Childcare reforms are failing to benefit children

As the cost of childcare to the Australian family and taxpayer has ballooned over recent years, it’s imperative to examine the evidence for increasing regulations and standards that contribute to the rise.

It should now be seen that making childcare less accessible effectively has become a bipartisan project. Though it was the Labor government in concert with COAG that introduced the most recent reforms to childcare—the National Quality Agenda—the costly policy has also continued relatively unhindered under the Coalition.

This is because three key claims have been uncritically accepted: that introducing stricter minimum standards for staff-to-child ratios and staff qualifications will improve the quality of childcare; that better quality care is beneficial for all children, and that these benefits justify the extra costs involved.

A critical analysis of the policy and the evidence upon which it is based reveals that these claims are disputable.

Defining ‘quality’ in the childcare context is difficult. But as far as public policy is concerned, ‘structural quality’—minimum standards and requirements—is the type of quality that governments can regulate. High levels of structural quality are thought to lead to more positive carer-child interactions and a better experience for children, which are thought to then lead to improved outcomes across cognitive, behavioural and socio-emotional domains.

Structural quality should be a public policy goal only insofar as it has a proven and meaningful bearing on other kinds of quality. A review of the literature that focused specifically on the link between changes to staff-to-child ratios and staff qualifications, and subsequent outcomes for children, found the evidence is far from conclusive in support of reforms to these areas.
Australian studies found only small positive effects of lower staff-to-child ratios for socio-emotional and behavioural outcomes—not for cognitive outcomes—and no statistically significant pattern of effects of staff qualifications on any outcomes.

Overseas studies found no consistent effects for either factor across any domains, with just one exception showing a link between higher qualifications and children’s academic achievement. Otherwise, where effects were found, they were only for younger children.

There is also doubt that these types of programs have a lasting impact on children. Only one Australian study finds effects that last to early primary school. The evidence of lasting impact for children from a range of overseas programs is mixed.

Moreover, the analysis commissioned by the government prior to the implementation of the policy does not adequately take into account several factors that indirectly impact on cost: administrative burden, impact on supply of childcare places, impact on female labour force participation, and deadweight loss.

Since the benefits of the reforms are unclear, and the costs have been underestimated, it is extremely difficult to argue that the extra costs involved represent an investment in any usual sense of the term.

It is also curious that the impetus for the policy is not obvious. In an appendix to a 2011 report on the Early Childhood Development Workforce, the Productivity Commission stated that the first rule of evidence-based policy is that there must be evidence of a problem. By their own admission—even buried in an appendix—it is not apparent that this was the case in Australian childcare.

The reasonable conclusion is that it is unlikely that the reforms to staff-to-child ratios and staff qualifications requirements will have a long-term beneficial impact on Australian children.

This point is conceded to some extent in the Regulation Impact Statement that accompanied the reforms, which said “it is not possible to provide an accurate measure of the benefits of the proposed NQA reforms.” Similarly, the Productivity Commission’s draft report into early childhood education and care said “[t]here is no consensus from the research on the structural aspects of quality as to the actual threshold effects, the marginal contribution from changes in variables or the optimal balance between them.”

A more likely consequence is that the increased costs involved in implementing these reforms will price many lower-income families out of childcare access altogether.

The childcare sector has been arguing that any attempt to water down the National Quality Agenda reforms will jeopardise Australian children. But a hard look at the evidence suggests the case for maintaining this policy—in the face of mounting childcare cost pressures on household finances and on the budget bottom line—does not stack up.

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Trisha Jha is a policy analyst at The Centre for Independent Studies and author of Regulating for Quality in Childcare: The Evidence Base, released today.