New supply of LDC services remains muted around levels last seen in 2016 says latest NQF Snapshot

The growth in supply of new long day care (LDC) centres across Australia rose 2.8 per cent year on year in the three months ended September 2022 according to the latest Australian Children’s Education and Care Quality Authority (ACECQA) NQF Snapshot.

 

The result was the third consecutive print below 3.0 per cent, levels not experienced since Q3 2016 and substantially lower than the 4.5 per cent increase seen just prior to the COVID-19 pandemic commencing in early 2020. 

 

 

Although it is unclear what the specific drivers of the slow down in LDC service approval issuance are, it is safe to say that acute skills shortages and inflationary pressures impacting the construction sector, as well as financial uncertainty from similar dynamics impacting the early childhood education sector will be combining to delay construction programs and greenfield decisions.

 

Looking at the performance of the larger states both New South Wales and Queensland recorded growth of under 2.0 per cent with the former recording the fifth consecutive quarter of sub 2.0 per cent growth. 

 

The growth of services in Victoria is higher at 4.4 per cent per annum, but is still almost 50 per cent lower than those recorded at the peak of the supply cycle in late 2018 and early 2018.

 

 

Across the smaller states and territories South Australia bucked the trend somewhat with an increase of 3.7 per cent, slightly higher than the June quarter of this year, but still well below peak levels of 6.0 per cent plus pre and post COVID-19. Western Australia was stable at around 4.8 per cent and the ACT saw zero growth, after posting a decline last quarter. 

 

Despite seeing more muted LDC supply growth and the pace of new service openings it was notable to see the ratio of LDC services to preschools and kindergartens tick up through a key level. 

 

There are now 2.8 LDC’s for every preschool and kindergarten across Australia. This varies from state to state given the different jurisdictional weightings and approaches to pre-school and kindergarten but the increase, after several stable quarters, is a timely reminder that LDC continues to grow relative to the other key centre based educational settings. 

 

 

NSW has the highest proportion of LDCs to preschools at 4.39 with QLD at 3.5, ACT at 1.96, VIC at 1.53 and SA at 1.10. Western Australia and Tasmania are excluded from the analysis given their kindergartens are managed within the school system. 

 

In the outside school hours care (OSHC) setting growth rates in new services remain very robust, comfortably exceeding levels last experienced in 2016. 

 

The number of new services increased by 5.3 per cent year on year with significant growth in VIC at 9.6 per cent and NSW at 6.6 per cent driving the increases. 

 

 

The family day care (FDC) setting saw its first decline in the number of schemes currently active since Q2 2021. There are now just 463 schemes licensed to operate in Australia, down from 1,100 in 2016. 

 

To read more about the Q3 2022 supply data access the ACECQA snapshot here.