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Speaker 1: Welcome to Fear and Greed Q and A where we

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Speaker 1: ask and answer questions about business, investing, economics, politics and more.

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Speaker 1: I'm Natalie McDonald and today what is universal childcare and

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Speaker 1: how could it change Australian business. Recently, the Federal government

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Speaker 1: took the first step towards a universal childcare system, hiring

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Speaker 1: Deloitte to work out what it would look like and

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Speaker 1: how much it would cost. Georgie Dent is CEO of

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Speaker 1: the Parenthood, Australia's leading parent advocacy organization. Georgie, Welcome to

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Speaker 1: Fear and Greed Q and.

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Speaker 2: A thank you so much for having me Natalie.

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Speaker 1: Firstly, Georgie, I'd love to drill down into the jargon

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Speaker 1: a little bit for those who may be out of

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Speaker 1: their child rearing years or yet to arrive there. What

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Speaker 1: do we mean when we talk about universal childcare?

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Speaker 2: So it's a really good question, and to be honest,

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Speaker 2: there are various definitions of what a universal early childed

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Speaker 2: education and care system would look like. I suppose the

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Speaker 2: way that the parenthood we would describe it is being

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Speaker 2: more similar to schools or hospitals. So when you have

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Speaker 2: a child who is of school age, you can enroll

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Speaker 2: them in your local primary school, and nobody will ask

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Speaker 2: how much money you make, how often you work, what

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Speaker 2: you do for a living. Your child will be entitled

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Speaker 2: to participate in the school by virtue of them being

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Speaker 2: a child. In Australia and moving towards a universal childcare

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Speaker 2: system is really about saying this infrastructure, the ability for

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Speaker 2: children to participate in high quality, affordable early education and

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Speaker 2: care is critical. It doesn't mean it's compulsory, but when

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Speaker 2: that piece of infrastructure isn't there, the choices and opportunities

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Speaker 2: for children, for parents and communities are greatly diminished. And

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Speaker 2: that's why it is. You know, I have described it

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Speaker 2: previously as sort of you know, the infrastructure project Australia

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Speaker 2: needs more than anything else.

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Speaker 1: There have been comparisons made as far as the funding

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Speaker 1: and the payment system goes with Canada. Is that with

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Speaker 1: the Canadian model be considered a gold standard? Is there

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Speaker 1: a gold standard when we look at the various models

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Speaker 1: and compare them with what we currently have.

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Speaker 2: So here in Australia we have got a childcare subsidy

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Speaker 2: that the federal government pays and that's basically the amount

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Speaker 2: of subsidy you get can range from sort of you know,

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Speaker 2: ninety five percent if you're on incredibly low income, but

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Speaker 2: it can also be you know, as little as you

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Speaker 2: might get twenty percent or twenty five percent of the

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Speaker 2: fee subsidized at the parenthood We have been critical of

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Speaker 2: the childcare subsidy as a funding mechanism for early education

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Speaker 2: and care because it is really inefficient. The A Triple

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Speaker 2: C did a big report into early education and care

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Speaker 2: that it published at the beginning of twenty twenty four,

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Speaker 2: and they said the childcare sub has had limited effectiveness

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Speaker 2: at putting any downward pressure on prices. So any early

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Speaker 2: learning service is entitled to charge whatever fees they like. Now,

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Speaker 2: what they tend to do is set up. They're more

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Speaker 2: often and more likely to set up in areas where

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Speaker 2: parents have got a higher capacity to pay high out

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Speaker 2: of pocket fees, because that's where it obviously becomes more

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Speaker 2: viable and more profitable, and the childcare subsidy funding mechanism

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Speaker 2: explains why. Then we've got parts of the country where

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Speaker 2: it's harder for a provider to make a profit, so

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Speaker 2: they're less likely to set up in an area where

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Speaker 2: families have got fewer resources, less capacity to pay out

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Speaker 2: of pocket fees, and so what the childcare subsidy has

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Speaker 2: done is it's driven up the out of pocket cost

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Speaker 2: for early education and care really considerably, so it has

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Speaker 2: risen considerably faster than inflation for the last five years.

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Speaker 2: It's also led to this situation we have where apply

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Speaker 2: really does depend on your postcode. And the other big

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Speaker 2: issue with the childcare subsidy in its current format is

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Speaker 2: that it hasn't had any impact at driving quality. So

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Speaker 2: we've had this situation where your ability to collect that

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Speaker 2: subsidy has not been determined by are you meeting all

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Speaker 2: of the minimum standards, are you investing appropriately in your staff,

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Speaker 2: what does your professional development look like? What is your

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Speaker 2: quality rating? So the funding has been quite disconnected from

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Speaker 2: the out of pocket cost, from supply from quality. And

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Speaker 2: the argument that we've been making is let's fund early

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Speaker 2: childhood education and care service directly so that we can

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Speaker 2: ensure services are being set up in every community where

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Speaker 2: there are children who need it, that services are completely

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Speaker 2: affordable for all families, and that the quality is the

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Speaker 2: high standard we need for children to benefit.

