Property developers blamed for 'childcare deserts' in NSW

Property developers investing in lucrative "farms for children" have been blamed for so-called "childcare deserts" in New South Wales, in a scathing report into the industry plagued by safety failures.

A parliamentary inquiry prompted by a Four Corners exposé last year on abuse and neglect in the sector, has linked the influence of real estate developers and investors to a lack of services in poorer suburbs.

Committee chair and Greens MLC Abigail Boyd accused for-profit providers of putting growth and revenue ahead of quality care in the report released on Wednesday.

"Every dollar that is taken in profit by a corporate early childcare company, or real estate mogul, or labour hire provider, is a dollar not being invested in quality and safety," Ms Boyd wrote.

'Farms for children'

The report included evidence from the head of consultancy company Divergent Education, Cheyanne Carter, who said centres were built to maximise "child per square metre" profit.

"We're creating zoos, farms for children, because no-one is regulating the design of these services, and the property is so profitable," Ms Carter told the inquiry in August.

In one case, she said 50 preschoolers were squeezed into a single room.

"[Developers] don't care about design. They don't care about supervision blind spots.

"They want as many children in that block of land as possible, without any consideration of how that actually impacts the children and the staff."

The report cited Australian Competition and Consumer Commission research that found investment in childcare real estate was "attractive" because of "long-term leases and stable tenants backed by government support".

The committee said it was concerned to learn about the role of the real estate sector in deciding where centres were established as it meant fewer services available in some areas.

"The market-based nature of provision has led to a concentration of services in more populated and wealthier areas while less profitable remote and poorer localities are left as so-called 'childcare deserts'," the report stated.

It also highlighted Australian child care was amongst the most expensive in the world, with couples spending 16 per cent of their income on services, compared to just four per cent in Sweden or three per cent in Korea.

Child abuse allegations prompts closure of 40 centres

Childcare giant G8 announced last month it was closing 40 centres across the country, having been rocked by allegations of child abuse at some of its facilities in Victoria.

It told shareholders 2025 was a challenging year for the entire sector.

The inquiry found equity-backed services had "no place" in the sector and for-profit providers were generally less safe for children than non-profit services.

It concluded the former regulator, the NSW Early Childhood Education and Care Regulatory Authority failed to appropriately respond to services with extensive histories of non-compliance, safety breaches and poor ratings.

The authority has since been replaced by an independent watchdog with sharper teeth, the NSW Early Learning Commission.

In October, the state government passed a suite of reforms tightening regulations and increasing penalties.

Independent Education Union NSW/ACT acting secretary David Towson said the report highlighted the safety problems being caused by serious staffing shortages.

He said more funding was needed to address pay concerns among educators.

"Ninety-five per cent of teachers and educators are female, and the gender disparity in the pay rates here, it's dreadful," he said.

"It should've been addressed a long time ago."

'Our work is not over'

The report made 35 recommendations, including introducing a rule that two staff members must always be in line of sight of each other when interacting with children.

It also recommended government funding be used to expand non-profit services.

It called for the release of information about the proportion of childcare fees and subsidies being paid by providers towards rent and for the government to explore regulating rent in the sector.

Deputy Premier and Early Learning Minister Prue Car said the report reinforced the importance of Labor's "nation-leading reforms".

"We will consider the committee's recommendations and respond in due course, but our work to reform the sector is not over," Ms Car said.