I think that's a really important development that would help them.

Well, then the other big question is, of course, under this sort of model, what would it cost taxpayers to provide that direct funding and lift those standards across the country?

Yes, well, I thought you might ask that question, David.

So, look, we, you know, and there are lots of numbers here.

You can dive into the ACCC and the Productivity Commission inquiries.

You can look at CPD's reports, and I won't go into all the numbers because I'll trip myself up.

But we would say, again, there's a triple dividend here, right?

If you're getting kids into early learning in a universal system, you're picking up kids with early developmental problems earlier, which is going to save the government costs down the track.

So, that's one saving.

Those parents that want to send their kids to early learning can get back into the workforce in greater numbers.

So you're increasing tax revenue.

And thirdly, and of real importance to the economic reform roundtable, you're increasing productivity.

And so there's a boost to GDP.

And this, of course, is one of the five inquiries that the Productivity Commission is looking at, the care economy and how we can boost productivity.

Sam Moston in her Women's Economic Empowerment Task Force report found this was the single biggest lever that we could pull to improve productivity in the nation.

So there's that triple dividend.

So our research would say that this more than pays for itself, David.

But we are talking about a significant increased commitment from the Commonwealth and from taxpayers.

Yes,

but as I said, if we do nothing and maintain the status quo, the cost base is going to keep going up, the prices keep going to go up.

We've got to find a way for the government to be able to have more control over

this system.

And so that's why we would say a universal system is the way to go.

Yeah, and we've got a prime minister, as you said, who's really invested in this.

So I think there's a real once-in-a-generation opportunity to pursue this reform that's good for the economy, that's good for parents, and that's good for...

I understand that.

Can you understand, though, that some might be cynical when we heard a lot of arguments on the NDIS for example that the big investment, additional investment was going to lead to greater workforce participation, have productivity benefits and just give it time, it will pay off in the long run.

Can you understand there being some scepticism on this idea that a much greater government investment in childcare is going to help the economy?

Absolutely, I can understand that.

And look, government,

we know, we work very closely with the government.

They are obviously very concerned by these issues.

I guess at the end of the day, what I would say is we can keep spending more money on a system that we know is not as good as it could be.

I wouldn't say it's a system in crisis, but we know it can be better.

And

that's the choice that we have as a nation.

I think this is an incredibly important way of investing in our future.

And it is an affordable way to do so.

And you said the Department, the Education Department, is looking at this idea.

We know the government, well, the Prime Minister

wants to go further on childcare.

Can you give us any sense as to the likelihood of something like this becoming the government's policy?

Yeah, well, look,

I think so, I hope so.

We've been really impressed with the work that the Education Department is doing, as I said, on this price review.

I think that's the first step, is working out the reasonable price of high-quality early learning.

We've got a number of initiatives that the government has already taken that's moving us in that direction, increasing pay for

educators, and as I said, this one billion dollar fund for building early education.

So we're on the right way, but yeah, we need to really invest

in the workforce.

We need to build that access.

And we have said that

this is going to take 10 years to really get a new system like this in place.

But we've got to act on that now.

And I really hope and think that this government will take those steps in this term of government.

And in the meantime, the legislation that was introduced this week, what do you think of that to lift standards by threatening funding being pulled if they're not meeting standards?

Yeah, look, look, I think it's welcome.

And obviously, you know,

the reports of abuse are horrendous.

I mean, I think they are isolated events.

It's important to remember.

But, yeah, I think the legislation is welcome and important.

I think, again, those operators that perhaps aren't motivated in what's in the child's best interest are likely to be affected by this legislation.

And that's probably a good thing.

Just to wrap it up, I guess when we look at this sort of big step...

in childcare that you're suggesting, there's probably people wondering, well, you know, we hear these comparisons with public schools.

Why don't we start from scratch and have government

actually actually own and run the entire sector like we do, or have a public system like we do in the school system?

Is that impossible?

No, well, and in fact,

in many states, that is what's happening, right?

In Western Australia, in particular,

you know, even in Victoria and New South Wales, we're seeing a lot of government early learning centres being rolled out, co-located with schools.

We just have an extremely complex, fragmented system.

So it's going to be very difficult,

like anything in Federation, to have a uniform system.

But that's absolutely part of the model that's being built out.

Yep, that's that's

something you'd suggest is the ideal?

I don't know if it's the ideal.

No, I think there are different models within that universal system that can work.

You know, sort of hubs are very important as well.

We really need to get to those underserved communities

and

working out what is best for those communities.

Aboriginal controlled childcare operators are also a really important part of this.

So yeah, there will need to be some element of complexity in the system.

But that public component is really important.

I think it's been really welcome the government's been investing in that area.

Well, Andrew Hudson from the Centre for Policy Development, it will be interesting to see how this progresses with the government.

We always like new ideas to chew over in this space.

So thank you very much for joining us today.

Yeah, thanks, David.

Thanks so so much.

I appreciate it.

And if you have any thoughts on this conversation, do drop us a line at insiders at abc.net.au.

We'll have more on this Sunday morning.

The Prime Minister is our guest.

I hope you can join us at 9 a.m.

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We'll be back in the feed this time next week with Insiders on Background.

PK, Patricia, will be back on Monday with Politics Now.

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