Early learning scenarios reveal challenging balancing act

05 September 2020

The Early Childhood Council has been looking at the future of early learning funding and its potential impact on children, parents, teachers and centres.

“It’s a fine balancing act. It’s hard for the government and operators to pull one lever without impacting elsewhere. Creating a fair playing field for everyone and getting the maximum out of public and private investment depends on fixing our broken funding model,” said ECC CEO Peter Reynolds.

The early learning funding options and their implications include:

Scenario one: Teacher pay rates increase, supported by some level of government subsidy increase

This is what’s happening now. Teacher pay increases are offset by a funding increase as promised in the last budget, but not all of the increased costs are met. This leads to a likely increase in parent fees, a minor reduction in teacher:child ratios or minor job losses.

This scenario will likely reduce child participation as parents struggle to pay, particularly in a recessive economy where unemployment is on the rise.

Scenario two: Teacher pay rates stay the same

Leading to increased teacher dissatisfaction, more leaving the profession for other better paying jobs and a continuation or growth of the current ECE teacher shortage

Again, we could see reduced enrolment or license levels for children so services can maintain ratios. With an overall loss of revenue for some services, we risk less investment in the sector by private operators.

Scenario three: Teacher pay rates increase supported in full by government subsidy increase

While requiring more government investment, the reality is that some services can’t survive at partial pay rate funding, reflecting the diverse nature of the ECE sector.

This scenario has the least potential effect on parent affordability, child participation and staff job security.

Scenario Four: Teacher pay rates increase with no increase in government subsidy rates.

The most dangerous for the sector, with services bearing the full effect of increased costs, leading to a disproportionate increase in parent fees, significant reduction in child participation, staff redundancies and some service closures.

“With resources tight, it’s not the size of the pie that’s important, but how we cut it.”

“Seeing the trade-offs required makes the need for a funding review crystal clear, so we can design a system that delivers the fairest and most positive outcomes for the whole sector, and minimises the unintended consequences,” said Mr Reynolds.

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