How childcare centres can save and thrive

Since 2012 daycare costs have skyrocketed for parents by almost 40%, with fees charged likely to only continue to grow.

The chief culprit of these excessive increases is the former Gillard Labor Government, who mandated childcare centres had to hire more and better-qualified staff, through its National Quality Framework (NQF). Worryingly, however, one in three centres has flunked the expensive NQF standards they are required to meet. However, what effect has the NQF – and the resultant compliance action – had on centres and the state of the industry? What are the ‘knock-on’ effects to fees, parents and the kids themselves?

Industry Snapshot

Australian Bureau of Statistics data, combined with a recent report by the Mitchell Institute think-tank at Victoria University, reveals some fascinating developments in the childcare industry. They show:

  • centres are charging one-third more for daycare, averaged across the capital cities;
  • 25% of daycare centres have failed to meet the new NQF standards covering the health, safety and care of children;
  • four years after the NQF came into operation, 25% of centres are still awaiting a quality rating by the Australian Children’s Education and Care Quality Authority (ACECQA);
  • only 44 of 11,261 centres given a rating so far by the ACECQA have been ranked “excellent’’;
  • taxpayer spending on childcare subsidies jumped by 250% over 10 years, to reach $7.2bn in 2014/15 (The Australian newspaper also reports The Turnbull government plans to boost annual spending to $11bn in 2018/19);
  • parents and taxpayers spend an average of $13,432 p.a for every child in preschool (against an ave. $10,432 for industrialised countries);
  • preschool costs even more than an ave. $9271 spent per primary student or $12,193 per secondary student;
  • kids from high-income families are twice as likely than poorer children to attend childcare;
  • 43% of children younger than five now attend childcare — up from 34% a decade ago; and
  • 95% of Australia’s four-year-olds are enrolled in taxpayer-subsidised preschool programs for 15 hours a week.

There are even calls from Mitchell Institute Director Sara Glover for preschool to be free to all three and four-year-old children! Are the fees parents are being slugged and the industry costs, and the massive federal government subsidies which continue to prop-up such costs, sustainable for the industry (and indeed the country) in the so-called end of the ‘age of entitlement’? What effect would free childcare then have on the industry and the Federal Government deficit now, and over time?

Seven Super Tips to Get Your Centre Flying

Childcare centres can’t always rely on ‘rivers of money’ washing down to them from parents and governments. They should prepare for less funding-support, or potentially having to compete with new, disrupting entrants to the early-education industry with a fraction of their operating costs. Centres must risk-proof and future-proof their businesses by ensuring they set up proper audit systems to comply with the NQF, as well as ‘cut their coat according to their cloth’ through properly managing their staff and resourcing to ensure operating costs are as competitive as possible.

Some simple (yet commonly overlooked) human resource management tips for centre operators to adopt, which will give them the best chance of successfully managing their centre staff and reducing costs, include:

  1. Properly induct your new employees. Send them a ‘new starter pack’ guide prior to them starting employment which covers off the practical (bank account, super, next of kin details, and photocopies of academic qualifications obtained for the centre personnel records). This also creates the right environment for the first day (welcome message/sentiment, some info about the centre and its values, mission and ethos, information on co-workers, first aiders, and access and operation times and systems etc.).
  2. Ensure entitlements and obligations (on both the new employee and the centre) are made explicit through a clear but detailed employment contract, which the new employee has signed and you have kept a copy for personnel records).
  3. Conduct probationary ‘check in’ meetings with the new employee at or around 3 months’ worked, and just prior to 6 months’ service. The three-month interview should be used for the new starter to be told of the areas he/she is performing well, and those job aspects the centre would like him/her to work on and improve. The meeting just before the six-month mark is for the centre to decide whether the new employee has done enough to justify being kept on post-probation (and in some cases for the new employee to choose whether this centre is for them long-term). A ‘hard’ conversation at this point, if the fit is not right or things just aren’t ‘gelling’ is much better than enduring the ‘loveless marriage’ between centre and employee for a number of years – with manager and employee alike avoiding the ‘uncomfortable’ decision which has to be made.
  4. Conduct periodic reviews with your staff to assess them, and feed back to them, the areas they are meeting, exceeding and not meeting your expectations. Ideally, this is done in a scheduled, regular 6 month pattern, and is done with all employees (to avoid any perception a certain employee is being ‘singled out’).
  5. If you have an employee (or a few) who are holding you back from meeting health and safety, government regulations or parent expectations, put those employees on a formal performance improvement process, where you assist, mentor and monitor them on the specific areas they are not meeting your expectations and directed to improve in those areas. As per the above, if only 44 of 11,261 centres given a rating so far by the ACECQA have been ranked “excellent’’, there is enormous scope for staff improvement here.
  6. Know your modern award minimum pay and conditions and regularly check your modern award (especially each July-August) to ensure you are paying your employees at or slightly above the mandated minimum pay rates.
  7. Above-and-beyond the modern award, increase hourly pay or conditions according to what works with you and your centre, and what you can afford. Incentivise your staff through rewarding ‘high-performers’ and not awarding increases to those doing the ‘bare minimum’ (note – as far as the modern award permits). If there is an expensive industry-wide, union-promoted EBA which doesn’t suit your operations, or contains many benefits unsuited to your centre or operations, choose not to voluntarily sign up to it! Prefer instead the centre-specific arrangements you have made which suit you and your staff best.

With a massive increase in child care fees these past 4 years, coupled with more staff ‘on the ground’, childcare centres have the building blocks in place to use this to redouble their efforts to meet NQF expectations, and obtain that ‘excellent’ rating by ACECQA. In doing so, childcare centres will begin to meet the parent, government and community expectations around the increased ‘cost’ of childcare in Australia.

Want to improve your HR and employee practices in your centre? Contact Workplace Wizards, a specialist workplace relations consultancy focusing on solving your people problems and unlocking the potential in your organisation. Contact our Director, Mark Ritchie, on 0458 6444 69 or mark@workplacewizards.com.au

Refer also:

http://www.mitchellinstitute.org.au/wp-content/uploads/2016/04/Quality-Early-Education-for-All-FINAL.pdf

http://www.abs.gov.au/ausstats/abs@.nsf/mf/4402.0

Mark Ritchie

Mark Ritchie

Mark is passionate about helping Australian businesses efficiently resolve their industrial relations issues. Mark has demonstrated proficiency advising managers, executives and boards of small to medium-sized enterprises, as well as some of Australia’s best-known companies, on both litigious and non-litigious matters.

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