Australia’s early childhood education and care (ECEC) policy and funding settings have driven strong growth in childcare places for relatively low public investment. But the way the sector has grown matters.
Australia has relied on a managed market model, where public subsidies support a mix of providers to deliver services. The sector has been shaped by the sophisticated approaches designed to match the demand and supply for childcare in the most cost-effective way possible.
Recent high-profile reports of serious safety breaches in ECEC have rightly prompted concern and calls for stronger oversight. This report examines how the design of Australia’s ECEC system — including its funding model, provider management types, workforce settings, and relatively low barriers to entry and exit — may be creating conditions that increase instability and risk.
Key findings
- Over the last 25 years in Australia, the number of long day care places increased by over half a million, growing from 190,900 in 2000 to over 720,000 by 2025. Most of this growth has been in private for-profit providers, which now make up 74% of long day care places. This shift has profoundly changed the ECEC landscape in Australia.
- The growth in long day care places has been accompanied by substantial instability, or what we describe as ‘churn’, in the ECEC system. Since 2013, about one-third (32%) of long day care services open in 2025 had changed approved provider. This means the registered legal operator of the service had changed. The rate is higher in for-profit centres where 40% have changed provider, compared to 11% of all other centres.
- There have also been significant workforce pressures contributing to high turnover. An analysis of Australian Tax Office data shows that in 2022-23, the duration for more than half of jobs in child care services (52.4%) was less than one year. This is more than double the rate for jobs in primary and secondary education (24.5%).
- Early childhood educators and child carers have some of the lowest median wages, at approximately $34.30 per hour compared to the national average of $42.40. This is also much less than the median wage of $62.00 per hour for school teachers.
- There is also evidence that for-profit providers are more likely to have enforcement actions recorded. Enforcement actions are a broad set of actions ranging from quality measures to safety breaches. Centre-based services run by large private for-profit providers (those that operate 25 or more services) were over three times more likely (229%) to have an enforcement action recorded than all other large providers.
- Governments should investigate funding that is based more on the cost of high-quality provision, rather than using the existing market benchmark price. A model that focuses on the actual costs incurred by providers to deliver high-quality services, including wages, infrastructure and operational expenses, would remove some of the pressures currently built into the system.
- The Early Education and Care Commission foreshadowed by the Australian Government should be established, and it should play a leading role in stewarding the sector towards a new approach.
This report highlights how Australia must balance policies designed to grow childcare places and keep costs down with the needs of children, families and communities. To get the most out of our ECEC sector, Australia needs to look beyond immediate fixes and examine the fundamentals of how the sector operates.
