Meeting Skills Shortages in an Expanding ECEC Industry

This report from the Carmichael Centre argues that Early Childhood Education and Care (ECEC) services should be treated as a strategic industry of national importance – not just a ‘market’, and not just a ‘cost’ item on government budgets.

Building a stronger, more accessible, and high-quality ECEC system is not just a top-ranking social priority for several reasons:

  • The ECEC sector supports hundreds of thousands of jobs.
  • It directly creates billions of dollars of value-added in the Australian economy.
  • It generates further demand for other sectors – both upstream, in its own supply chain, and downstream in consumer goods and services industries that depend on the buying power of ECEC workers.
  • It facilitates work and production throughout the rest of Australia’s economy, by allowing parents to work – although that goal would be much better achieved if Australia had a more comprehensive, universal, and public ECEC system.
  • ECEC enhances the long-term potential of Australia’s economy, and all of society, by providing young children with high-quality education opportunities – that are proven to expand their lifetime learning, employment, and income outcomes, and enrich their families and communities.

Australia’s current market-based system for ECEC funding and service provision is incapable of meeting the needs of parents, families, and the broader economy. A drift to the market-based provision of ECEC services has undermined public provision in Australia and diminished the quality of service and the conditions under which it is delivered.

From this crisis-ridden starting point, the staff recruitment and retention challenge in ECEC will become much worse, if in fact Australia were to make a long-term commitment to expand ECEC provision to adequately meet the needs of working parents (and the entire economy).

Much public debate over the viability of expanded ECEC, putting Australia on a par with other leading industrial nations, has focused on the fiscal dimensions of that undertaking: how would we pay for it?

If Australia is going to expand its ECEC system in line with the needs of working parents and employers, increasing funding to the Nordic-level average for ECEC must be considered, and ramping up high-quality vocational education for ECEC workers must be an immediate and highest-order priority to meet the workforce needs of expanded ECEC coverage.

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Rate rises are going to cause a housing affordability crunch

For most of the past decade the talk about housing affordability has focussed on house prices. As fiscal policy director, Greg Jericho notes in his Guardian Australia column, falling interest rates since November 2010 have made paying off a mortgage less onerous than it otherwise would have given the soaring house prices.

But that is about to change. 

The signal that interest rates are going to rise by possibly 2.5% points over the next 18 months means that for new mortgage holders the cost of repaying a mortgage is going to be harder than ever before - harder even than when interest rates hit 17% in 1990.

It is a hit that will only exacerbate standard of living problems as wages will struggle to keep up with the rising cost of of holding a mortgage - especially given the belief that wage rises need to be contained below inflation rises continues in economic debate.

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High inflation means real wages have plummeted

The March CPI figures showing that inflation rose 5.1% over the past 12 months is not just the highest level since the introduction of the GST it also signals the biggest fall in real wages since then as well. 

Labour market policy director, Greg Jericho, notes in his column in Guardian Australia that even if wages have increased by 2.5% in the next release (up from 2.3% in the 12 months to December) real wages will have fallen 2.5% in the past 12 months.

That would mean real wages would be back at 2014 levels and barely above where they were when the LNP took office in September 2013.

Worse still for low-income earners, in the past 12 months the prices of non-discretionary items rose 6.6%. For those whose income goes more towards paying essential bills than does the average household, the pain of these price rises has been much higher. Their real wages have likely fallen by more than 3% in the past 12 months.

This is why any gloating about a recovery from the pandemic must be tempered to consider the reality of workers' lives. It is not enough to point to lower unemployment if real wages are falling faster than they ever have outside of the introduction of the GST - especially for lower income earners. 

That is not a recovery; that is a failure. 

With interest rate rises now very much on the way, without wage rises that account for inflation and properly reward for increases in productivity, workers standard of living is set to fall and see them back where they were nearly a decade ago

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Free Education Can Rebuild Australia’s Public Universities

If the federal government lifts annual higher education spending to 1% of GDP, it could repair the destruction inflicted by the COVID pandemic and make universities more accessible and affordable for all Australians, according to new research from the Centre for Future Work at the Australia Institute.

The report analyses the current worrying state of Australia’s higher education sector based on current funding and policy trends, and provides an ambitious national vision for higher education that re-aligns the sector with its public service mission.

At the Crossroads, authored by Eliza Littleton, identifies seven key policy initiatives including free higher education for domestic students, that if implemented, would put Australia’s public universities on a path toward full revitalisation.

