Government expenditure on early childhood education and care (ECEC) has grown
substantially since 2008, and in 2018 was approximately $9.2 billion. This is an increase in
real terms since 2008 of almost 140%.
The overall increase in government expenditure is due in part to an increase in participation
across the ECEC sector. It may also be related to investments to lift the quality of ECEC
services, to improve children’s learning and development.
In 2018, government investment in ECEC fell for the first time in at least a decade.
The vast majority of government expenditure, 83.5% in 2018, is in the form of child care
subsidies, with preschool delivery accounting for the remaining proportion of expenditure.
Although private expenditure on ECEC is not systematically captured, estimates based on
available data indicate that Australian families and carers are spending between $3.8 billion
and $6.8 billion on ECEC per year. This private investment constitutes a significant
proportion of Australia’s total investment in ECEC.
While per child expenditure on ECEC is difficult to calculate, estimates indicate that it
remains below the base level of per-student expenditure in primary schools; despite the
higher ratios of educators to children required to deliver quality ECEC services.
Only expenditure on preschool services is officially counted as education and training by the
Australian Bureau of Statistics. Although all ECEC services are required to support early
learning, child care subsidies are not recognised as expenditure on education.
Promising areas of policy reform include:
1. Improving the transparency and certainty of government funding for ECEC, including
achieving stability in preschool funding; and reporting on real changes in ECEC
investment by controlling for variables related to participation.
2. Investing in quality in all types of ECEC services to maximise the return on
government investment in the sector. Classifying child care services as ‘education
and training’ may clarify the investment logic for early learning.
3. Improving the transparency of private investment in ECEC, including better data
collection and reporting, and simplifying funding arrangements for families.