Child Care Wages and Workforce Strategies – Looking at Australia: What Do They Have That We Need?

Canada has a crisis on its hands – a child care workforce crisis.  Already, child care operators across the country are unable to find staff; rooms are closing and centres are closing because of the inability to attract and retain early childhood educators.  That’s BEFORE the estimated need for 60,000 new early childhood educators as we move to $10 a day child care. 

Australia is not the first country that springs to mind when looking for child care policies to emulate.  For instance, Australia funds child care with vouchers that encourage the growth of the for-profit sector and lead to ever more expensive child care services.  This kind of funding has made the buying and selling of child care real estate into big business.   

However, Australia does have a wage grid and a strategy for workforce development, which jurisdictions in Canada do not have.  We can learn from their example. 

Australia has something called a Fair Work Commission whose job it is to design the wage grid and set the minimum wages and minimum conditions of employment in different sectors.  Children’s Services is one of those sectors, and the award made by the Fair Work Commission is a legal document that child care employers have to follow.  Employees can bargain for more than the minimum, but employers cannot pay less than the minimum award rate. 

Here’s a link to the Fair Work Commission award for Children’s Services workers updated in November 2022.  There’s a detailed classification structure of qualifications and responsibilities that forms the basis of the wage grid.  The wage grid lays out the minimum hourly and weekly rates that can be paid for different classification levels in children’s services occupations.  The two most frequent qualification levels are for staff with a Certificate III in Children’s Services (typically a 6-month course) and a Diploma in Children’s Services (typically an 18-month course).  The current award sets the starting hourly rate for less qualified staff (Certificate III) at $24.76 per hour and for qualified educators with a Diploma at $29.17 per hour.  Wages rise above these starting rates with increased experience.  Minimum hourly rates for a Director of a child care centre (called long day care) range from about $35 to $40 depending on the size of the centre and experience.

The Children’s Services Award covers many but not all ECEC employees – most others are covered by the Educational Services (Teachers) Award. That award sets out the wage grid for Early Childhood Teachers (ECTs) who have a Bachelor degree qualification (typically a 4-year course) or higher. All ECEC services in Australia must engage or have access to an ECT for a particular amount of time per week, determined by the number of children in attendance. Entry-level pay for an ECT is $32.20 per hour and increases with experience.

Since late 2019, Education Ministers across Australia have led a process involving extensive consultation to develop a ten-year strategy to build up and support the children’s education and care workforce.  It lists 21 actions – short, medium and long term – to be implemented over the ten-year period.  There is an implementation and evaluation plan to shape and ensure progress of this workforce strategy.

On top of all that, Australia is collecting detailed data about its workforce from all service providers (response rate of 99%).  There is a National Workforce Census, which is a population survey of early childhood education and care service providers across Australia.  It collects data on service usage, children with additional needs, access to programs and staffing.  On the workforce specifically, the census collects information about hours of work, qualifications, exemptions from qualification requirements, experience and tenure, professional development, gender, age, and Indigenous status of staff members.  The survey also collects data about whether these staff members earn the award-level wage (as determined by the Fair Work Commission) or a higher wage, and if higher by how much.  So, for instance, in the 2021 Workforce Census report we find that 57% of contact staff in child care centres earned the award rate, 34% earned above the award rate and for 9% of staff the wage rate was unknown.

None of this is perfect, of course.  Early childhood educators in Australia still receive low wages relative to many other workers and there is a movement for an immediate wage rise to keep educators in the sector.  However, many of the elements necessary to know about and improve wages and working conditions are in place in Australia.  I wish I could say the same about Canada.

Do You Want to Know How to Make Child Care Expansion Happen in Ontario?

I’m done some work recently with Building Blocks for Child Care (B2C2) on how to facilitate the expansion of not-for-profit and public child care in Ontario. They are an organization that knows a lot about all the different steps necessary to expand child care services – planning, design, rules and regulations, financing. With their advice, I wrote a primer called How to Make Child Care Expansion Happen in Ontario, giving 10 recommendations for action in Ontario to make not-for-profit and public child care grow.

Briefly, they are:

  1. A system of capital grants and loan guarantees for not-for-profit and public operators
  2. Creating public planning mechanisms with provincial, municipal, school board and community members
  3. An inventory of publicly-owned lands and buildings suitable for child care expansion
  4. Mandate where possible the co-location of licensed child care services whenever business and housing developments happen
  5. Explore the use of Land Trusts to preserve the preservation of child care assets in public hands for future generations
  6. Use provincial legislation and regulations to control transfers of child care assets and ensure they are not controlled by big-box corporate child care chains
  7. Early guarantees of operational funding and licensing of not-for-profit and public operators that plan expansion following public plans.
  8. Development and implementation of a province-wide salary and benefits grid and much more funding to increase compensation of educators and other staff. Recruitment and retention of qualified educators is Job #1.
  9. Transparent and effective future funding guidelines to support expansion. Assistance to municipalities to implement financial accountability measures in a long-term funding model.
  10. Public funding of organizations such as B2C2 that support not-for-profit operators to negotiate hurdles associated with expansion of child care services.

