Childcare inquiry’s final findings

The early childhood education sector has failed to deliver accessibility and affordability, an inquiry by the Australian Competition and Consumer Commission has found.

The year-long inquiry has made eight recommendations and 31 findings in its final report into the childcare sector, released on January 29.

Business News previously reported on the consumer watchdog’s findings from the first and second interim reports.

However, the federal subsidies for childcare fees had not come into effect when the previous reports were published.

Early Childhood Australia deputy chair Pauline Roberts said the final report found the childcare subsidy did not have too much impact on reducing fees.

“[Western Australia’s] the third lowest in terms of our daily fee, in terms of the cost, but in out-of-pocket [expenses] we’ve reduced fees by 9.6 per cent,” she said.

WA recorded the second smallest decrease in daily out-of-pocket expenses for centre-based daycare services of all major Australian cities, according to the ACCC report.

“Early learning centres, particularly, are impacted when their four year olds go to school, because that’s where the funding goes,” Dr Roberts told Business News.

“The ACCC found that the early childhood sector is not meeting the needs in terms of accessibility and affordability for parents.

“The childcare subsidy actually doesn’t have too much impact on what happens with reducing fees.”

The highest average session fee for outside school hours care in the September quarter was in WA at $40.95 a session, the ACCC report said.

This was slightly down from the average of $41.66 recorded in WA in the June quarter.

In its report, the ACCC found the childcare reforms, enacted in July, led to a decrease of the average out-of-pocket expense in households up to 13.7 per cent between June to September 2023.

The ACCC said the previous affordability benefits from the childcare subsidy were quickly eroded by fee increases.

“This is due to the impact of inflation and increases in average fees that exceed the indexation of the hourly rate cap over this period and, as such, have reduced some of the benefit of the reforms,” the commission said.

The ACCC also found the average fee for all types of childcare rose by between 7.2 per cent and 9.8 per cent in 2023.

“The average daily fee for centre-based daycare increased by 9.8 per cent, and this increase was higher than the annual indexation of the hourly rate cap in July 2023,” the report reads.

“We also note that the minimum award wage for childcare workers increased by 5.75 per cent from July 1 2023, representing a major cost increase for providers.”

Dr Roberts said it was difficult to know whether the report and recommendations would change the sector, but it had reinforced the ongoing workforce issues.

The WA government funds kindergarten and schools, while early childhood education (pre-kindergarten) is subsidised by the federal government.

“The issue is with WA; we’re actually very much behind the eastern states already without funding for three year olds and access for younger children to care and education,” Dr Roberts said.

“Until there’s some sort of announcement if they do decide to fund three year olds, they actually need to start looking at how they’re going to apply that funding to early learning centres, rather than having to be on school sites.

“That is a difficulty they need to actually do some work around; how that money can follow the child rather than just only go to schools.”

She said one of the key findings of the final report was the remapping of geographical areas, which could be important for WA.

“There are areas that are adequately served with services and then there are what they’re calling ‘under-served’,” Dr Roberts said.

“Then they’re also calling these ‘desert areas’ … where there are no services at all. They’re unserved.

“One of the recommendations from the report is … when we actually look at reforms to funding, it needs to take into account those three distinct areas in terms of how the funding is applied.”