LDC enrolment momentum moderates, CCS hits new high says latest DESE Child Care report

LDC enrolment momentum moderates, CCS hits new high says latest DESE Child Care report

by Jason Roberts

April 18, 2022

The total number of children attending long day care (LDC) services in the three months ended June 2021 dipped back below 800,000 but Child Care Subsidy (CCS) disbursed touched a new record in the period according to the Department of Education, Skills and Employment’s (DESE) latest Child Care in Australia report.

 

The DESE data is sourced internally from their Child Care Subsidy (CCS) administrative systems and is released quarterly but with a nine month lag to the data itself. 

 

A total of 782,760 children attended an LDC service in the June 2021 quarter, down 4.2 per cent on the previous quarter, a larger than usual drop from the first to second quarter suggesting uncertainty around a return of COVID-19, especially towards the end of the quarter, as well as standard seasonality started to impact families enrolment decisions. 

 

 

Outside School Hours Care (OSHC) however saw near record attendance in the period as its closer links with schools, which were open for the duration of the quarter, underwrote demand. 

 

The number of hours that children spent enrolled at an LDC service fell slightly in the June quarter to 30.9 hours per week. After breaking decisively above the 30 hour mark after the return of the CCS system in July 2020 it has remained well supported at these higher levels since. 

 

 

In the Family Day Care (FDC) and OSHC settings enrolment trends from an hours in care perspective appear to be consistent with FDC recording average weekly care of 24.1 hours, which is broadly similar to the last 24 months of results, and OSHC reporting 11.7 hours, which is lower than the prior quarter but more or less similar with records going back to 2014.

 

CCS subsidy spend tops another new record in Q2 2021

 

Subsidy spend across the sector was well supported in Q2 2021 with a total of $2.28 billion, a new record, of entitlements disbursed on behalf of families. 

 

 

LDC still remains by far the largest recipient of CCS funds and received $1.86 billion, or 82 per cent of the total. OSHC was the next largest with $223.1 million. 

 

Although very materially lower in terms of quantum Additional Child Care Subsidy (ACCS) spend reached a record level of $28.5 million in the quarter, higher than the previous record of $28.1 million recorded in Q4 2020.   

 

The number of children accessing and receiving ACCS in Q2 2021 fell around 6 per cent from the previous high in Q4 2020 driven largely by continued low numbers of temporary financial hardship ACCS being disbursed and also the continued reduction in transition to work requests.

 

 

Notably, however, the Child Well being category continues to see growth with 26,860 children benefiting from this classification of ACCS in the period.

 

LDC fees show signs of picking up momentum again after post COVID hiatus

 

After a period of relative calm on the fee increase front we are now starting to see more evidence of fee increases pushing back towards the upper bound of recent trends.

 

The average hourly cost of care at an LDC service in June 2021 was $10.80. That is 8.0% higher than in June 2019 before COVID hit and around 3.3 per cent higher than the notional average fee during the June 2020 period a year earlier. 

 

 

The pick up in fee increases, which were also evident in FDC and OSHC, can also be seen from looking at the percentage of services with hourly rates above the CCS fee caps with LDC and FDC the most notable in terms of their creep higher. 

 

15 per cent of all LDC services had fees above the $12.20 fee cap per hour by the end of June 2021, a new record level, however, it’s important to note that the inflation adjustment to the hourly cap in July 2021 will serve to rebase the percentage back lower again. 

 

 

The same will be true for both FDC and OSHC fees. 

 

This particular data stream will prove a very useful indicator as to whether the Government’s decision to place a fee cap into the CCS legislation as a means to anchor fee increases over and above the cap has been successful.

 

A persistent trend of ever increasing percentages of services with fees over the fee cap would be a strong indication that the policy has failed; however, if the percentage can remain relatively close to the current 15 per cent ceiling (for LDC) it would signal some success that the cap is serving its intended purpose of anchoring fees. 

 

More time will be required for the data to tell this important story. 

 

To access the latest DESE report and data tables please click here.

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