Why is the ACCC looking at the childcare sector?
Following on from last year’s election, the Albanese Government has focused their attention on trying to address the rising cost of childcare in Australia. The Treasurer has tasked the Australian Competition & Consumer Commission (ACCC) to inquire into 4 different childcare services – centre-based day care, family day care, outside school hours care and in home care. Relevantly, the recipients of all these services are eligible for the government’s childcare subsidy.
The ACCC has released their interim report which found that centre-based day care and outside school hours care make up 97% of all childcare services in Australia. The number of these services has increased since 2018, while the numbers of family day care and in home care services have decreased.
Further, the number of approved childcare places has increased by 17% between 2018 and 2022 however this has not been consistent across all service types nor all geographic regions.
Importantly, ACCC preliminary findings suggest that “The positive association between areas of socio-economic advantage and price…suggest that prices are often set by providers having regard to the parent and guardian cohort’s capacity (or willingness) to pay rather than the level of competition.”
What does this mean?
In short, the report suggests that one will pay more on average if they send their children to childcare centres located in more affluent suburbs than those that aren’t. Surprisingly, between 2018 and 2022, childcare fees increased across all services between 20% to 32%. In nominal terms, this represents an increase for centre-based day care of about $21 per day and family day care $16 per day.
The rate of childcare fee increases has been faster than inflation and wage increases.
After taking into account government subsidies, the report found that out-of-pocket expenses still increased by 7% when using centre-based day care services, 15.8% for family day care and 12.3% for outside school hours care. In home care experienced a decrease of 10.5% due to a change in subsidy entitlements in early 2019 but increased 15.7% from September 2019 to December 2022.
The ACCC continues to consult with childcare providers “to obtain detailed cost information to better understand the drivers of childcare prices and how the local markets for childcare services operate.” It is expected that the ACCC will issue a consultation paper in September 2023 which will include draft findings and recommendations and will call on all parties to put forward submissions in response to it. Once the ACCC has considered all submissions then they will provide their final report to the Treasurer by 31 December 2023.
If you are considering or are interested in putting forward a submission to the ACCC on this subject but don’t know how then please contact us and we can assist.
For more information you can refer to the Childcare inquiry interim report June 2023 by clicking here.