Cheaper child care

The Australian Competition and Consumer Commission (ACCC)released its final report yesterday on early childhood education and care (ECEC).

31 January 2024


THE Federal Government commissioned the ACCC inquiry to get a greater insight into the factors driving fee increases in ECEC.


The final report finds that since the introduction of the Government’s Cheaper Child Care measures, the average reduction in out-of-pocket expenses for Centre-Based Day Care was eleven per cent.


Minister for Education Jason Clare said “This report shows how much our Cheaper Child Care laws have cut costs for more than one million Australian families.


“It also has a number of recommendations about where more work is needed. The Government will consider these along with the recommendations of the Productivity Commission which is due to report in a few months.”


The report notes that “The initial impact of the changes to the Child Care Subsidy rates has been positive for childcare users, reducing out-of-pocket expenses for all types of care.”


Since Cheaper Child Care was introduced, the average reduction in out-of-pocket expenses across the sector have been:


  • 11 per cent for Centre-Based Day Care


  • 8.8 per cent for Outside School Hours Care


  • 12 per cent for In Home Care


  • 13.8 per cent for Family Day Care.


The report found that under the former government nominal gross fees in Australia increased by around four times the OECD average.


Between 2018 and 2022, fees increased by 22.8 per cent compared to the OECD adjusted average of 6.2 per cent.


Minister for Early Childhood Education Dr Anne Aly said “Our Cheaper Child Care reforms are delivering for families, reducing out-of-pocket costs and ensuring more children can access the transformative benefits of early learning.


“We’ll carefully look at the recommendations from the report, including consideration for alternative approaches for vulnerable cohorts such as First Nations families.


“The ACCC report, along with the Productivity Commission review, will help us to identify areas for improvement in our early childhood education and care system for the future.”


Member for Robertson, Dr Gordon Reid said “I welcome the ACCC report into early childhood education and care and look forward to the Federal Labor Government continuing to make positive changes to the sector.


“On the Central Coast, we know that it is becoming increasingly difficult for families to access childcare services.


“I also look forward to listening directly to local families and the region’s childcare providers at the Robertson Childcare Forum on Feb 2, 2024, where I intend on taking issues that are discussed to Minister Clare and Minister Aly to address."


While highlighting the benefits of Cheaper Child Care, the report finds more can be done to keep out-of-pocket costs down, especially for cohorts experiencing vulnerability or disadvantage.


Among other things, the report recommends changes to the existing hourly rate cap mechanism, and stronger price monitoring by government supported by a credible threat of intervention, including naming and shaming providers who massively jack up fees.


The Government will consider the ACCC’s report alongside the Productivity Commission inquiry into ECEC, which is due to be finalised by 30 June 2024.


The ACCC’s final report is available on the ACCC website.

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