ACCC focus centres on child care

Western Australia remains one of the more expensive states for childcare according to two interim reports by the Australian Competition and Consumer Commission.

The consumer watchdog recently released its second interim report into childcare services and findings on the sector’s costs and affordability.

The ACCC found WA had the second highest growth in average hourly fees for outside school hours care in the country.

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

WA was second at 7.4 per cent.

In its first interim report in July, the ACCC found childcare fees rose faster than inflation and wage growth over the past four years.

The average outside school hours care services fee in WA was $41.66, the highest in the country.

“If we look at the average hourly fee for outside school hours care services, which accounts for differences in session length, we observe the ACT ($10.75) is slightly higher than WA ($10.11),” the ACCC report said.

“This suggests the average session of care is longer in WA than the ACT.

“However, we observe that across all areas by remoteness, the average session fee is much higher in WA than in other states and territories.”

The ACCC also found the state had a significant number of outside school hours care services charging more than the rate cap at 32 per cent.

The first interim report released in July comprised of data collected from childcare providers around the country and a national survey of more than 4,000 parents and guardians, according to the ACCC.

ACCC chair Gina Cass-Gottlieb said it was unlikely a one-size-fits-all approach would achieve all desired outcomes for childcare services.

Initiatives

The second interim report proposed a major change in the sector, with the ACCC suggesting recommendations for governments to adapt amid a rise in fees.

Each of the four types of childcare services are eligible for the Child Care Subsidy, a government assistance program.

In its first interim report, the ACCC found access to the Child Care Subsidy helped many households afford some child care, but was not without its limits.

“However, to be eligible for the Child Care Subsidy, households must be undertaking approved activities including working, studying or volunteering,” the report said.

“This requirement may exclude or limit some households from accessing and/or using more childcare services.

“The total subsidy is paid directly to the childcare service provider, leaving the household with a gap fee to pay.

“This is referred to as the out-of-pocket expense and represents the ‘true’ price that households pay for childcare.”

The ACCC doubled down on the subsidy in its second interim report, calling it complex particularly for time poor parents and guardians.

“The operation of the Child Care Subsidy – and its inherent complexity – can make it very difficult for parents and guardians to accurately estimate their subsidy entitlement,” the report said.

“This makes it challenging to accurately compare the out-of-pocket expenses they will face with different services in their local area market.

“Centre-based day-care fees are generally advertised at a daily rate, while the Child Care Subsidy is calculated and capped on an hourly basis, and the number of hours in a daily session can vary between services.”

For the final report to be handed down in December, the ACCC will focus on the price changes since the increase to the Child Care Subsidy rate in July 2023.

Next step

The ACCC is undertaking an inquiry into the childcare sector at the request of the federal government.

Only one more report remains to be provided to Treasurer Jim Chalmers by the end of the year.

Last year, Mr Chalmers directed the ACCC to launch a price inquiry for childcare services, categorised into four types: centre-based day care, outside school hours, family, and in-home care.

The federal government allocated $10.8 million for the 12-month ACCC inquiry.

Public submissions on the draft recommendations in the second inquiry will be collated this month, according to the inquiry schedule.

The ACCC is expected to hold further stakeholder meetings to clarify submissions in November.