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We (still) need to talk about insecure work

Business groups and conservative media are happy to discuss insecure work as if it is nothing new - stable and part of a healthy economy that provides workers with independence. But this is not the case, with insecure forms of work - casual, gigs, temporary work and short-term contracts - taking up a growing share of jobs in Australia.

Taking this perspective to task in a piece for The New Daily, Jim Stanford and Mark Dean discuss how a much broader range of forms of insecure work face many workers in Australia today, with the issue not getting any better. This is not even a trend created by unavoidable conditions created by the pandemic; it has rather been a deliberate outcome of the federal government's labour market policies. Simply pretending it isn't an issue won't make it go away; nor will it provide us with sustainable solutions to the precarious situation that will keep facing more and more workers until the problem of insecure work is adequately addressed

This piece originally appeared in The New Daily here.


The election campaign needs to be more than a quiz show

The election campaign thus far has been dominated with gotcha questions that unfortunately have missed the vital need to examine the different policies on offer at a time when Australia's economy is in a state of extreme flux. 

Labour market and fiscal policy director, Greg Jericho writes in his Guardian Australia column that the recovery from the depths of the pandemic has overwhelmingly been on the backs of casual workers. It also has seen a large increase in the gap between people on JobSeeker and the number of unemployed. The rise of low paying, insecure work that has helped bolster the employment figures has also meant people who are working but still earning less than enough to keep out of poverty is remaining high.

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High-Quality Public ECEC Would Lift GDP, Government Revenues

Australia’s economy would get a powerful boost from stronger public early child education and care services, according to new research from the Centre for Future Work at the Australia Institute.

Accessible and affordable child care services would support improved labour force participation and more full time work by women – converging with trends in other industrial countries (especially the Nordic countries, where women’s labour supply is much stronger than in Australia).

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House prices means interest rates do not need to rise much to inflict great costs

The more than a decade long period of the Reserve Bank going without raising interest rates looks set to end. Rising inflation and the unwinding of the pandemic restrictions and border closures means that the emergency cash rate of 0.1% will soon go up. But at the moment the market expects before the end of next year that it will rise to above 3%.

But while that may have been a neutral rate in the past, the Centre's Fiscal and Labour Market Policy Director Greg Jericho, notes in his column in Guardian Australia, recent surges in house prices means such a rise would place an extreme burdon on mortgage payers - one not conducive to an economy still in recovery. 

It took nearly 6 years during the mining boom for the RBA to raise the cash rate by 300 basis points; currently the market anticipates the same rise occurring in 17 months.

That would massively limit economic growth for little purpose at a time when wage rises remains below inflation, and rather unlikely to occur given the Reserve Bank's recent hesitancy to slow the economy until real wage again start rising.

 

 

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A slap-dash budget revealing a government with no idea why it is in power

This year's budget was transparently targeted towards the May election.  

But as Fiscal and Labour Market Policy Director, Greg Jericho notes in his Guardian Australia column, the slap-dash and short-term nature of the measures reveals this government has lost any real reason for governing.

From the extra bonus of the low-middle income tax offset with no taper, which is now being used by businesses to argue against raising the minimum wage and the relative lack of concern about those in poverty while trying to exist on JobSeeker, this budget has all the hallmarks of an effort made up at the last minute and where poll numbers were more important than any economic figures

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Budget 2022-23 Wastes Fiscal Windfall on Election Gimmicks

The Commonwealth Government has tabled its budget for the 2022-23 financial year. As the nation emerges from two years of lockdowns and border closures, with less than two months until a federal election, this budget is focused on getting the government re-elected -- rather than addressing the challenges of public health, stagnant wages, and sustainability facing Australia.

This failure is all the more regrettable given the enormous discretionary fiscal resources which the government has at its disposal: the budget projects $133 billion in extra tax revenues over the next five years, compared to its MYEFO projections just three months ago, thanks to strong economic growth and rising nominal GDP. But instead of ploughing those revenues into reforming human services (like health, aged care, early child education, or disability services), undertaking a genuine policy to revitalise domestic manufacturing, or accelerating the energy transition, the government has prioritised one-time cash handouts to entice voters in the upcoming election.

In this comprehensive budget overview, the Centre for Future Work's team of economists unpacks the budget, considers its effects, and suggests alternatives.

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