Australia’s early childhood education and care (ECEC) system has expanded rapidly in recent years, backed by major public investment. However, this growth has not yet translated into improvements in productivity or consistent increases in high-quality service delivery.

In collaboration with Mandala, Building a high-performing ECEC system brings together linked microdata, National Quality Standard (NQS) ratings and economic modelling to provide the deepest look yet at how the ECEC system is performing, and what is needed to strengthen it.

Modelling shows that lifting the bottom quintile of services to the performance of the top could increase GDP by $15.7 billion by 2060, alongside rising employment, private investment and government revenue. These gains reflect both improved productivity and the long-term developmental benefits of higher-quality early learning experiences for children.

The report highlights significant barriers limiting performance gains — including persistent workforce shortages, declining Diploma enrolments, high turnover, and substantial administrative and compliance burdens. Without addressing these constraints, many services will remain unable to translate funding into sustained improvements in quality.

This report was commissioned by the Front Project to build a clearer, more evidence-driven picture of how Australia’s ECEC system is performing — and where targeted reform can have the greatest impact.

Mandala undertook the analysis using firm-level microdata, NQS ratings and modelling to assess both productivity and quality across thousands of providers.

Despite CCS expenditure more than doubling since 2010, productivity in the care sector has flatlined, and fewer services are achieving Exceeding NQS ratings than in previous years. These trends highlight a widening gap between investment and impact, signalling the need for more precise, system-wide approaches to improving outcomes.

There is substantial variation in both quality and productivity across the sector. Only a small group of providers achieve strong results on both dimensions, while many more fall into the lowest-performing category. This level of granularity shows that traditional measures alone cannot capture the realities of ECEC performance.