It’s not rocket science. These are some obvious steps to help the necessary expansion of not-for-profit and public child care services. Parents and children will suffer when expansion doesn’t happen. Soon there will be long waiting lists to get into child care facilities in Ontario if the government does not act now.

Accessibility and Quality of Child Care Services in Quebec

These (link below in next paragraph) are slides from a recent webinar presentation I made along with colleagues from Équipe de recherche Qualité des contextes éducatifs de la petite enfance at UQAM. You can listen to the French version of my talk  https://youtu.be/R-JIAjvfQew or the whole webinar https://qualitepetiteenfance.uqam.ca/evenement/leducation-a-la-petite-enfance-sinvite-dans-la-campagne-electorale-27-septembre-2022/

But, I have also reproduced most of that talk in English here:

Christa Japel has also done similar work here https://childcarecanada.org/blog/learning-experience-access-and-quality-qu%C3%A9bec%E2%80%99s-profit-child-care

Give Them an Inch and They’ll Take a Mile: The Story of For-Profit Child Care in Ontario

The Ministry of Education in Ontario is beginning to understand that they really can’t satisfy for-profit child care providers with anything less than the full cake and eat it too.  The Ontario government has bent over backwards to accommodate the for-profit child care operators; they want them to opt into the Canada-wide Early Learning and Child Care (CWELCC) system.  What has the Ministry done so far for the for-profit operators?

  • It changed the regulations so that municipalities (mandated to be Service System Managers) no longer have the discretion to sign purchase-of-service agreements only with not-for-profit providers (16 of the 47 had this type of provision);
  • It changed regulations so that measurement of quality in a centre could not be used as a criterion for eligiblity for CWELCC sign-up;
  • It completely gutted the new Management and Funding Guidelines for 2022 which the Ministry itself had established back in April.  The April version of the guidelines affirmed that municipalities should judge whether the funds given to operators in 2022 were based on actual costs.  In other words, the municipalities should judge whether operators had ineligible expenditures or excesssive profit claims.  The August Guidelines eliminated these provisions.
  • It ordered municipalities to collect very little financial data from operators.  The April version of the Guidelines said that “CMSMs/DSSABs are required to collect sufficient and detailed financial information from Licensees…. CMSMs/DSSABs will review all financial components including cost and expense line items for reasonability and eligibility, while ensuring CWELCC System objectives will be achieved….”  The August version of the Guidelines said “Information collected from Licensees to support implementation should be kept to the minimum amount necessary to meet the reporting requirements outlined in the CWELCC Guidelines….”

As of October 18th, the Ministry of Education has announced that the August 2022 Guidelines will continue for 2023; there will be few controls over how child care operators spend the revenues they receive from the CWELCC program.  Information collection will be kept to a minimum.  All of this despite the fact that, with a 50% cut in fees at the end of 2022, more than twice as much government money will be going to operators.

Ontario’s Action Plan (part of the CWELCC Agreement with the federal government) said there would be a revised allocation methodology in 2023.  That didn’t happen. Now, the new costs-based funding system will be in place for 2024.

But that’s not enough concessions as far as the for-profit operators are concerned.  They want more.  Sharon Siriboe, the director of the Ontario Association of Independent Childcare Centres wants guaranteed funding rules before for-profit operators will join the system.  “How can any small business remain viable and be asked to make such significant changes with only 14 months of clarity?”

What is the problem here?

Ontario signed an agreement with the federal government back in late March of 2022 – the Ontario-Canada Canada-wide Early Learning and Child Care Agreement.  In it, Ontario committed itself to the vision of building a largely not-for-profit system of accessible, affordable, inclusive child care services of high quality with federal money – $10 Billion of it over 4 years.

In Section 4.1 of that agreement, it states that “Ontario intends to maintain and build upon its existing robust accountability framework by introducing a further control mechanism. Ontario proposes to implement a cost control framework following the signing of the agreement that will be in place for all providers that opt into the Canada-wide ELCC system. The Parties are interested in approaches to ensure the sound and reasonable use of public funds, ensuring that costs and earnings of child care licensees that opt-in to the Canada-wide ELCC system are reasonable and that surplus earnings beyond reasonable earnings are directed towards improving child care services.”  

I don’t really like calling it a “cost control framework”.  It would be better to call it a “wise spending of public dollars” framework.  The objective is not to have costs that are as low as possible; the objective is to spend public dollars sensibly to achieve the objectives of affordability, accessibility and quality.  Ontario has agreed with the federal government that there will be a mechanism that ensures that all providers spend public funds wisely and that both the costs claimed by these providers and the earnings (profit) claimed by these providers are reasonable in achieving the objectives of this new child care system.

