Terms of Reference
On 12 December 2013, the Senate referred the following matter to the
Senate Education and Employment References Committee for inquiry and report by
17 June 2014:
cost and availability for parents over the short term, including the
effectiveness of the current government rebates;
administrative burden, including the impact of the introduction of the
National Quality Framework;
the current regulatory environment and the impact on children, educators
and service operators;
how the childcare sector can be strengthened in the short term to boost
Australia’s productivity and workplace participation for parents; and
any related matters.
The order of the Senate was amended on 17 June 2014 to extend the
reporting date until 15 July 2014.
Access to affordable, quality early childhood education and care (ECEC)
is important to individual children, their families and the broader community.
It not only helps children develop—influencing later outcomes at school and in
life—but also dictates the level of families' engagement with employment and
study and ultimately has a considerable impact on national productivity.
Australian families have access to a range of public and private, for
and not-for-profit, home-based and centre-based ECEC services. The ECEC system
is based on market oriented arrangements which allow parents to choose the type
of service they use based on personal considerations and preferences, including
Most Australian families are involved with the sector in one way or
another, as the majority of Australian children participate 'in some form of
child care or early learning before entering school, or afterwards through
outside school hours care.'
The ECEC sector is also an industry in its own right, generating
estimated revenues of over $10 billion annually and employing some 140 000
Child care payments
Under current legislative arrangements, the Child Care Benefit (CCB) is
paid to persons using 'approved' or 'registered' services, who are required to
meet the standards set out in family assistance law, specifically the A New
Tax System (Family Assistance) (Administration) Act 1999 (Cth).
Parents and carers can claim CCB for between 24 and 50 hours per child
per week, either as a fee reduction paid directly to the provider or at the end
of the financial year through the tax system. The CCB is means tested, and is
payable as follows:
Figure 1- Child Care Benefit - Amounts payable 
Further, families can also access the Child Care Rebate (CCR), currently
$7500, to assist with additional child care costs. The CCR is not means tested.
The Department of Education (the department) advised the committee that
limited CCB subsidies are also available for registered (as opposed to
approved) care providers. Registered care providers are individuals who are
registered with the Department of Human Services (DHS). Families opting to use
registered care receive a lower rate of CCB than families using approved care,
'as approved care providers are required to comply with Family Assistance Law
quality standards and other legislative requirements.' To receive the CCB,
families must use approved services that meet the requirements of one of the
Long Day Care (LDC) – a centre-based form of care. LDC
services provide all-day or part-time education and care for children.
Family Day Care (FDC) – administers and supports
networks of FDC educators who provide flexible care and developmental
activities in their own homes, or in approved venues, for other people's
Outside School Hours Care (OSHC) – provides education
and care before and/or after school and/or care during school vacation time.
Services may also open on pupil-free days during the school term.
Occasional Care (OCC) – a centre-based form of care.
Families can access OCC regularly or irregularly on a sessional basis.
In Home Care (IHC) – a flexible form of care where an
approved educator provides care in the child's home. The Australian Government
limits the number of approved IHC places available in the market and new IHC
services can only become CCB approved if places are available for allocation.
Productivity Commission inquiry
On 22 November 2013, the Treasurer, the Honourable Joe Hockey MP,
directed the Productivity Commission to undertake an inquiry into future
options for child care and early childhood learning, with a specific focus on
developing a system which would address children's learning and development
needs whilst supporting workforce participation. The terms of reference for
the inquiry are:
contribution that access to affordable, high quality child care can make to:
increased participation in the workforce, particularly for women
optimising children’s learning and development.
current and future need for child care in Australia, including consideration of
hours parents work or study, or wish to work or study
the particular needs of rural, regional and remote parents, as well as
of affordable care
of child care available including but not limited to: long day care, family day
care, in home care including nannies and au pairs, mobile care, occasional
care, and outside school hours care
- the role and potential for employer provided child
- usual hours of operation of each type of care
- the out of pocket cost of child care to families
- rebates and subsidies available for each type of care
capacity of the existing child care system to ensure children are transitioning
from child care to school with a satisfactory level of school preparedness
to improve connections and transitions across early childhood services
(including between child care and preschool/kindergarten services)
- the needs of vulnerable or at risk children
with relevant Australian Government policies and programmes.
there are any specific models of care that should be considered for trial or
implementation in Australia, with consideration given to international models,
such as the home based care model in New Zealand and models that specifically
target vulnerable or at risk children and their families.
for enhancing the choices available to Australian families as to how they
receive child care support, so that this can occur in the manner most suitable
to their individual family circumstances. Mechanisms to be considered include
subsidies, rebates and tax deductions, to improve the accessibility,
flexibility and affordability of child care for families facing diverse
benefits and other impacts of regulatory changes in child care over the past
decade, including the implementation of the National Quality Framework (NQF) in
States and Territories, with specific consideration given to compliance costs,
taking into account the Government’s planned work with States and Territories
to streamline the NQF.
Many submitters relied in whole or in part on their submissions to the
Productivity Commission when contributing to the committee's inquiry. Some organisations
were unable to specifically tailor their submissions to the committee's terms
of reference, and instead provided the committee with copies of their
submissions to the Productivity Commission.
It should also be noted that the committee is conducting two inquiries
into aspects of Australia's child care system simultaneously. Given the potential for
overlap and the relevance of each inquiry to the other, the committee decided
against holding separate hearings for both, opting instead for a more streamlined
The committee has divided the evidence received into two reports, one
focusing primarily on the National Quality Framework (NQF), and another on
economic issues. Ideally the reports should be read together, and this report
focuses on the economic issues facing families and communities accessing ECEC
The committee thanks those individuals and organisations who contributed
to the inquiry by preparing written submissions and giving evidence at the
Notes on references
References in this report to the Hansard for the public hearings are to
the Proof Hansard. Please note that page numbers may vary between the proof and
the official transcripts.
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