Scope

This Research Note presents Commonwealth funding data for child care over the past decade. The Research Note does not aim to fully explore the various issues and implications contained in the data.⁽¹⁾

Background

The Commonwealth first became involved with funding child care in a substantial way with the passage of the Child Care Act 1972. In that year the Commonwealth provided funding ($6.5 million in the first year) for non-profit organisations to operate centre-based day care facilities for children of working and sick parents. Funding was provided for capital grants, recurrent grants (to help pay staff and provide for children in special need) and grants for research into matters relating to child care.

Since that time Commonwealth involvement and funding for child care has grown enormously, such that it now outlays almost $1.7 billion annually on child care. The vast majority of this funding goes to the Child Care Benefit (CCB) which provides assistance to families for child care costs.

The following data shows how, using several different measures, Commonwealth child care expenditure has changed from the early 1990s to the present. The different measures highlighted are: nominal expenditure on child care, nominal expenditure per approved child care place and child care expenditure as a proportion of Gross Domestic Product (GDP).

Total Commonwealth Expenditure and Funding Per Place 199192 to 200203

Table 1 shows Commonwealth nominal expenditure on child care over the period 199192 to 200203 as well as expenditure per approved child care place over the same time period. It should be noted that the child care place data is in calendar years and that the expenditure data is in financial years, so there is not absolute precision between the two sets of data. However, the figures do clearly show the trend in expenditure per place over the period in review.

Table 1: Commonwealth Expenditure per Child Care Place

C'wealth approved child care places			C'wealth expenditure on child care ($m)			C'wealth expenditure per place
1991	168,276		199192	449		2,667
1992	192,782		199293	555		2,876
1993	207,973		199394	691		3,320
1994	241,492		199495	894		3,703
1995	268,927		199596	1,014		3,771
1996	306,575		199697	1,092		3,560
1997	331,113		199798	1,026		3,099
1998	399,355		199899	1,091		2,733
1999	422,040		199900	1,278		3,028
2000	443,444		200001	1,356		3,059
2001	457,800		200102	1,646		3,596
2002	500,034		200203	1,692		3,385

Sources: expenditure figures supplied by the Department of Family and Community Services.
Administrative expenditure is included in the funding tables. Approved child care places data
from Australias Welfare 2001 and Productivity Commission, Report on Government Services 2003.

 

It can be seen that expenditure per child care place peaked in the mid 1990s and then declined fairly rapidly until 1999. It grew substantially in 2001 and then dropped slightly in 2002. As the figures are nominal, there would have been larger variations in expenditure per place if the effects of inflation are taken into account.

The apparent decline in funding per place since the mid 1990s does not necessarily mean a decline in quality per place. For example, a changing 'mix' of places over the past 10 years has seen more 'less costly' forms of care (for example, outside school hours care) introduced into the child care system and as a consequence expenditure per place has been reduced. Outside school hours care has been increasing at a faster rate than either family day care or centre-based long day care. Because school aged children spend less time in care and receive a lower rate of child care benefit, per child outside school hours care expenditure is less than for other forms of care. This has led to lower per place spending overall.

Child Care Expenditure as a Proportion of GDP

Table 2 shows that Commonwealth nominal spending on child care as a proportion of GDP increased steadily from 199192 to 199697, decreased in 199798 and 199899 and has risen steadily since then.

Table 2: Commonwealth Expenditure on Child Care
as a Proportion of GDP

Year	C'wealth $m	GDP $m	Child care exp as % of GDP
199192	449	406,428	0.11
199293	555	426,048	0.13
199394	691	446,832	0.15
199495	894	471,349	0.19
199596	1,014	502,829	0.20
199697	1,092	529,885	0.21
199798	1,026	561,229	0.18
199899	1,091	591,918	0.18
199900	1,278	628,621	0.20
200001	1,356	669,307	0.20
200102	1,646	711,547	0.23
200203	1,692	751,647	0.23

Sources: expenditure figures supplied by the Department of Family and Community Services. GDP data supplied by the Parliamentary Library Statistics Group.

 

Figure 1 shows in graphic form the trend in expenditure per child care place and expenditure as a proportion of GDP. It clearly shows that both measures have trended in a very similar waypeaking in the mid 1990s, a significant trough in the late 1990s and has been generally trending up since that time.

Figure 1: Commonwealth Expenditure per Child Care Place and as a Proportion of GDP