Introduction

1. The Australian Government established the Community Support Program (CSP) during 2004 to improve access to child care, especially in areas where the market would otherwise fail to provide services. The Department of Education, Employment and Workplace Relations (DEEWR) administers the CSP on behalf of the Australian Government.¹

2. Access to high-quality and affordable child care can be an important factor in a parent’s decision to remain in or return to the workforce. There are a variety of factors which affect access to child care. These include the geographic proximity of services to parents’ work or home, the availability of places at existing services, the availability of alternate care types and the cost of accessing care.

3. During the quarter ending June 2011, 964 000 children attended formal² child care in Australia, representing more than 25 per cent of Australians aged 0–12. These children attended a total of 14 441 approved child care services, of which there are several different service types. As at June 2011, approximately 60 per cent of children in child care attended Long Day Care (LDC), approximately 30 per cent attended Outside of School Hours Care (OSHC), and approximately 10 per cent attended Family Day Care (FDC).³ In addition, in June 2011, the Australian Bureau of Statistics (ABS) estimated that parents of 148 600 children had an unmet need for formal child care. Of these, LDC was mainly required for 48 per cent of the children and OSHC was mainly required for 34 per cent.⁴

4. There are three main forms of assistance available to the different types of formal child care services through the CSP. These are establishment, sustainability and regional travel assistance. In 2011–12, $104 million in CSP funding supported 12 per cent of the total number of formal child care services in Australia.

5. Under the CSP, payments are made to providers of child care for services that meet specified eligibility criteria. These criteria differ for establishment, sustainability and regional travel assistance, and according to the type of child care. Similarly, payment rates vary for each assistance and child care type. The eligibility criteria and payment rates depend on a range of factors, including the remoteness of a service and the number of child care places utilised.

6. The CSP is a component of Australian Government funding provided directly to child care services, at an estimated total cost of $327 million in 2011–12. In addition, the majority of Australian Government child care funding supports eligible families through the Child Care Benefit and Child Care Rebate, at a combined estimated cost of some $4.2 billion in 2011–12.⁵

Audit objective and scope

7. The audit objective was to assess the effectiveness of DEEWR's administration of Community Support Program funding. The three high level criteria used to make this assessment were that DEEWR:

• effectively planned for program delivery;
• soundly managed program delivery; and
• effectively monitored and reported on program performance.

8. In 2010–11, the ANAO audited the effectiveness of DEEWR’s administrative arrangements for the delivery of two types of Indigenous child care services through CSP payments.⁶ This audit focuses on CSP payments made to formal child care providers.

Overall audit conclusion

9. Through the Community Support Program (CSP), the Australian Government contributes to the establishment and operating costs of child care services so as to improve access to child care. The program aims to focus support in areas where the market would otherwise fail to provide services. In 2011–12, under the CSP, DEEWR provided a total of $104 million to help providers establish and/or operate over 1700 formal child care services. The child care service providers interviewed by the ANAO emphasised the importance of CSP funding to their ongoing provision of quality child care services to communities.

10. DEEWR’s administration of delivery arrangements for the CSP funding was generally sound. DEEWR had effective processes in place to assess the eligibility of applicants in a timely fashion and payments made under the program and examined by the ANAO were accurate and timely. In relation to program monitoring, provider reporting arrangements have achieved a reasonable balance between the level of assurance obtained from child care providers on their service delivery, and the associated workload for those providers and DEEWR. DEEWR has also continued to improve program delivery arrangements in response to a series of reviews.

11. While the administration of delivery arrangements has been generally sound, DEEWR has not evaluated the effectiveness of the program’s design in improving access to child care since assuming responsibility for the program in 2007. During this period, DEEWR has maintained the CSP eligibility criteria and payment rates used to target funding, and the child care sector has continued to expand with increasing demand for places.⁷ In this context, the majority of CSP funding to formal child care for 2011–12 (approximately 71 per cent) was allocated to support the sustainability of one type of child care—FDC, which accounts for approximately 10 per cent of all children in formal care.⁸ In contrast, 21 per cent of CSP funding was allocated to the two main types of care—LDC and OSHC, which account for approximately 90 per cent of all children in formal care. While there are a range of factors which influence access to child care, these points suggest a need for DEEWR to assess whether the program’s settings remain appropriate for achieving the greatest gains in relation to the program objective. Having reviewed the program’s settings, DEEWR should develop suitable performance measures as a basis for its ongoing assessment of the program’s performance.

12. The ANAO has made two recommendations directed towards DEEWR evaluating and strengthening the effectiveness of CSP funding.

Key findings by chapter

Chapter 2: Planning for program delivery

13. As CSP funding is available to only a small proportion of all formal child care services (12 per cent in 2011–12), it is important the funding is appropriately targeted so as to improve access to child care. Access to child care can depend on a number of factors, such as: the geographical access to the service (the proximity of a service to a parent’s home or work); the availability of places at existing services; the choice of care type available; and the cost of care. However, DEEWR has not identified which of these factors the program aims to address. Furthermore, DEEWR has not analysed the child care market, which would involve identifying the areas where the market would fail to meet child care needs without CSP funding. DEEWR could clarify its approach to achieving the program objective through the development of an explicit program strategy which gives appropriate consideration to these factors.

