ACCC: WA childcare prices rise

Western Australia has the second highest growth in average hourly fee for outside school hours care in the country, the Australian Competition and Consumer Commission has found.

The ACCC yesterday released its second interim report into childcare services and findings on the sector’s costs and affordability.

The commission found the increase in the average hourly fee for outside school hours care from 2019 to 2022 was the biggest in Queensland at 10 per cent, followed by WA at 7.4 per cent.

Northern Territory had a 6.4 per cent increase in average hourly fee for outside school hours care, according to ACCC’s report.

The ACCC also said a major outside school hours care operator found tender processes in Victoria, WA and independent schools were relatively more competitive, leading to pressure to offer higher licence fees to schools.

“For example, one large provider of outside school hours care observed that a relatively short recontracting period of two years in WA public schools meant that more competitive pricing is required to maintain market share,” the report said.

"The tender process to award contracts for outside school hours care services differs state by state, which may also explain some of the differences in profitability between states, for example if providers are permitted to bid for contracts or not."

In the report, the ACCC said overseas data showed child care in Australia was relatively less affordable for households than in most countries in the Organisation for Economic Co-operation and Development.

The OECD has 18 member countries, with the majority described as high-income economies in the United Nations' Human Development index.

According to the ACCC, countries including the UK, Ireland, the Netherlands, Canada and New Zealand have progressed towards mandated low fees or free hours with subsidies to cover providers’ costs.

The ACCC report said public expenditure on early childhood education and care for zero to five year olds was 0.6 per cent of the gross domestic product in Australia, compared to the OECD average of 0.8 per cent of GDP.

“In Australia in 2022, for a couple on average wages with two children (aged two and three) in centre-based child care full-time, net childcare costs came to 16 per cent of net household income compared to the OECD average of 9 per cent,” the report said.

“This is despite the Australian government contribution to fees being significantly higher than most other OECD countries – 16 per cent in Australia compared to the OECD average of 7 per cent.”

The ACCC has recommended the Australian government reconsider and restate priorities of childcare policies and relevant price regulation mechanism.

“As the competition and consumer regulator, we have carefully examined the childcare sector and the impacts for consumers,” ACCC chair Gina Cass-Gottlieb said.

“We have found market forces under current policy settings are not delivering on accessibility and affordability for all children and families across Australia.”

Other recommendations include further consideration of subsidies and direct price controls.