IBISWorld Market Research
Although the industry is fragmented at the state level, it has recently been the target of federal reform and standardisation.
Melbourne, Australia (PRWEB) January 17, 2014
The Preschool Education industry in Australia is currently the target of Federal Government reform. Although the industry is fragmented at the state level, the Coalition of Australian Governments (COAG) agreement has ensured Federal Government support and funding for the early education sector. In December 2009, COAG introduced the Early Years Learning Framework, to improve the quality and national consistency of preschool and childcare services. According to IBISWorld industry analyst Lauren Magner, “the framework set out new compulsory national standards for early childhood education and care providers and included a National Quality Standard, minimum staff-child ratios, staff qualification requirements, a quality rating system and a new national body.” It also included establishing universal access to 15 hours of preschool education for 40 weeks of the year to all four-year-olds by the end of 2012-13. To help providers meet the new requirements and execute these reforms nationwide, the Federal Government committed $955.0 million to states and territories spread over the five years through 2012-13.
The additional funding is the main reason for strong revenue growth over the past five years. The cash injection has not only enabled more children to enrol in preschool programs, but industry participants are now able to provide additional spaces. “As a result, industry revenue is forecast to grow at a compound annual rate of 12.6% over the five years through 2013-14,” says Magner. The industry will continue to ride the wave of growth following the final government payment in 2012-13, with revenue expected to rise by 6.7% in 2013-14, to $1.8 billion. The industry has a low level of concentration, as a large proportion of preschools are community-managed. No one operator controls a significant share of revenue.
Although industry participants have had access to a larger pool of funds, the strict National Quality Framework requirements that operators have to comply with is expected to impose larger costs on Preschool Education industry operators. The higher staff-to-student ratios and overall higher qualification requirements are likely to increase wage pressures in the industry. Consequently, industry profit margins are expected to contract over the next five years. Even though 2012-13 was the last year of extra funding from the Federal Government, the government's ongoing commitment to maintaining universal access is expected to help sustain revenue growth. A rise in the population aged four years old will be one of the major factors driving revenue over the next five years.
For more information, visit IBISWorld’s Preschool Education report in Australia industry page.
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IBISWorld industry Report Key Topics
Industry participants are primarily engaged in providing accredited pre-primary school education. Preschool programs are educational in nature and are designed to introduce children to the ideas, attitudes and behaviour required in a school environment. Preschool education is generally directed at children aged three to five years and is provided by staff that have training in an educational field. Preschools may be operated by government, community organisations or the private sector.
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