Latest ACECQA NQF Snapshot provides first glimpse of COVID-19’s impact on new centre supply

The Australian Children’s Education and Care Quality Authority’s (ACECQA) latest NQF Snapshot, which provides a range of analysis and information on the profile of the early childhood education and care sector (ECEC), has provided the first glimpse on the impact that the COVID-19 has had on the rate of new service openings since the pandemic began. 

The Q2 2020 Snapshot, which uses data sourced from the National Quality Agenda IT System (NQA ITS), confirms a substantial drop in the number of long day care (LDC) service approvals issued in the period relative to Q1 2020 to just 24, an increase of 0.3 per cent. 

This compares to an average quarterly increase of 73 new approvals in the last four years and an increase of 57 centres on average in the second quarter of the year since 2016. 

The contraction is most likely a function of developers and operators electing to delay centre openings in light of the uncertainty created by the COVID-19 pandemic and the impact it will have on demand.

Victoria continues to see highest supply in absolute and relative terms

A total of 11 new service approvals were issued in Victoria in the three months ended 30 June 2020, an increase of 0.70 per cent which was down from its four year average quarterly growth rates of 1.4 per cent but still higher than the other larger states and territories across Australia. 

New South Wales saw an increase in new approvals of 0.2 per cent, compared to a long term average of 0.8 per cent and Queensland actually saw its first decrease in service approvals issued for at least five years with a fall of one. 

The remaining states and territories each had relatively small increases in absolute terms ranging from between increases of three, as seen in Western Australia, to no increase at all, as seen in Tasmania. 

Annual growth rates still remain elevated but likely to fall going forward 

The annual growth rates of LDC service approval still remain elevated at 3.8 per cent compared to the same period in 2019 driven largely by strong growth in the March 2020 quarter of 1. 5 per cent and relatively strong growth in the September and December quarters of 0.9 per and 1.0 per cent respectively. 

If one was to assume that current service approvals growth rates of 0.3 per cent persisted through until the end of 2020, overall annual growth rates would track back towards just below 2.5 per cent mark for the first time in at least five years. 

If, however, growth rates snap back to the long term average of around 0.9 per cent per quarter annual growth rates will settle around 3.5 per cent per annum. 

Kindergarten/preschool settings see annual fall for fourth consecutive quarter

The number of kindergarten and preschool service approvals in issue has fallen by 1.5 per cent compared to the same period last year, a fall of 48 services with 56 per cent of the fall coming from New South Wales based services. 

The upward trend in closures of kindergarten and preschools, in what has historically been a very stable setting, is worth monitoring, particularly as the fall out of the Victoria COVID-19 restrictions currently in place plays out and Victoria’s large concentration of kindergartens (the state has 56 per cent of all kindergarten services nationally). 

FDC closures continue to moderate but OSHC hits at least a four year low

The number of family day care (FDC) licences currently issued fell to 507 in the June quarter 2020, a fall of 3.6 per cent month on month and 12.9 per cent year on year. 

Notably, the annual fall of 12.9 per cent is actually the best performance since the March quarter in 2017 and indicates that the setting is continuing to stabilise after several years of substantial contractions. 

In the outside school hours care (OSHC) setting the performance was less strong with an increase of just 0.5 per cent compared to the same period last year, the lowest annual growth in the last four years and substantially below the rates of 2016 which were as high as 4.0 per cent.

Just 21 new services were opened across the country with 33 in New South Wales being offset by falls in the ACT, South Australia, Tasmania and WA. 

It is important to recognise that early education supply and demand dynamics are localised, so a national snapshot may not be representative of a particular catchments characteristics but as a guide to overall trends provided value.

To read ACECQA’s latest snapshot please click here.