Budget Review 2021–22 Index

Dr Shannon Clark

In the 2021–22 Budget, the Australian Government has committed to a continuing funding contribution for preschool (known as kindergarten in Victoria, Queensland, Western Australia and Tasmania).

Budget Measures: Budget Paper No. 2: 2021–22 allocates $1.6 billion over four years from 2021–22 to be delivered to the states and territories through a new four-year funding agreement, with ongoing funding of $589.0 million per year (indexed) from 2025–26 (p. 91; see also, Federal Financial Relations: Budget Paper No. 3: 2021–22, p. 41). The new agreement will support universal access to preschool for children in the year before school for at least 15 hours per week (600 hours per year).

The new four-year Preschool Reform Funding Agreement will make funding contingent on state and territory governments agreeing to a ‘robust reform timeline’ (Budget Paper No. 2, p. 91), aimed at increasing children’s attendance and school-readiness. Funding is to be tied to preschool attendance targets from 2024 and a preschool outcomes measure is to be developed and trialled for introduction in 2025.

The measure also provides funding to improve data collection and a new performance framework to underpin the reforms, including $33.6 million over five years (and $2.0 million per year ongoing) for the continuation and expansion of the annual National Early Childhood Education and Care Collection (NECECC) and the development and trialling of a method for testing whether preschools are achieving the outcome of getting children school-ready (p. 91).

Although not stated in the description, this measure addresses recommendations from a recent review by the Nous Group of the National Partnership on Universal Access to Early Childhood Education (UANP), delivered to the former Council of Australian Governments (COAG) Education Council in March 2020. In line with the review’s recommendations, this measure represents a shift in emphasis from access and availability towards attendance and quality as well as a shift towards more enduring arrangements for preschool funding.

Background and universal access national partnerships

In Australia, state and territory governments are responsible for the provision of preschool. Arrangements differ across jurisdictions with preschool programs delivered in a range of different contexts, for example, school-based settings, stand-alone services, and centre-based day care; and by a range of organisations, including governments, not-for-profit and for-profit providers (see Chapter 2 of the Nous Group review). For families in financial need, states and territories offer free or subsidised services (p. 10). Some states and territories provide free preschool in government preschools and/or subsidise programs delivered by eligible non-government services (p. 27).

Since 2009, the Australian Government has contributed to preschool education via national partnerships. Federal, and state and territory government leaders signed the first National Partnership Agreement on Early Childhood Education in December 2008. It committed governments to providing every child with access to a high-quality preschool program in the year before full-time schooling (YBFS) by 2013. Preschool programs were to be delivered by a four-year university qualified teacher, in accordance with a national early years learning framework, for 15 hours a week, 40 weeks a year. Programs were to be accessible across diverse settings and ‘in a manner that ensures cost does not present a barrier to access’ (p. 5).

In 2013, government leaders agreed to the second national partnership, the National Partnership Agreement on Universal Access to Early Childhood Education, which covered preschool services until the end of 2014. Under the second agreement, and furthering the National Early Childhood Development Strategy’s vision that ‘by 2020 all children have the best start in life to create a better future for themselves and for the nation’ (p. 4), the agreement committed governments:

to maintain Universal Access to quality early childhood education program(s), with a focus on improved participation of vulnerable and disadvantaged children, and in a manner that meets the needs of children, parents and communities and ensures that cost is not a barrier to participation (p. 4).

One of the performance benchmarks set in the second agreement was for 95% of children to be enrolled in a quality early childhood education program in the year before school for 600 hours a year, including 95% of Indigenous children and vulnerable and disadvantaged children. Annual attendance targets would be agreed in jurisdictions’ implementation plans, moving to 90% over time (p. 7).

Subsequent national partnership agreements extended the UANP on a shorter-term basis. Since 2015, there have been six extensions of the UANP (2015; 2016 and 2017; 2018; 2018 and 2019; 2020; and 2021). The extension for the current UANP, which runs for the 2021 calendar year, was announced in April 2020.

Table 1 shows Australian Government contributions to the UANP since 2009 in real dollars. The $1.6 billion allocated under the Guaranteeing Universal Access to Preschool budget measure is in addition to the amounts for 2021–22 below.

Table 1: Australian Government payments for universal access national partnerships, 2009–10 to 2021–22 (real, 2021–22 dollars)

Financial year	$ (m)
2009–10	111.8
2010–11	118.1
2011–12	357.0
2012–13	540.9
2013–14	265.1
2014–15	461.5
2015–16	355.4
2016–17	427.6
2017–18	442.3
2018–19	443.7
2019–20	456.2
2020–21	458.5
2021–22	317.2

Note: real funding has been calculated by the Parliamentary Library by deflating the nominal expenditure figure by the June quarter CPI and CPI forecasts from the 2021–22 Budget; this methodology may differ to that presented in the Budget papers.

Source: Australian Government, Final budget outcome, multiple years; Australian Government, Federal financial relations: budget paper no. 3: 2021-22, p. 37.

Impact of the National Partnership on Universal Access on Early Childhood Education

The Nous Group’s UANP Review found that the UANP had had a significant impact on the provision of and participation in affordable, quality preschool, and was a ‘significant national accomplishment’ (p. 13).

