Child Care Subsidy impact on sector revealed in latest DET report
The Sector > Economics > Affordability & Accessibility > Child Care Subsidy impact on sector revealed in latest DET report

Child Care Subsidy impact on sector revealed in latest DET report

by Jason Roberts

April 11, 2019

The Federal Department of Education and Training (DET) have released their first issue of the Child Care in Australia information report which draws on data gathered by the Department of Human Services post the implementation of the new Child Care Subsidy (CCS).


The data focuses on four key areas namely; childcare usage, availability, fees and entitlements. Although not as comprehensive as the reports issued under the previous subsidy regime, the data does provide a useful insight into the impact of the CCS on the ECEC sector since its implementation in July 2018.


Jump in weekly hours of care used driven by LDC and OSHC


The number of hours of care used by a child in a given week has jumped materially from the same period last year.


On average, the weekly amount of time spent across all three care settings, long day care (LDC), family day care (FDC) and outside school hours care (OSHC) has increased by 3.6 per cent compared to last year.


This increase is most notable in the LDC setting where the average number of hours used per week increased to 30.9, a jump of 6.9 per cent year on year and the largest since the DET reports started.


The increase in LDC hours utilised broadly corroborates signals from the larger operators  indicating that occupancy increases accelerated in the second half of 2018 as families took  extra days of care as affordability increased.


The number of hours children attended OSHC also saw a large increase of 6.8 per cent compared to last year and as with LDC was the largest gain on record.


Bucking the trend FDC saw a further contraction in the number of hours used per week, down 11.7 per cent compared to last year and down 22% since peaking in the quarter ending September 2015.


This is likely to correlate with the increased scrutiny around compliance in this space, with the Federal Government vocal in their statements about FDC provider compliance.


Increase in hours used not reflective of growth in children’s attendance


Although the number of hours committed to care per child increased materially in the period the total number of children attending LDC, FDC and OSHC services only increased by 0.3 per cent overall compared to the same period last year.


The key reason for this is continued falls in the number of children attending family day care services that in terms of numbers was broadly similar to the increases seen in LDC and OSHC combined.  


In the 12 months to September 2018, 51,230 children withdrew from FDC services, whereas 30,360 more children enrolled in LDC services.


The challenges experienced in FDC remain the well documented enforcement issues around non-compliance and fraud but also will have been amplified by a change in the loading assigned to FDC subsidy levels in the new CCS legislation.


Away from FDC, LDC and OSHC attendance growth was strong in the period, up 4.2 per cent and 5.3 per cent respectively year on year with the LDC rise being the largest quarterly increase since December 2011.


The number of children and families accessing ACCS shows sharp decline*


Although there are indications that the CCS has had a positive impact on hours used and enrolment, particularly in the LDC setting, there is evidence to the contrary when considering vulnerable and disadvantaged families.


The number of children and families accessing the Additional Child Care Subsidy (ACCS) in the quarter ended September 2018 showed a meaningful drop relative to the previous quarter and the same period last year.


The total number of accessing ACCS under the main categories of child well being, temporary financial hardship, grandparent support and transition to work in the period was 22,050 compared to 35,870 in the third quarter of 2017, a fall of 39 per cent.


This substantial fall reflects the stricter rules built into the CCS that has seen documentary evidence required to support each and every applications and the introduction of Centrelink as the ultimate arbiter as to whether applications are successful or not.


Fee rises accelerate at centre level but net fees mitigated by savings from CCS


Average hourly fees rose to $9.50 across the LDC, FDC and OSHC subsectors. This was a 5.6 per cent increase on last year and the largest jump since the quarter ended December 2016.


LDC services saw their average fees rise 4.8 per cent, FDC by 14.2 per cent and OSHC by 6.4 per cent.


These fee increases were at the top end of the range recorded in the last 4 years, however, importantly break a pattern of more moderate fee increases passed in the last 2 years and signal a more aggressive stance on behalf of operators positioning their businesses ahead of the CCS implementation.


From an affordability perspective, the quarter ending September 2018 saw net out of pocket child care costs as measured by the Australian Bureau of Statistics fall 8.5 per cent which suggests that centre fee increases were more than offset by savings created by the CCS.


This net increase in affordability appears to have been the main driver behind the increase in weekly hours of care used per child.


Government subsidy increases to new record but only just


The overall subsidy committed to the early childhood education and care sector in the quarter ended September 2018 was $1.95 billion – an increase of 2.2 per cent on the same period in 2017.


It was not clear how these entitlements were distributed across LDC, FDC and OSHC as DET, unlike in previous reports, elected not to break out the data per setting.


Indigenous enrolment increases but data quality muddied by BBF service change


A 45.5 per cent increase in the number of Indigenous children enrolled in child care was recorded in the period.


This number will reflect changes in the way Budget Based Funded services are treated as they became part of the mainstream child care subsidy package after July 1 2018.


* This article has been updated since initial publication to include details of the number of children and families accessing the Additional Child Care Subsidy. The data has been gathered from current and past Department of Education Child Care reports.

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