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Speaker 1: A lot of this does drill down into the heart

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Speaker 1: of you have a sector that is largely privately held.

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Speaker 1: If Georgie, if I'm understanding right then, and without wanting

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Speaker 1: to tangent too far, you're saying that a change in

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Speaker 1: funding models could close the gap on issues around child's

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Speaker 1: safety as well, if we're looking at those minimum standards. Obviously,

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Speaker 1: this is a topic that is so much in the

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Speaker 1: parental discourse at the moment.

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Speaker 2: So look, you know, there's two economic reasons for investing

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Speaker 2: in early child education and care. One of them is

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Speaker 2: the education and development of children. So we know that

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Speaker 2: when children have the opportunity to participate in high quality

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Speaker 2: early education and care before they start school, they're far

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Speaker 2: more likely to arrive at school developmentally on track. We

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Speaker 2: know that kids who have access to high quality early learning,

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Speaker 2: they over the course of their lives, they will enjoy

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Speaker 2: improved outcomes on health, social educational outcomes, and their economic trajectory.

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Speaker 2: The zero to five window is quite literally magically profound

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Speaker 2: in the development of children. And so when you have

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Speaker 2: high quality services and you get children having the auction

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Speaker 2: to participate before they start school, you quite literally secure

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Speaker 2: our future prosperity and future productivity. The second reason to

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Speaker 2: invest in all education and care is because it is

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Speaker 2: critical infrastructure that enables parents to participate in the paid workforce.

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Speaker 2: This is of course in the economic interests of individual

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Speaker 2: households who have most of whom rely on paid work

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Speaker 2: to feed, house care for their children, to raise a family.

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Speaker 2: But it's also good for the economy because the more

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Speaker 2: that parents are working, the bigger the revenue pile is

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Speaker 2: for the government. And they're the two sort of defining

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Speaker 2: features that we believe a new funding model should ultimately

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Speaker 2: be delivering.

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Speaker 1: It speaks to how critical it is the benefits of

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Speaker 1: getting this right for business, for the economy, as well

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Speaker 1: as of course family and children at the center of that.

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Speaker 1: As we discussed labor commissioning, Deloitte launch a two year

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Speaker 1: study of demand and costs. My sentiment would be that

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Speaker 1: this is far too lead to help families who are

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Speaker 1: currently in the dieped up depths of the cost of

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Speaker 1: existing crisis. But from a tangible outcome perspective, are you

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Speaker 1: hopeful of this leading somewhere?

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Speaker 2: So Deloitte has been asked to look at what does

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Speaker 2: it actually cost to deliver high quality early education and care?

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Speaker 2: And you know you're right when you say you know

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Speaker 2: this maybe isn't fast enough for families right now, and

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Speaker 2: it's not I would have loved for this work to

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Speaker 2: have been commissioned a decade ago. Two decades ago would

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Speaker 2: have been even better. But the main thing is this

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Speaker 2: work is being done, and why this is critical is

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Speaker 2: if we don't know what it costs to deliver quality

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Speaker 2: early education care, it's really difficult to be designing and

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Speaker 2: effective funding model to achieve those objectives. But because we

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Speaker 2: have got a highly fragmented system where we've got state

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Speaker 2: run preschools, we've got community run early education care, we've

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Speaker 2: got a lot of private provision of long daycare, it

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Speaker 2: means we don't have line of sight right now of

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Speaker 2: exactly what it costs to deliver early education. And if

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Speaker 2: we don't know what it costs, then we don't know

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Speaker 2: the extent to which the funding model is or isn't

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Speaker 2: delivering on the objectives it needs to be.

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Speaker 1: And to your point around the puzzle pieces that come together,

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Speaker 1: I would concede that, of course the government's changes to

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Speaker 1: paid parental leave, also the changes to seeperannuation definitely if

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Speaker 1: you zoom out, improve that that overall picture. Georgie, thank

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Speaker 1: you so much for talking to your fear and Greed

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Speaker 1: and sharing your insights.

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Speaker 2: Thank you so much, Natalie for having me. I really

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Speaker 2: appreciate it.

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Speaker 1: That was Georgie d and CEO of the Parenthood. If

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Speaker 1: you've got something you'd like to know, then send through

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Speaker 1: your question on LinkedIn, Instagram, Facebook, or at Fairangreed dot

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Speaker 1: com dot au. I'm Nashie Matt Child and this is

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Speaker 1: Ferm Breed Q and AM