Since 2015, all States and Territories have consistently met the top benchmark of achieving 95 per cent or above for the proportion of children enrolled in a quality preschool program in the YBFS (p. 49).

The review found that jurisdictions had invested significantly to increase the number of services, the workforce, and to change community attitudes (p. 48).

The participation of Aboriginal and Torres Strait Islander children and vulnerable and disadvantaged children had also improved:

• across all states and territories, there had been a steady increase of the proportion of Aboriginal and Torres Strait Islander children enrolled and attending preschool programs of 600 hours, rising from 87% in 2013 to 96% in 2018 (p. 51) and
• improvements had also been made for vulnerable and disadvantaged children; however, the review noted that there is no nationally agreed definition of ‘vulnerable and disadvantaged’ under the UANP (p. 51). Using the UANP performance indicator methodology, the review found that, nationally, the proportion of vulnerable and disadvantaged children enrolled in preschool programs for 600 hours had risen slightly, from 92% in 2014 to 94% in 2018 (pp. 52–3).

The review noted that participation of children in rural and remote areas was a known challenge due to thin markets for preschool services and early childhood workers (p. 53).

New directions in data collection and performance-based funding

The budget measure proposes to make Australian Government funding contingent on reforms which increase participation and school-readiness. Funding would be tied to attendance targets from 2024, rather than enrolment targets as it is currently. Again, this reflects the UANP Review’s findings and recommendations.

The review also emphasised the need for new and robust measures for measuring attendance before new targets are set, finding: ‘Current measures of attendance are not suitable for performance reporting or funding decisions’ (p. 15).

The review also found that the UANP’s current attendance target was unrealistically high and recommended setting a more realistic target in the future (p. 15):

The UANP references a goal of achieving an attendance rate of 100 per cent for 90 per cent of eligible children – a higher attendance rate than in the compulsory full-time school systems. This is unrealistically high in a non-compulsory and not universally-free system. While this goal is not tied to funding, it is nevertheless used as a performance indicator (p. 99).

In relation to preschool quality, the budget measure includes funding for the development and trialling of a preschool outcomes measure for introduction in 2025. Such a measure would test the degree to which preschools achieve the outcome of getting children school-ready.

Currently, Australia collects national data on the developmental health of children at the start of full-time school through the Australian Early Development Census (AEDC). The AEDC is held every three years and collects data relating to five key domains of early childhood development:

• physical health and well being
• social competence
• emotional maturity
• language and cognitive skills (school-based) and
• communication skills and general knowledge.

The UANP Review recommended that negotiations about future funding agreements should consider the value and feasibility of child-focussed outcomes measures and should consider whether AEDC results should be included as a performance indicator, although it recommended that it should not be tied to funding (p. 16).

Where to next for preschool funding?

The Nous Group’s 2020 UANP Review recommended a five-year National Partnership to replace the then current UANP to enable time ‘to work through a range of reform priorities and to lay the foundation for new, more enduring funding arrangements from 2026’ (p. 15). Although the UANP was again extended on a short-term basis in April 2020 (in the context of the COVID-19 pandemic), the four-year funding agreement included in the 2021–22 Budget otherwise puts the reform in line with the recommendations from the review. As such, it may be that governments’ next move is ‘towards a National Agreement pertaining to preschool in the YBFS, potentially underpinned by legislation’ (p. 15).

Details of the new Preschool Reform Funding Agreement will need to be negotiated by education ministers. At the September 2020 meeting of the Education Council, education ministers tasked officials with developing advice in relation to the UANP Review to assist with future planning for early childhood education. The Education Council was due to discuss the advice at its second meeting in 2021; however, following changes to the federal relations architecture, education ministers will meet in 2021 as the Education Ministers Meeting. It is unclear when meetings will be held in 2021.

What about three-year-olds?

As discussed above, the budget measure indicates a shift in emphasis towards participation in and quality of preschool. Another consideration for future directions for preschool in Australia, and an element of the current measure that stakeholders identified as not going far enough, is support for preschool for three-year-olds.

In response to the 2021–22 Budget, Samantha Page, CEO of peak body Early Childhood Australia, welcomed the longer term funding for preschools, but also stated: ‘Ultimately we want this to be extended to younger children, in line with international best practice’. Similarly, CEO of Thrive by Five, Jay Weatherill stated: ‘Locking in four-year-old preschool is also welcome but the government has missed an opportunity to extend this to three-year-olds’.

While some states do offer two years of preschool, there have been increasing calls for universal access to preschool to be expanded to three-year-olds across Australia. For example, an independent review commissioned by state and territory education officials in 2017 considered effective early childhood interventions and how to improve outcomes for children both at school and in subsequent education and employment. One of the report’s key recommendations was for universal access to be expanded to all three-year-olds, with access prioritised for disadvantaged children, families and communities during roll-out (p. 80). It argued:

In terms of improving school outcomes through early childhood interventions, the evidence points to this as the single most impactful reform Australia could undertake, with international comparisons highlighting it as the biggest gap in the current system. The case for this investment is compelling (p. 8).

As noted in the Budget Review article on Child Care Subsidy changes, it remains to be seen how changes to the Child Care Subsidy (CCS) will interact with preschool programs, and whether the changes to CCS will create an incentive for families with multiple children under six to move children into child care services to be eligible for the higher rate.