Childcare fees have outpaced inflation in the past five years, with rises of between 20% and 32% from 2018 to 2022 according to a report from the competition regulator.
Households are now paying 4% more for centre-based and outside-school-hours care, 6% more for family daycare and 15% more for in-home care services, once adjusted for inflation.
Those are the results of the Australian Competition and Consumer Commission’s interim report into childcare, released on Wednesday.
The report comes as the Albanese government’s cheaper childcare package comes into force on 10 July, prompting fierce debate about whether childcare centres are raising prices to soak up more generous subsidies.
The federal government’s $5.4bn scheme raises the maximum subsidy rate from 85% to 90% alongside a more generous income test, estimated to affect 1.2 million families across Australia.
The ACCC is yet to study whether subsidies are driving prices, but said it will next consider “how the hourly rate cap impacts price setting behaviour” and “impacts [of the subsidy on] affordability and out-of-pocket expenses”.
In the interim report, the ACCC found in December 2022 households were paying on average:
$123.64 per child a day for centre-based daycare, with $48.60 out-of-pocket
$90.23 a child a day for family daycare ($28.92 out-of-pocket)
$30 per child a session for outside-school-hours care ($13.54 out-of-pocket)
$301.42 per family a day for in-home care ($60.69 out-of-pocket).
It said “childcare out-of-pocket expenses for households are growing at a slower rate” than total fees.
“After subsidies, the out-of-pocket expenses increased 7% for households using centre based day care services and 15.8% for households using family day care.”
The ACCC found that about half of households with the lowest incomes spend 5% to 21% of their disposable income on childcare while those on the highest incomes spend just 2% to 9%.
It found that “while households in major cities and [regional] Australia have more childcare places and providers available to them, this may come with higher prices”.
Large centres had higher fees than small or medium-sized providers, and for-profit providers charged higher average fees compared with not-for-profits, the ACCC found.
The number of centres charging above the hourly rate cap almost doubled from 2018 to 2022, from 11% to 22% of services for centre-based care and from 20% of services to 42% of services for family daycare.
The hourly rate cap places an upper limit on the amount the government will subsidise for each hour of care, with any fee above the rate cap ineligible for a subsidy.
The education minister, Jason Clare, said, “The ACCC is watching what’s happening right now to see whether providers across the country are playing by the rules.
“If they don’t then the ACCC will recommend what actions we need to take to ensure the full benefit of cheaper childcare is passed on to families.”
Labor estimates its childcare package will save a family earning $120,000 with one child in care $1,700 annually.
On Monday the early childhood education minister, Anne Aly, defended the latest round of fee increases of 6% to 8% by noting these were “in line with inflation”.
But Aly told Radio National that over a number of years fees had risen by “an exorbitant amount, to the point that Australia is one of the most expensive countries for early childhood education and care for parents”.
