Childcare fees are growing faster than inflation and wages, although government subsidies are taking some of the pain out of price hikes.
An investigation into the costs of childcare by the Australian Competition and Consumer Commission revealed out-of-pocket expenses rose between seven and 16 per cent during the past four years, despite government subsidies counteracting some of the price growth.
When including subsidies, the cost of sending a child to centre-based day care lifted seven per cent during the past four years, 12 per cent for outside school hours care and 15.8 per cent for family day care.
The federal government launched the inquiry late last year ahead of its bolstered childcare subsidies that kicked in on July 1.
The government has been alert to worries childcare providers could exploit the increased subsidies and raise fees above and beyond the amount needed to cover their rising costs because of inflation.
The ACCC will watch how the sector responds to the government's changes to the childcare subsidy over coming months.
The regulator's interim findings on childcare costs, released on Wednesday, found childcare fees had risen faster than inflation and wage growth during the past four years, lifting 20-35 per cent, depending on the type of care.
But the regulator found government subsidies had kept out-of-pocket expenses growing at a slower rate over the same period - offsetting more than half of childcare fees, on average.
ACCC chair Gina Cass-Gottlieb said the analysis critically revealed low-income households were hit hardest by the cost burden.
While low-income earners received a higher subsidy than wealthier families, they were still forking out five to 21 per cent of their disposable income on childcare.
That's compared to two to nine per cent for those in the highest income bracket.
"Our inquiry will continue to examine why low-income households are paying a greater share of their disposable income on childcare fees," Ms Cass-Gottlieb said.
A consultation paper will be published in September and a final report is due before the end of the year.
