Missed the masterplan to supercharge the economy? It’s child’s play

Economics Editor

So,what did you make of the Albanese government’sEarly Years National Summit at Parliament House on Friday? What? You didn’t hear about it? Well,yes,it got little coverage from the media. Yet another case of us letting the urgent and the controversial crowd out the merely very important and the encouraging. Maybe it’s a pity Peter Dutton didn’t say he was thinking of opposing it.

In truth,the government’s election promise – to do a better job of delivering what’s now called ECEC,early childhood education and care – is its most expensive and,after climate change,probably its most important. The two have much in common,of course:the wellbeing of our kids and grandkids.

Illustration:Simon Letch

Illustration:Simon LetchSupplied

Note the way our need for affordable and available childcare has morphed into a concern to start children’s education much earlier than age five.

Neuroscience long ago established that our brains develop continuously from birth to adulthood,but the development in the first five years of life is crucial to later development. It’s determined partly by our genes,but also by our experiences in the early years. Children who are badly treated,or don’t get enough attention,are likely to have problems in later life.

To put it more positively,there’s nowmuch evidence that good quality early childhood programs help children get a better education. Starting earlier seems to help kids “learn how to learn”. All children benefit,but those from disadvantaged homes benefit most.

Other research shows that early learning leads to better health,reduced engagement in risky behaviours such as smoking,drinking,drug taking and over-eating,and stronger civic and social engagement.

Anthony Albanese has made early childcare reform a key pillar of his prime ministership.

Anthony Albanese has made early childcare reform a key pillar of his prime ministership.Rhett Wyman

These benefits to individuals are,in themselves,sufficient justification for government spending on early learning. But the benefits spill over to their families and the wider community.

As well,the economy benefits from having more people working rather than in and out of unemployment. This improves government budgets by increasing the number of taxpayers,as well as by reducing the need for remedial spending on school drop-outs or people with literacy problems. Or those who’ve got into trouble with the police.

The American economist and Nobel laureate James Heckman has found that quality early education helps break the cycle of generational poverty. And skills developed through quality early childhood education can last a lifetime.

Last week’s summit brought together 100 experts to help the government develop an “early years strategy”. To see what’s been happening,it helps to start with childcare,then move on to early education.

The Morrison government reduced the cost of childcare for second and subsequent children,but Albanese topped that by promising to increase the subsidy to up to 90 per cent for the first child,starting in July.

This was one of Labor’s biggest election promises,costing $4.7 billion over four years according to Budget papers. It has also asked the Productivity Commission to review the childcare system and asked the Australian Competition and Consumer Commission to develop a mechanism to regulate the cost of childcare.

But cost is only one problem. Many families have trouble finding a place for their kid. Research by Victoria University’s Mitchell Institutehas found that more than a third of Australians live in regional and rural areas where three children vie for each place.

Areas with the highest fees usually have the highest availability of places,suggesting private providers go not only where the demand is,but also where they’re likely to make higher profits.

I trust you noticed that all those wonderful benefits came fromquality care. Successive federal governments have worked to increase the quality of childcare,including improved ratios of staff to kiddies. This helps explain why the cost of childcare keeps rising.

Politicians and economists tend to see the main benefit from more and cheaper childcare as allowing more women to get paid employment. This is about gender equity,not just a bigger economy.

But another reason childcare keeps getting dearer is the push for childcare to be about early education – “play-based learning” – not just child minding. This means getting better qualified carers,including a proportion with teaching qualifications.

This hasn’t gone well. Childcare workers – like aged care workers – are still too badly paid. Unsurprisingly,staff turnover is high – which doesn’t help.

The other part of the early education push is the introduction of “universal” preschool education for four-year-olds. The previous government started this some years ago,with the states.

Now the push is for preschool to be extended to three-year-olds. And last year the Victorian and NSW premiers announced plans for greatly increased early childhood spending,particularly on preschools.

What more the feds will be doing,we’ll know when they produce their early years strategy. But whatever the plan,it’s unlikely to succeed unless it involves higher pay for childcare workers – paid for by the government,not parents.

Considering the many benefits of early education,however,the extra cost should be seen as an investment in our children’s wellbeing. Not to invest what’s needed would be to “leave money on the table”,as economists say.

Ross Gittins unpacks the economy in an exclusive subscriber-only newsletter every Tuesday evening.Sign up to receive it here.

correction

This article has been updated to correct a previous version which stated Labor’s cheaper childcare policy would cost $5 billion per year,when the figure was in fact $4.7 billion over four years,according to Budget papers.

Ross Gittins is the Economics Editor of The Sydney Morning Herald.

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