14. In establishing CSP governance arrangements, DEEWR has clearly articulated the respective administrative responsibilities of its national and state and territory offices, developed and made publicly available detailed program guidelines and eligibility criteria, and assessed program risks. However, there would be merit in DEEWR updating its program guidelines, including to accurately reflect current payment rates and provider reporting arrangements. In addition, DEEWR’s risk management approach could be further strengthened by considering key risks such as the introduction of the National Quality Framework⁹, and by implementing, where appropriate, identified risk treatments.

Chapter 3: Delivering the program

15. DEEWR has built awareness of the CSP through publicly available guidance, and by advising child care providers about the program as part of general child care approval processes. In addition, the CSP application processes were suitably designed and provided relevant information for DEEWR to make eligibility assessments.

16. For a sample of provider applications and funding agreement files, DEEWR’s assessments of eligibility appropriately recommended services for funding in a timely fashion. There would, however, be merit in DEEWR strengthening its documentation of service assessments in some areas. These include providing better visibility that all of the CSP’s universal eligibility requirements were checked, identifying who conducted the assessment, and when it was completed.

17. A funding agreement had been completed for all of the sampled files where the service was eligible for CSP assistance. The ANAO tested the accuracy of payments made to LDC services¹⁰ , finding that the overwhelming majority of payments either aligned with amounts as per the program guidelines, or differed from those amounts for appropriate reasons.

Chapter 4: Monitoring and reporting the performance of the program

18. For the CSP, DEEWR has compliance processes which primarily rely on self-reporting by child care providers. DEEWR uses providers’ reports to monitor their adherence to the terms and conditions of the funding agreements. In particular, larger providers are required to provide an audited financial acquittal to provide assurance that program funding is spent appropriately. Over time, DEEWR has streamlined provider reporting arrangements and achieved a reasonable balance between the level of assurance obtained from provider reports, and the associated workload for those providers and DEEWR.

19. In oversighting delivery of the program, DEEWR monitors the number of services receiving assistance and program expenditure—an important consideration given the demand-driven nature of the program. However, there is a need for DEEWR to establish performance measures which directly address the program’s objective, and to use those measures to monitor and evaluate the program’s performance. DEEWR could also consider the potential benefits of conducting a formal program evaluation, to contribute to a better understanding of the CSP’s effectiveness. Improvements in these areas would support DEEWR’s child care policy advice, and its public reporting on the program.

Summary of agency response

20. The proposed report was provided to DEEWR for formal comment. The department provided the following response:

The Auditor-General's report acknowledges the effective administration of the Community Support Program (CSP) and notes the continued improvements implemented by DEEWR in response to recent program reviews.

The Department acknowledges the considerable shifts in the child care sector since it assumed responsibility for the CSP in 2007, and that it is timely to review the targeting of CSP funding. Implementation of the report's recommendations will assist the development of the child care market in the Australian community and provide a sound basis for future program evaluation.

21. DEEWR agreed with the two recommendations in this report. DEEWR’s responses to the recommendations are shown in the body of the report immediately after each recommendation.

Footnotes

¹ On its commencement in 2004, the CSP was administered by the then Department of Families and Community Services. Responsibility was transferred to DEEWR in December 2007 following Machinery of Government changes.
² A formal child care service is one that is approved by the Australian Government so that eligible parents can receive government funding to assist with the cost of child care.
³ Department of Education, Employment and Workplace Relations, February 2012, Child Care Update, June Quarter 2011, p. 2.
⁴ Australian Bureau of Statistics, May 2012, 4402.0 – Childhood Education and Care, Australia, June 2011. There is no clear trend in the estimated unmet need for child care. In 2008 and 2005, the estimated number of children with an unmet need for formal child care was 90 000 and 188 400, respectively. Australian Bureau of Statistics, October 2009, 4402.0 – Childhood Education and Care, Australia, June 2008, and November 2008, 4402.0 – Child Care, Australia, June 2005.
⁵ Department of Education, Employment and Workplace Relations, Portfolio Budget Statements 2012–13, pp. 36 and 38.
⁶ The two types of Indigenous child care services were Multifunctional Aboriginal Children’s Services and Crèches. ANAO Audit Report No.8, 2010–11, Multifunctional Aboriginal Children’s Services (MACS) and Crèches.
⁷ The number of children using formal child care services in Australia has increased from 804 000 in the September quarter 2005, to 964 000 in the June quarter 2011. Similarly, the number of child care services rose from 10 400 in the September quarter 2005, to 14 400 in the June quarter 2011.
⁸ In addition, as at June 2011, over 80 per cent of estimated unmet needs for child care mainly related to LDC and OSHC.
⁹ The National Quality Framework aims to raise quality and drive continuous improvement and consistency in education and care services. The framework began to take effect on 1 January 2012 with key requirements being phased in over time. Importantly, the framework requires higher educator-to-child ratios, higher qualified FDC and LDC service staff, and more stringent standards for the physical environment of child care services. These requirements will have implications for many services, including those in receipt of sustainability assistance.
¹⁰ The ANAO assessed LDC payments because payment amounts could be readily compared to ‘allowable amounts’ as per the funding agreements, due to the stepped nature of payment amounts.