Surge in CCS payments not matched by enrolment increases in notable divergence highlighted in latest DoE figures

The amount of Child Care Subsidy (CCS) entitlements disbursed in the three months ended September 2021 surged to a new record across all setting types however the increases did not translate to equivalent gains in enrolments.  

 

This is the second such divergence in CCS gains versus enrolments increases with the previous quarters data showing a similar, albeit muted trend, according to the latest Department of Education Child Care in Australia report.

 

The latest report, published quarterly but with a significant time lag, was released last week.

 

In the three months to September 2021 a total of $2.6 billion was spent across the long day care (LDC), family day care (FDC), outside school hours care (OSHC) and in home care settings via CCS and additional child care subsidy (ACCS) streams. 

 

The increase represents a 43.2 per cent jump compared to Q3 2020 and a 15.2 per cent increase compared to Q2 2021, with LDC, the largest consumer of CCS subsidy, now standing at more than $2 billion per quarter, seeing increases of 37 per cent and 12 per cent respectively.

 

Even accounting for a change in ACCC appropriation arrangements which took effect on 12 July 2021 and boosted their numbers, the overall increases were substantial, taking entitlement spending to significant new highs. 

 

Subsidy surge not matched with corresponding increase in enrolments 

 

However, the number of children enrolled in an ECEC service, across all settings, in the same period was 1,346,140, which represented just a 1.3 per cent increase from the previous quarter and 14.2 per cent on the previous year. 

 

Although the increases are not insubstantial they still fall materially short of the corresponding growth in CCS subsidy entitlement increases. 

With respect to LDC which accounts for 83 per cent of all CCS subsidies a similar pattern occurs with enrollments up 9.2 per cent compared to the previous year and subsidy levels up 37 per cent and compared to the previous quarter enrolments were up 4.3 per cent despite a 12 per cent jump in subsidy. 

 

At this juncture it remains to be seen what is behind this rather troubling divergence. That being said, if future reports do not see enrolments play catch up and subsidies continue to rise it raises the possibility that we have now reached a tipping point where the relationship between subsidy injection and enrolment increases starts to break down. 

 

Percentage of service fees above CCS fee cap creeps higher in LDC and FDC

 

In a separate development the percentage of LDC and FDC services with fees above the CCS fee caps continue to creep higher with FDC in particular recording a significant increase in the period. 

 

These trends are particularly notable given the fee cap is reset higher on 1 July each year and services have scope to increase fees for the remainder of the year, suggesting that by the last quarter of the financial year, the difference between the cap and fees will be even wider. 

 

16 per cent of LDC services are trading with fees above the fee cap, an increase of 4 per cent on September 2020, and a substantial 32 per cent of FDC services are trading above the fee cap, an increase of 13 per cent on the previous years. OSHC services have actually seen the proportion decline over time. 

 

The increases experienced in the LDC and FDC space are cause for concern and counter a key tenet of the CCS subsidy framework that the CCS cap would act as a disincentive for services to raise fees too far due to the increased relative burden they would have on families the further the hourly cost rose relative to the cap. 

 

Early indications are that this assumption and the mechanism inserted in the legislation to address it  may be breaking down. 

 

First Nations children attending ECEC bounces back to new record in Q3 2021

 

The number of First Nations children attending an ECEC service bounced back strongly after a weak quarter in June 2021 to record a new record level of attendance in the September quarter. 

 

53,600 children attended either an LDC, FDC or OSHC service in the three months to September 2021, up from just 36,570 in the previous quarter and 32,360 in the same period in 2021. 

 

The broader sector numbers correspond with those recorded at LDC services with attendances now well above the pre-COVID 19 levels with the expectation that these continue to climb as new policy measures introduced by the Albanese Government further support increased attendance. 

 

To read the latest DoE report and access their data tables please click here.