What is this new cost control/wise spending of public dollars framework?   Ontario tries to claim they have one already, but they don’t.  They have what we could call a fee control framework.  In other words, base fees for every operator are frozen at whatever their value was on March 27, 2022.  Each operator will get revenue from government equal to 25% of this base fee if they join CWELCC in 2022.  The operator will use these funds to backdate a 25% fee reduction to parents.  There will be another cut to fees at the end of December.  This will take fees down by 50% compared to the level they had in 2020. And, in 2023, operators will get revenues from government to cover these fee reductions for parents.  These rules control the fees charged by operators, but they in no way validate the costs and earnings that are covered by the new government revenues.  There is effectively no reporting on what these costs and earnings are.  There is no way to calculate the amount of surplus taken by operators, or to see how it is used.

That’s the way the for-profit operators like it.  No requirement for reporting on how the public funds they receive are spent until well into 2024.  Even then, only a requirement for an annual audit. No need to justify the salaries paid to management.  No need to justify the profits they claim each year, which are built into the fees they charge.  We know from the CCPA fees survey that for-profit operators in cities across Ontario charge higher fees than not-for-profits.  Their median fees are between 8% and 40% higher than the not-for-profits, depending on the municipality. Why?  Are these fee (and revenue) differentials justified?  The for-profit sector would prefer not to tell.  They don’t want detailed accountability for the public funds they receive.

I have recently argued that the Ministry of Education should be requiring all operators in 2023 to submit detailed budgets of planned expenditures.  These would be reconciled against actual spending (and profit) at the end of the year.  This, along with related operating data, could provide the detailed costs and spending information the Ministry of Education would need to design a new costs-based funding system.  But the Ministry doesn’t want to do that.  Instead they are giving the for-profit child care operators a free pass for another year.  The Ministry plans to develop a new costs-based funding system for 2024 with virtually no costs data upon which to build it.  And, the for-profit operators are even objecting to this.  They apparently want the free pass to continue for ever.

Why, you might wonder?  From an economic point of view, the position of the for-profit operators is quite rational.  They have a licence to provide child care services in Ontario and many of them make good money providing these services.  From now on, having a licence to provide child care services to children 0-5 in Ontario is going to mean receiving hundreds of thousands of dollars a year in guaranteed government funding; by September 2025, government-provided revenues will cover over 80% of the per-child costs of most centres. Access to this kind of government funding is scarce; not everyone can get a licence   In a similar situation in Quebec, some fixed-fee centres have been able to sell their licences to new operators for over a million dollars.  That’s not selling equipment or real estate; that’s just the price of buying the licence.  In Ontario, the fewer the reporting requirements, the fewer the controls over how operators spend their money, the fewer the controls on profit, the higher will be the price when you come to sell your licence.  Large big-box for-profit child care chains may be willing to pay top dollar for existing licences of small for-profit operators if there are very few controls on the reasonableness of costs and earnings.  So, the demands of the for-profit operators are rational; they’re just not very good for Ontario children, families and for the building of a financially accountable child care system.

FOUR URGENT STEPS TO BETTER CHILD CARE HEALTH

The second theme in today’s publication by IRPP (see earlier blog post for the first) is what needs to happen now to make sure that $10 a day child care works out for families and children. There’s a tsunami of additional demand for child care on the horizon as child care fees plummet and we’re not ready for it. Many provinces have not placed much emphasis on expansion of not-for-profit child care spaces and haven’t provided the funding or tools necessary to make it happen.

In today’s publication, which is available here…

IN ENGLISH:  https://irpp.org/research-studies/early-learning-and-child-care-in-canada/ 

IN FRENCH:  https://irpp.org/fr/research-studies/apprentissage-et-garde-des-jeunes-enfants-au-canada/

… I make the following recommendations to federal and provincial governments:

Rapidly expand not-for-profit and public child care facilities.  Provincial and territorial governments should provide substantial capital grants or loan guarantees to not-for-profit operators to accelerate a planned and coordinated expansion. Large jurisdictions should enable specialized development agencies to design, plan and build not-for-profit centres, and should encourage the delivery of more child care services by municipalities, colleges and school boards.

Increase the wages of early childhood educators. With little improvement in pay for child care educators in over 30 years, wages have to rise substantially to recruit and retain enough qualified early childhood educators to meet demand and maintain or improve staff-child ratios.

Be prepared to inject more funding. No one has yet addressed whether $9 Billion a year is enough money to provide universal $10 a day child care in all jurisdictions, especially those where child care fees have been particularly high for years (e.g., B.C., Alberta, and Ontario).  It probably isn’t. A cost-shared federal-provincial supplementary financing program in high-fee jurisdictions would make good fiscal and social sense, as governments get a substantial revenue boost from the increased labour force participation of mothers.

Close gaps in maternity and parental benefits. There is a stark difference in the coverage and generosity of maternity and parental benefits between Quebec, which has its own program, and the rest of Canada, which relies on federal Employment Insurance. The federal government should address these gaps as part of planned Employment Insurance reforms.  It should follow through on the Liberals’ 2019 election platform promise to ensure that parent who do not qualify for paid leave through EI receive income benefits during the first year of their child’s life.