New LDC openings bounce back in Q3 2020, but a long way from highs earlier in the year
The Sector > Economics > New LDC openings bounce back in Q3 2020, but a long way from highs earlier in the year

New LDC openings bounce back in Q3 2020, but a long way from highs earlier in the year

by Jason Roberts

November 10, 2020

The number of new long day care (LDC) services that opened in the three months ended September 2020 bounced back from the COVID-19 impacted lows of the previous quarter, but fell well short of the surge in new openings registered at the beginning of 2020 according to ACECQA’s latest NQF Snapshot


A total of 77 new services opened in Q3 2020, with each of the five larger states and territories recording increases in the range of 0.8 per cent and 1.2 per cent compared to Q2 2020 which reported openings of just 24 services nationally. 



To some degree the bounce back in service openings should not be unexpected given the passing of the COVID-19 pandemic and a return to a more normal operating environment however the degree of bounce back still remains substantially below the surge in openings in Western Australia, Victoria and South Australia recorded in the first quarter of 2020. 


On an annualised basis new LDC openings are growing at 3.8 per cent compared to the same period last year, which is the same as the previous quarterly period and comfortably within the range of between 3.5 per cent and 4.5 per cent growth recorded in the last three years. 



What is notable about the annual growth rates is that the COVID-19 reduction in new openings, just 24 in Q2 2020, has not had any impact on the overall annual growth rates because the number of openings in Q1 2020 was so large, at 117, to effectively counteract its impact on the annual rate of growth itself. 


Therefore it is fair to conclude that concerns of a COVID-19 inspired reduction in supply may have been premature, and that, looking forward, rates of growth will continue to track in the 3.5 per cent to 4.5 per cent range. 


Kindergarten/preschool records fifth consecutive quarter of negative growth


The number of kindergarten and preschool services contracted for the fifth consecutive quarter at 0.6 per cent compared to the same period last year. There were 18 less kindergarten and preschool services in Australia in Q3 2020 compared to Q3 2019 with 173 in total closing in the last twelve months. 


The notable consequence of the contraction in kindergarten and preschool services over the last 15 months is that the number of kindergarten and preschool services relative to LDC services continues its long decline. 



There are now 2.66 long day care services for each kindergarten and preschool service across Australia, up from 2.23 in 2016, and a clear illustration of how increased supply of new long day care services is overwhelming the static to falling numbers of kindergarten and preschool services in Australia. 


Across the different states and territories there are quite big variations in the ratio. For example, in Victoria, there are 1.42 long day care centres per kindergarten, which is 30 per cent higher than 2016, while in New South Wales there are 4.28 LDC services per preschool, a slightly smaller increase of 19 per cent over the same period. 


Family day care closures continue to contract – approaching 2017 levels


The contraction in the number of family day care (FDC) services across Australia that began in earnest in 2017 continues to show signs of moderation with the fall in the three months ending September 2020 period, registering the smallest contraction in four years. 



The scale of the purge in FDC has been substantial with New South Wales, a key driver of the fall in light of multiple frauds uncovered in the FDC space, seeing numbers fall 61.6 per cent since the peak of 2016. 


Victoria has seen falls of 59 per cent and Queensland of 29 per cent. 


To review this quarter’s ACECQA snapshot please click here

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