Over 70% of long-day childcare services in Australia are delivered by business, according to Professor Deborah Brennan of the University of NSW's Social Policy Research Centre, writing in the February 29 Melbourne Age.
Brennan notes, "Until the 1990s, most child care was provided by non-profit, community-based organisations. This changed in the early 1990s when the Australian government stopped paying operational subsidies to non-profit care services, and placed the money in the hands of parents to spend in the marketplace."
This shift has proceeded with the active support of the federal government, which today subsidises the childcare sector through an annual pay out of around $1.7 billion through its Child Care Benefit scheme.
While funding has risen at an annual rate of 14.4%, according to the March 11 Sydney Morning Herald, childcare costs have gone up by 62% between 2002 and 2006, with some centres in Sydney now charging as much as $100 a day.
Lynne Wannan, the convener of the National Association of Community-Based Children's Services, told the SMH that the corporate model preferred by the government has not led to increased competition, lower prices and improved quality. "The reverse has happened", she said. "It has led to a classic market failure."
Early childhood researcher Joy Goodfellow has explored the extent of this failure in some detail. She told an ABC Radio Background Briefing special on child care in 2004 that you could expect a not-for-profit organisation to have salary costs of around 80% of its total budget. But in the corporate sector, the aim is to keep staff budgets down to under 50%.
"So the way you keep your salary budget down under 50%", she explained, "is to think about the cost of staff in your centre. So you might want to employ people who have lesser qualification if your regulation allows you to do that. It might say you want to have higher numbers of casual staff so that you can then put those staff off if you don't have the children there. It might mean that in a day you have only maybe a small handful of children left in the afternoon, so you say, 'Okay, we'll group all those children together under this staff member, and send the other staff member home'. So there are things, or practices that can occur that are I believe, detrimental to children but they are undertaken in order to economise."
Goodfellow's concerns are backed up by the appalling pay rates on offer in the sector. Even after recent substantial wage rises, the minimum award rate for a childcare worker with one year's experience is $611 a week. With level three qualifications and five years experience the pay rate can be as low as $19 per hour.
As Background Briefing noted, after the Howard government ditched subsidies for non-profit centres in 1997 "it's the new corporate players that dominate, with their shareholder backing, management systems and economies of scale. And it's all happened in the mere blink of an eye."