THE HON DR ANNE ALY MP

Minister for Early Childhood Education

Minister for Youth

GREG JENNETT, HOST: So, it is fairly clear that the government wants to walk down a path that will eventually lead to that universal early childhood education system in Australia. As we canvassed earlier today, it released that report by the Productivity Commission, which stopped short of recommending universal care, but it did push for free access for low-income families, at least initially. We spoke to the Minister for Early Childhood Education and Youth, Anne Aly, a short time ago. 

This is a really significant day, Anne Aly, for policy development that is important to the nation. So, we appreciate you finding some time for us today. Welcome back once again. Now, I understand universal early childhood education isn't yet government policy, but there is a lot to digest in the Productivity Commission report and to tease out your ideas. So, the package suggested would add a $5 billion extra to child care subsidies alone. There are other costs, too taking the annual bill to $17 billion. Is that affordable or would some form of additional revenue be required to fund this?

MINISTER ANNE ALY: Well, thanks, Greg. It is indeed a big day today with the release of the Productivity Commission review’s final report. Look, they do make a number of recommendations, 56 in total as a matter of fact, and they go across a range of areas in early childhood education and care, from the removal of the activity test, to making early childhood education care more affordable particularly for low-income families, to the establishment of an early childhood education and care commission. There are a number of things in there, and you're right that they have estimated that the costs of implementing their recommendations would take the cost of early childhood education up to about $17 billion a year. This government, from the first day that we took office, has always looked at early childhood education and care as an investment – an investment in our youngest Australians. And we embarked on a process of reform. The first part of that reform was making it more affordable. And I just spoke to somebody in Perth whose daily fee went down from $70 to $40 a day after those reforms that we made under the cheaper childcare bill.

The second part of that reform was looking at the workforce issue and increasing the pay for early childhood educators by 15 per cent, because we know that any kind of reform needs a stable workforce. This is, I guess the third part of reform, is looking at what are the levers that we have to that pathway to universal early childhood access, early childhood education that's accessible, affordable and inclusive. We'll take a look at the 56 recommendations that the Productivity Commission review has put forward and we'll make those determinations, and we'll cost it when we've made those determinations.

JENNETT: Yeah, I understand that. But conceptually, regardless of cost, you know, no one would dispute the social worth of making this investment in our children at the earliest possible ages. But conceptually, is the government open to a tax levy or a surcharge to fund it in a way that really, I suppose, recognises its importance?

ALY: Conceptually, our government recognises that early childhood education and care is an investment. Investment in our children and an investment in Australia's future. As I said, we haven't looked at-- considered in detail the recommendations of the Productivity Commission review. The Prime Minister has said on several occasions that we are committed to a universal early childhood education and care system in Australia. What that looks like, the Productivity Commission review charts a pathway to that for us. What that looks like in the final determination will be up to the consideration that we have of the Productivity Commission review and its recommendations. What that costs and how we fund that will also be up to the considerations that we make as we progress towards this pathway.

JENNETT: Yeah, I do understand that. And can I ask then about bang for buck? And this is just drawing on the commission's numbers. So, despite the significant increase in expense, that is subsidy costs rising under their model by almost 40 per cent and benefits for virtually every family. The actual rate of attendance in childcare would only lift by 10 per cent. Aren't there more targeted ways that you could lift attendance rather than increasing the higher subsidy rate for those, let's say, earning between $80k and $140,000 a year?

ALY: Well, it depends on how you look at early childhood education and care. Early childhood education and care is many things. First of all, it's an essential service for parents who work, and I'm sure that your viewers who are parents who work understand that it is an essential service for them. Secondly, it is also of great benefit to children. And it is, you know, during those first five years of a child's life where their brain is developing, it allows all children to thrive. We don't want children held back. We don't want children who are born into disadvantage to have to carry that disadvantage through their life.

So, when we talk about lifting access and lifting attendance at early childhood education and care, the Productivity Commission review told us that it is the most vulnerable children, the children who need it the most, who are not getting it. And that is because early childhood education and care is proportionately more expensive for people on a lower income than it is for people on a higher income. And so that's why they've said that their way of universal, their expression of universal early childhood education care is 30 hours free for everybody.

JENNETT: Yeah. Now, the report also recommends, and you've touched on this briefly, Anne Aly, removing the penalty that bars parents from accessing the child care subsidy if they're not working or studying a certain number of hours; the so-called activity test. Do you see a case for scrapping that now, immediately, even before you get to those bigger questions we've been grappling with here?

ALY: Well, we'll consider that. We'll consider that recommendation. I will say that we have already relaxed the activity test for First Nations children. We did that when we introduced the increase to the Child Care Subsidy in 2022. And we've seen the rates of children, Aboriginal children, First Nations children, attending early childhood education and care lift because of that. We know that the activity test, several reports have told us that the activity test presents as a barrier to children from vulnerable families and vulnerable communities accessing early childhood education and care. But as I said, we'll consider that as part of the broader suite of reforms that we need to make to get to that universal early childhood education and care system.

JENNETT: Is it likely, as we move towards universality, that because government becomes such a bigger player in the funding of fees, we're likely to see more publicly owned and not for profit centres prospering relative to the for-profit sector, which I think is about half at the moment?

ALY: Well, one of the things that the PC recommends is investment in centres. Right now, you have the for-profits, particularly the large for-profits and smaller for-profits, able to buy new centres and kind of expand their footprint in that way. Whereas the not-for-profits are rather hamstrung because they can't purchase new properties or they can't build new centres. So, that's one of the things that the PC recommends. We have a system that is a mix of different services. And this morning I attended the Early Childhood Australia conference and there was a professor from Norway who presented and he spoke about how it was a very similar situation in Norway, as well as a number of other countries, based on his research. And it was quite interesting to hear from him about how other countries also have this kind of mixed model of service delivery in terms of large for-profits, large not-for-profits, smaller and smaller players as well. And how - what his recommendations are for kind of getting that optimal mix, that balance of all of them.

What I'm really mindful of is, first and foremost, we need to ensure that we have the workforce to be able to expand access. There are more early childhood educators now than there were when we first came into government. A large part of that is the fact that we have made TAFE courses free. And I've met young people who are taking advantage of those free TAFE courses and who have said they wouldn't have been doing early childhood education and care, a certificate in early childhood education if it hadn't been for the free TAFE courses. So, that's made a huge impact. But we can't build a system or reform a system without that stable base of a strong workforce.

JENNETT: No, it's absolutely centric around those workers. We barely scratched the surface, to be fair, Anne Aly, on the content.

ALY: Well, here it is. As you can see, it's quite hefty. So, there's a lot to get through.

JENNETT: It is. There's a lot to get through. You've had it for a couple of months. I guess that means we'll discuss it further when you're next back with us. Thanks so much, Anne Aly.

ALY: Thank you. I look forward to that, Greg.

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