Profits before children: The crisis in Australian child care
What do you get when you throw billions of government subsidies at private, for-profit childcare providers with little regulatory oversight? Unacceptable levels of child abuse and negligence, wage theft and exploitation alongside a booming investment opportunity for property developers, bankers and private equity firms.
A recent Four Corners investigation into early childhood education and care (ECEC) has revealed a rise in incidents of sexual abuse, serious physical and mental injury, inappropriate use of restraints and missing children. This is the latest in a string of reports highlighting chronic staffing shortages, regulatory breaches and child welfare concerns in the sector. Meanwhile, the ballooning $20 billion-a-year industry is marketed as an attractive investment opportunity, due to the heavy injection of government subsidies and high fees charged by providers.
Some of the more extreme cases of reported abuse include children being strapped in highchairs for hours at a time, being kicked and roughly handled, force fed and screamed at. Cost-cutting measures mean many children are fed meals with inadequate nutrition or not fed at all. In some cases, staff lack proper first aid training and knowledge of allergy management. This has resulted in children being hospitalised for serious injuries, often by parents after staff failed to call emergency services at the time of the incident.
This is the predictable outcome of a system that prioritises profit over quality education and care for young children.
Child care has fallen victim to the neoliberal privatisation of public services in Australia over several decades. As a United Services Union member previously wrote in Red Flag, “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”.
Early childhood education is the only level of education in which private, for-profit providers benefit from government subsidies. The Australian Consumer and Competition Commission (ACCC) projects that government handouts to the sector will reach $15 billion by 2026-27.
The result has been a rapid rise in the number of for-profit providers opening childcare centres across the country. According to Professor Gabrielle Meagher, interviewed by Four Corners, of the 300 to 400 new centres opening each year, 95 percent are for profit.
In order to generate maximum returns on investment, for-profit childcare providers have an incentive to drive down operating costs. This means sacrificing child safety and welfare and cutting back on staffing costs to increase profit margins. The latest report into the sector by the Australian Children’s Education and Care Quality Authority (ACECQA) shows that for-profit centres are consistently rated lower quality than not-for-profit providers. The report found that just 13 percent of for-profit childcare providers exceed national minimum standards for the provision of ECEC, compared to 28 percent for not-for-profit providers. The latter figure is still far too low and indicates that problems in the sector are widespread, likely due to chronic staffing issues.
Early childhood educators, the vast majority of whom are women, are some of the worst-paid workers in Australia, even after the government’s pay rise of 15 percent over two years. A 2023 ACCC inquiry found that for-profit providers spend significantly less on staff, have a higher proportion of casual employees and employ less experienced educators than not-for-profit providers. Although the rates of pay for staff vary across providers, qualified educators covered under level 3 of the Children’s Services Award were paid on average $35.48 per hour at not-for-profit centres, while their for-profit counterparts were paid $33.69 per hour. As a result, there has been an exodus of workers from the sector. Desperate for staff, operators are cutting corners, hiring under-qualified educators and skipping background checks to fill vacancies.
Despite these issues, governments have not prioritised adequate funding for regulating the burgeoning sector. A report by the Productivity Commission last year found that industry regulators are under-resourced, meaning compliance inspections are infrequent or in some cases do not occur at all. According to the ACECQA, almost one in ten providers have never been given a quality rating yet are allowed to continue operating and enrolling children.
Whistleblower Ashley Sy, an early childhood educator, told Four Corners that centres she has worked at regularly gamed the system to achieve ratings that don’t reflect the reality of the services they provide. “There are materials that children can’t use on a day-to-day basis that are kept in staff rooms that are only brought out for assessment and rating time.” She said staff feared reprisals for speaking up about conditions in the centres they work in because many are migrants and did not want to risk losing their jobs and visas.
Even when assessments do take place, the ratings are next to meaningless. Centres that do not meet the minimum standards are given the euphemistic rating of “working towards” and allowed to continue to operate and rake in huge profits.
In an environment where profits are put before child protection and staff working conditions, it’s no surprise that there are frequent reports of breaches in laws and regulations. Yet the consequences are minimal even for serious breaches.
In a particularly heinous case in which several children suffered brutal physical and psychological abuse, childcare provider Jumpstart and an educator were fined just $186,620 and $38,650, respectively. The mother of one of the children affected expressed the inadequacy of this, saying to Four Corners: “Children being abused and having trauma for the rest of their lives, that’s what it’s worth? As a parent, if I was to do that to my son and had it reported I would lose my son, I would be considered an unfit parent”.
Clearly, the sector is in need of reform. At a minimum, federal and state governments should shut down providers that do not meet quality standards and direct more resources to the regulators to conduct frequent spot checks. They could cap fees charged by for-profit providers and mandate wages for educators on par with primary and secondary schools to address the staffing shortages.
However, Labor seems reluctant to investigate seriously and address the issues. The NSW Labor government attempted to block Greens MLC Abigail Boyd from accessing reports from the regulator about serious cases of abuse and neglect. A selection of documents was made public only in early April, six months after she first requested them. In March, Boyd moved a motion to censure Labor MLC Penny Sharpe, the leader of the government in the NSW Legislative Council, for not producing the documents as directed.
“I have spent five months trying to get this information out, and none of the excuses stack up”, Boyd said when presenting the motion. “The fact that our regulatory authority cannot produce this information when it is responsible for keeping children as young as nought to three years safe is incredibly worrying.”
The response from Minister for Education and Early Learning Prue Car so far has been to order an independent assessment with narrow terms of reference and no concrete time line, further kicking the can down the road.
Labor is reluctant to address the crisis in child care because it is committed to raising women’s participation in the workforce to fill skills and labour shortages. According to a 2023 report by the Women’s Economic Equality Taskforce, boosting women’s participation in the paid workforce by removing barriers, such as limited access to affordable child care, could add $128 billion to the economy. So, the government doesn’t have an interest in bringing the inadequacies of the sector to light, or to fund a robust regulator for that purpose, as this could interfere with its broader economic objectives.
Given the documented superiority of publicly operated providers, an immediate solution to this crisis is to nationalise the sector to ensure the welfare and safety of children are the priority while significantly improving staff pay and working conditions. This would ensure that child care exists for public good rather than private wealth accumulation.
However, Labor—like its Coalition counterpart—is committed to the idea that the market, with its competition between private providers, produces the best outcome, despite the mounting evidence to the contrary. Until this changes, children will continue to be placed at risk, educators will be underpaid and overworked, and the industry will remain a playground for private profiteering rather than a service that truly supports working parents and their children.
