ACCC zeros in on next stage of child care reform

The ACCC today confirmed that between 2018 and 2022 the average costs for large centre-based day care providers grew 27 per cent.

Over the same period, nominal gross child care fees in Australia increased by 20.6 per cent in comparison to the OECD average of 9.5 per cent.

That’s according to the ACCC’s second interim report into child care costs, released today.

In addition, in 2022 for a family on average wages with two children in centre-based day care full-time, the report finds that net child care costs came to 16 per cent of net household income.

This is compared to the OECD average of 9 per cent.

The findings in the report predate the Albanese Government’s Cheaper Child Care investment, which in the first week of operation in July this year saw families pay on average around 14 per cent less per hour per child for centre-based day care.

This is good news, but there’s more work to do. In this report, the ACCC outlines where the next stage of reforms could head.

It makes clear that the current cap on child care fees, introduced by the previous government, is ineffective and reform is needed.

The report also finds that large not-for-profit providers have a higher proportion of staff employed full-time and at an above award wage compared to for-profit providers.

The report makes a number of draft recommendations to regulatory arrangements and to the broader system to help keep fees in check and out-of-pocket costs down for families.

Draft recommendations include:

• Further consideration and consultation on changes to the Child Care Subsidy and the existing hourly rate cap mechanism, including stronger price monitoring by government supported by a credible threat of intervention.
• Removing, relaxing or reconfiguring the current activity test.
• Including a stronger price and outcomes monitoring role by government.
• Introducing a market stewardship role for both Australian and state and territory governments, in identifying under-served areas and vulnerable cohorts.
• Further consideration of supply-side subsidies and direct price controls.
• Providing clearer and more accessible information for parents and carers.
• Maintaining and expanding support for Aboriginal Community Controlled Organisations that provide services to First Nations families.

Parents, educators, providers and other interested parties are encouraged to have their say on the draft findings and recommendations from the ACCC’s consultation paper.

The report is available here and submissions are open until 29 October 2023.

All submissions will be considered by the ACCC with its final report to be provided to Government by 31 December 2023.

The ACCC findings will be considered alongside the Productivity Commission inquiry into early childhood education and care which will provide advice on making the system more affordable and accessible for families for the next decade and beyond.

Quotes attributable to Minister for Education Jason Clare:

“This report reveals that child care costs under the former government went up by twice as much as the OECD average and the reforms they introduced to cap prices haven’t worked.

“The good news is our changes have seen families pay on average around 14 per cent less per hour per child for centre-based day care.

“But there is more work to do, and this report points the way for where the next stage of reforms could lead.”

Quotes attributable to Minister for Early Childhood Education Dr Anne Aly:

“We want to ensure all Australian families, no matter where they live or their background, have equitable access to affordable quality early childhood education and care.  

“This report will inform the in-depth Productivity Commission review, helping us chart the course to universal access to early childhood education and care.

“Children who access quality early learning go on to do better at school and throughout life. 

“It's important children aren't locked out of the health and education benefits of quality early learning, this is why we made changes to boost the Child Care Subsidy - delivering real cost of living relief for around 1.2 million families right across Australia."

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