Privatisation of child care laid bare: women pay high price

Quality childcare helps children develop key social, emotional and communication skills. And the quality of their experiences – positive or negative – in the first five years of life shapes how their brain develops.

It is therefore extraordinary that about 70% of our long day childcare services are now run by for-profit operators when we know that the for-profit sector generally delivers lower quality education care.

All education and care services in Australia are rated against the National Quality Standard. Some 41% of not-for-profit services exceed the standard, whereas only 18% of for-profit ones do. Moreover, only 14% of not-for-profit providers are not yet meeting the standard compared to 24% of for-profit operators.

So almost one-quarter of for-profit providers are not providing quality education and care. And yet these providers end up the beneficiaries of large government subsidies. The things that make an education and care service a high standard – primarily large numbers of highly qualified educators – are also the things that are the most costly. When you are trying to make money, this is the area to scrimp on.

While the sector receives more than $8 billion in subsidies a year, the government has little resolve to demand greater accountability from operators for that funding.

Australia’s childcare system was once primarily the preserve of not-for-profit organisations and charities. Now there is a mix of small private providers with one service; boutique operators with chains of between 10 and 20 services; publicly listed providers such as G8 Early Learning; and finally services owned and operated by private equity firms, often multinational ones.

Pitfalls of privatised system

Almost from the get-go, Covid-19 revealed the pitfalls of our primarily privatised childcare system. In state-run institutions such as schools, operating decisions could be made purely on health grounds and the need to provide education (and simultaneously care) for the children of essential workers.

With childcare, there was another dimension. In March when the first lockdown occurred, it quickly became obvious that families were not sending their children to child care because of health concerns. Families then started to question why they were paying for a service they weren’t using, and subsequently unenrolled their children from the service.

Yet occupancy figures are a major issue in childcare. Once they drop below about 90%, most services can’t make a profit. Drop below 70-80% and the service will struggle to survive.

Services across the country started to alert the federal government that numbers were dropping so alarmingly that 1) there was not going to be any childcare for essential workers during the pandemic and 2) there may not be a childcare system at all after the pandemic.

The government quickly come up with a rescue package that included the proviso that all families who needed childcare would receive it free of charge.

The rescue package was complex, cumbersome and constantly changing as holes became apparent. The government was determined to build in safeguards as it had only just finished weeding out the dodgy operators who had set up family day care schemes over the past years to rort funding. Safeguards invariably mean more complexity. But the rescue package did its job and the sector survived.

But some of the for-profit providers soon got antsy. Deprived of being able to charge parents fees, they were surviving, but hardly thriving. As more children started to attend as the country opened up again, services wanted to charge fees again.

Lobby groups influenced policy

In a sector dominated by for-profit provision, the lobby groups of for-profit providers soon become the mouthpieces of the sector. These lobby groups advocated for government subsidies to continue without 1) needing to provide free childcare and 2) adhering to the obligations usually required as a result of receiving Jobkeeper for staff.

The government fell into line by providing a transition grant that was post-dated by a week. This gave the services time to get rid of employees they did not want to keep on the books. Childcare educators thus became the first workers in Australia to lose their right to JobKeeper payments.

The grant also swapped Jobkeeper for an employment guarantee, which simply required staff to receive a minimum of two shifts over the transition period, which will last for a couple of months.

Cruel blow to educators

This resulted in many educators essentially losing their capacity to earn a living wage. Given that educators are 97% female and are among the lowest paid in the country, this seemed a particularly cruel blow.

It is not just direct service providers that are making money out of the huge government investment in the sector. There’s the property developers; landlords; investors; and the private equity firms that now own chains of long day-care providers and a large proportion of before- and after-school care services.

The real horror of the privatisation of our education and care sector, however, is that despite the huge government subsidies of more than $8 billion a year, parents are still paying an arm and a leg for this essential service. This affects women, in particular, and creates a disincentive for women to participate in the workforce. And not all children get access because to what is essential early education because it is sold as a commodity.

And the women who mostly do the caring and educating? They receive pittance wages while the landlords, developers and investors make a mint.

The perils of privatisation and private greed

This article was republished with permission from Pearls and Irritations.