The ACCC’s Childcare Inquiry Interim Report has found that childcare fees have risen between 20% and 32% from 2018 to 2022, vastly outpacing inflation. Furthermore, the number of childcare centres who are charging above the hourly rate cap, an upper limit the government will subsidise for each hour of care, has doubled over the same period. The report also found that roughly half of all households in lower income brackets were spending up to 21% of their disposable income on childcare.
In 2018 11% of services for centre-based care and 20% of services providing family day care were charging above the cap. These numbers have now grown to 22% and 42% respectively over 5 years.
When adjusted for inflation, the report found that households were now paying 4% more for centre-based care and outside-school hours care, 6% more family day care and up to 15% more for in-home care services.
The report also detailed that for-profit providers of childcare services were charging higher average fees compared to not-for-profits.
The report also detailed average expenses for childcare. In December 2022, families were paying on average:
$123.64 per child per day for centre-based day care (with $48.60 out-of-pocket)
$90.23 per child per day for family day care (with $28.92 out-of-pocket)
$30 per child per session for outside-school-hours care (with $13.54 out-of-pocket)
$301.42 per family per day for in-home care (with $60.69 out-of-pocket).
Minister for Early Childhood education, Anne Aly, described the increase in fees over the past few years as “an exorbitant amount," and noted that the prices have risen "to the point that Australia is one of the most expensive countries for early childhood education and care for parents.”
The report has been released shortly before the Albanese government’s cheaper childcare package comes into effect on July 10th. The ACCC will now be investigating “how the hourly rate cap impacts price setting behaviour” and “impacts [of the subsidy on] affordability and out-of-pocket expenses”.
Increase in Child Care Subsidy
In September of 2022 the Albanese Government introduced legislation to increase the Child Care Subsidy (CCS) towards reducing the cost of childcare to "about 1.26 million families." The legislation forms part of a $5 Billion package which was scheduled to take effect in July of 2023.
According to the Department of Education, the Government intends to:
lift the maximum CCS rate from 85% to 90% for families earning $80,000 or less
increase CCS rates for around 96% of families with a child currently in care earning under $530,000
keep higher CCS rates for families with two or more children aged 5 years or under in care.
It is expected that as a result of these reforms, a family on a median combined income of $120,000 with a single child in early childhood education will save nearly $1800 over the course of the first year its implementation.
In a media release provided by the Minister for Education, Jason Clare, and the Minister for Early Childhood Education and Youth, Dr. Anne Aly, they note that childcare costs in Australia have risen by 41% over the past 8 years and that currently 60% of mothers with young children are working part time hours:
One of the most important commitments the Government made at the election was to cut the cost of child care. This legislation implements that commitment. 96 per cent of families with children in early childhood education and care will benefit from this reform, and no Australian family will be worse off. Making child care cheaper will help ease the cost-of-living pressure on a lot of families and give parents the opportunity to work more and earn more if they want to. A lot of Australians want to work more, but if they do a lot of that pay is gobbled up by child care costs. It means it’s not worth it.
The Australian Treasury estimates that these reforms to the CCS will result in 37,000 additional full time employees to the economy in 2023 to 2024.