Terms of reference for ACCC inquiry into pricing in the ECEC sector released

The Australian Competition and Consumer Commission (ACCC) has released the terms of reference for the inquiry requested by the Federal Government into pricing practices deployed by approved providers across the early childhood education and care sector. 

The report’s commissioning was a key pre-election pledge for now Prime Minister Anthony Albanese MP. The idea was first aired as part of his Budget Reply speech in October 2020 and continued to be a central commitment throughout his campaign. 

The terms of reference specify that the ACCC is required to hold an inquiry into the market for the supply of child care (ECEC) services with the following areas to be taken into consideration as part of their investigation:

A. Costs incurred by providers of early learning services as part of their operations including:

• the cost and availability of labour
• the use of land and related costs
• finance and administration costs
• regulatory compliance costs
• the cost of consumables

B. Prices changes since 1 January 2018 by providers of early learning services including:

• price changes following the commencement of the Family Assistance Legislation Amendment (Cheaper Child Care) Act 2022
• price changes as a result of Commonwealth policies that have the objective of lowering child care costs to consumers

C. How costs and prices differ by:

• Provider type (e.g. for profit and not-for-profit)
• Provider size (e.g. providers operating one service and providers operating multiple services)
• Type of ECEC services provided (e.g. centre based day care, outside school hours care, family day care and in home care)
• Age and characteristics of the child in an ECEC service
• Geographical location (e.g. urban, regional, and remote)
• Level of competition present in the market for the supply of services
• Overall NQF quality rating of services

D. Factors affecting demand, supply and competition in the market for child care services, including:

• the extent and existence of supplier practices and strategies in response to the existing government funding arrangements and regulatory settings
• the impacts on the market from COVID-19, including the impact of the temporary coronavirus response measures contained in the Child Care Subsidy Minister’s Rules 2017

E. The impact of the above factors on child care provider viability, quality and profits

F. The impact and effectiveness of existing price regulation mechanisms and any impediments inherent in those mechanisms to their effective operation

The terms of reference also stipulate that an interim report be completed and shared with the Treasurer by no later than 30 June 2023 and a final report be presented by no later than 31 December 2023.

To read the terms of reference please click here.