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The value of high quality early childhood education
New research from PricewaterhouseCoopers has shown that investing in early childhood education and care delivers significant productivity benefits in both the short and long term.
The well-known short term gains of increasing workforce participation and female return to work rates are boosted by the all-important long term gains from when children in high quality child care reach maturity and enter the workforce.
PwC partner James van Smeerdijk said the report, Putting a value on Early Childhood Education and Care in Australia, showed that conventional approaches to valuing the benefits of early childhood education and care were too narrow.
"The long-term benefits from increasing childhood participation in quality early care and education have largely been ignored," Mr van Smeerdijk said.
The report's modelling uses three scenarios. First, it shows that children receiving quality early childhood education and care, defined in the report as education and care which either meets or exceeds National Quality Standards, would generate up to $10.3 billion in cumulative benefits to gross domestic product (GDP) by 2050.
Secondly, engaging children from families in the lowest income brackets who presently receive no formal early childhood education and care would boost Australia's GDP a further $13.3 billion by 2050.
And thirdly, in line with much of the existing modelling, the effect of a reform which reduces the net cost of child care by five per cent would increase female participation in the workforce and generate a $6 billion lift to national GDP by 2050.
Combined, all three scenarios would increase GDP by up to $29.6 billion by 2050.
"Increased participation in the workforce creates an immediate short-term benefit but this should really be seen as the starting point to creating the longer-term benefits from getting more children into quality early childhood education and care" Mr van Smeerdijk said.
"In the report when we refer to quality we are referring to any service that meets or exceeds the existing National Quality Standard," Mr van Smeerdijk said.
Mr van Smeerdijk said the research estimated that increasing access to quality early childhood education and care across all three scenarios would increase costs to government in 2050 by $412 million annually (in today's dollars) and would lead to increased costs for government in the short to medium term.
"That may seem like a lot of money but to put it into perspective consider that the present Federal Budget is roughly $410 billion per annum, so we're only talking about a 0.1 per cent increase in an area which we consider critical for the nation," Mr van Smeerdijk said.
"The longer term benefits such as increased tax revenues and higher employment would offset the increased costs and create a $1 billion direct benefit to the taxpayer in 2050."
Mr van Smeerdijk said the debate around the need for higher productivity often acknowledged the need for a highly educated workforce.
"The first block needed to build this workforce of the future is early intervention in childhood education, which numerous global studies show to be critical to a child's later numeracy and literacy levels.
"In addition to the pure economic benefit, there is the added social benefit that higher education levels bring with lower government expenditure on justice, on health and on welfare."
"And consider the fact that with more people employed in better paying jobs through the likely increase in numeracy and literacy, we can all benefit from the increased tax take and the fall in government health, justice and welfare costs."
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