Early childhood education shouldn’t be for profit

21 August 2022
United Workers Union member

There is a crisis in the early learning sector in Australia. Early childhood educators are underpaid and overworked, and they are abandoning the sector in droves, leading to chronic staff shortages. For many childcare centres, being dangerously and illegally understaffed has become the norm. Educators are pressured not to take leave, or sometimes even lunch breaks, and workloads keep increasing, while wages don’t. Many educators take work home with them to do in their own time, and at work it is frequently a struggle just to ensure conditions are safe for children, let alone provide quality education.

The situation is no better for parents, who in Australia pay some of the highest childcare fees in the world, if they can access it at all. There is significant unmet demand for child care, especially in lower income areas, and the demand is growing.

This is what it looks like when an essential service is run for profit. Decades of increasing privatisation in child care have left workers, parents and children worse off, while private providers profit.

A report released by the Mitchell Institute and Victoria University earlier this year found that 36.5 percent of Australian children aged under 5 live in childcare “deserts”, where child care is highly inaccessible. Even outside of these deserts, parents have to join long waiting lists in order to secure a childcare place—if they can afford child care at all.

According to OECD data, for an average couple in Australia, childcare costs amount to 20 percent of household income. For some parents, it doesn’t make financial sense to work, and they are forced to become stay-at-home parents instead. This disproportionately affects women, who still earn less on average than men, with far more women than men taking extended time out of the workforce after having children.

Despite having promoted the privatised model that has created this situation, governments are increasingly recognising that inaccessible and expensive child care is a problem for the economy. Hence the pledge to (eventually) increase childcare subsidies made by federal Labor, and the Victorian state government’s recent announcements of two years of free kindergarten and the establishment of 50 government-operated childcare centres. The Victorian government states, “Lack of access to childcare takes almost 26,600 women entirely out of the workforce in Victoria”, and getting these women into the workforce would boost the Victorian economy by $1.5 billion per year.

This hints at the essential role child care plays for Australian capitalism. Not only is child care a key part of raising the next generation of workers—educating, supervising and socialising children—but it also enables parents to get back to work making profits for their bosses. This was highlighted early in the pandemic when, as a result of centres temporarily closing and/or attendance being limited for public health reasons, hundreds of thousands of parents were unable to go to work, or struggled to work from home while looking after their children at the same time.

But despite the crucial role child care plays for capitalism in keeping workers at work—not to mention in the lives of the children who attend—early education is devalued and disregarded as glorified babysitting. Early learning is one of the most female-dominated industries in Australia, women constituting 97 percent of educators. It is also one of the lowest paid, especially when compared to male-dominated industries and industries with similar minimum qualification requirements. The sexist idea that women are constitutionally more nurturing and that childcare jobs reflect natural inclinations as much as they do the need for money, is weaponised to maintain low wages and poor conditions.

But early childhood educators play a crucial role in helping children develop skills at a key time in their lives, with expertise that is highly valued by parents and others who care about the wellbeing of children.

The work is also physically taxing: educators are exposed to all sorts of infectious diseases, including COVID-19, and deal with everything from bodily fluids to emotional meltdowns, with all the associated risks. According to researchers from Charles Sturt University, childcare workers sustain serious workplace injuries at the same rate as construction workers. Yet many educators earn as little as $23 per hour. Last August, the United Workers Union, representing early childhood educators, conducted a survey of childcare workers, which found that almost 40 percent don’t plan to stay in the sector long term, and more than a fifth saying they couldn’t afford to stay due to low pay.

Over the last three decades, Labor and Liberal governments have shaped the sector more and more in favour of private providers, moving away from funding service provision by government or community-run providers, and towards per-child subsidies available to private providers. In 1990, the Australian government extended the childcare fee relief program, previously available only to not-for-profit centres, to commercial childcare centres. This signalled that Australian child care was open for business, with government subsidies becoming available for private corporations to collect. In 1997, operational subsidies for community-owned long day care were removed, while in 2001, incentives and financial assistance were introduced for the establishment and operating costs of some private centres.

These changes laid the basis for the state of the sector today—highly privatised and highly profitable. Since 2013, private for-profit services have increased from about 40 percent of child care in Australia, to at least 51 percent. Meanwhile, government-run services have decreased in number, going from 14 percent of providers to 11 percent over the same period.

Between government subsidies and private fees, the Australian early learning sector’s total revenue is around $15 billion a year. The combination of stable long-term demand and reliable government subsidies make child care an attractive investment for large companies like G8 Education and for private equity firms. As the website Childcare4Sale boasts, “With the growing trend of women returning to work, increased government support, and the potential return on investment, childcare centres are showing up as one of the strongest passive-income assets in an investment portfolio today”.

One of the largest childcare providers in Australia, Only About Children, recently changed hands to the tune of $450 million. The new owner is Bright Horizons, a US company that operates more than 1,000 childcare centres across a number of countries. In 2020 (under the previous owners—US private equity giant Bain Capital), despite collecting government support payments and operating at a profit, Only About Children declared a loss and paid no tax in Australia.

This kind of creative accounting is common among the big childcare providers. G8 Education is the largest childcare provider in Australia. In 2020, G8 received $260 million in JobKeeper and other government relief, and made profits of at least $60 million. However, G8 declared a loss and paid no tax on the basis of predicting impairment to “possible future revenues”. In the same year, G8 CEO Gary Carroll took home more than $830,000. Meanwhile, G8 was found to have stolen $80 million in wages from its workers through systematic underpayment over the previous six years.

According to a report released by the union last November titled ‘Spitting off cash’: Where does all the money go in Australia’s early learning sector?, “Above-award rates of pay that value the work of educators are more common in the not-for-profit sector. Generous executive salaries and dividends are doled out by the large for-profit providers, whilst educators are paid the bare minimum”.

Not only are wages lower in private for-profit centres; data from the industry regulator also reveals that they perform worse on just about every measurable outcome. A report released in October 2021, Unsafe and non-compliant: Profits above safety in Australia’s early learning sector, found that for-profit centres performed worse than other centres on quality and safety. The report states, “children are less safe in for-profit centres, which are sanctioned far more often ... for-profits have a history of poorer safety and lower quality” and, “for-profits are the worst-performing management type when it comes to ensuring quality education and care for Australian children”. Quality ratings for education and care were worst in long day care, which is the most lucrative part of the sector and the most dominated by private for-profit providers.

For private providers, educators and children are no more than a means to an end, whose safety and wellbeing they will cheerfully sacrifice if it increases their profit margins. Child care would be vastly improved if the government redirected funding away from private for-profit centres and into providing universal free child care accessible to all, and decent wages for educators. When profits are at the centre of early learning, gains for the bosses come at the expense of workers’ pay and conditions, parents’ financial and social position and children’s learning and safety.


On 7 September, early childhood educators around Australia are taking to the streets to demand change. This action has been called through Big Steps—the early learning campaign of the United Workers Union. Union members are calling on the government to value early learning by raising educators’ wages. To register your support for educators and to find a rally near you, go to bigsteps.org.au/shut-down-the-sector-landing.

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