The Australia Competition Consumer Commission (ACCC) has recently conducted an analysis revealing that childcare costs have been rising at a faster rate than both inflation and wage growth over the past four years. According to the ACCC’s interim report on the price and availability of childcare services, fees for center-based and out-of-school hours care have surged by 20 percent, while in-home care costs have seen a staggering increase of 32 percent.
However, the report also highlighted that government subsidies have managed to offset more than half of the childcare fees on average. Despite this, the ACCC found that after subsidies, out-of-pocket expenses for households utilizing center-based day care services rose by 7 percent, while households relying on outside school hours care experienced a 12 percent increase, and those using family day care faced a significant surge of 15.8 percent over the past four years.
The ACCC estimates that around 1.2 million children under the age of five (70 percent) and 655,000 children aged 6-13 (25 percent) are currently attending childcare services in Australia. The report also revealed that disadvantaged households, despite receiving greater government contributions and paying lower out-of-pocket expenses, are burdened with a larger share of their income spent on childcare.
ACCC Chair, Gina Cass-Gottlieb, expressed concern over the disproportionate cost burden faced by low-income households, stating, “Critically, our analysis shows that the cost burden is felt most by households that are already facing disadvantage.” The ACCC intends to delve deeper into the reasons behind low-income households’ increased share of disposable income spent on childcare fees.
To address the escalating costs, the maximum subsidy rate is set to increase from 85 percent to 90 percent starting July 10. Additionally, the maximum household income threshold to receive the subsidy will be raised. Cass-Gottlieb emphasized the ongoing data collection efforts aimed at understanding the factors driving prices, availability, and quality in the childcare sector, while urging providers to maintain transparency and honesty regarding any price changes.
The ACCC’s report identified affordability as the most crucial factor influencing parents’ decisions on childcare usage. In line with this, a consultation paper will be published in September 2023, with the final report expected to be submitted to the treasurer on December 31.
As the ACCC continues its inquiry, it aims to shed light on the intricate dynamics of childcare service provision, pricing, and quality, with the ultimate goal of ensuring accessible and affordable childcare for all Australian families.
Author: KinderGarten
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