Child care fees rise 4.5% in December QTR, led by surge in Sydney prices says ABS CPI report

Child care prices registered a 4.5 per cent quarterly rise in the three months to December 2022, the largest such increase in over ten years, driven by an unprecedented surge of 8.0 per cent in Sydney according to the latest ABS CPI release. 

The quarterly ABS release, which measures net out of pocket expenses after the Child Care Subsidy (CCS) , for families living in Australia’s largest metropolitan areas, marks a step change in the overall price increases after a period of relative moderation from 2016. 

The last such quarterly increase of this size, excluding COVID and subsidy change periods, was recorded in March 2008 and measured 4.5 per cent signaling that this most recent increase is significant in terms of size. 

Although all eight state and territory capitals captured in the survey recorded increases, the most notable standout, and the key driver behind the large jump in the quarter was Sydney which saw prices rise 8.0 per cent in the three months to December. 

Not only was it the largest increase in seventeen years it also made some of the other increases, namely Brisbane, Darwin and Canberra look modest at 3.5 per cent, 3.0 per cent and 3.0 per cent prospectively. 

It is unclear at this juncture what has driven the early learning community in Sydney to respond so forcefully to current operating conditions with fee increases of this scale. Inflation is likely to have played a role in decision making but given it is not a localised phenomenon and impacts all communities in Australia it is hard to pin the blame on it. 

When looking at current fee levels relative to two important downward adjustments to affordability enacted in the last six years, namely the introduction of the Child Care Subsidy in July 2018 and the CCS adjustments in March / April this year, it is notable that even with the large increase in Sydney it is still tracking well behind Brisbane. 

Brisbane’s out of pocket expenses are now 11 per cent higher than just prior to the implementation of the CCS and 1.5 per cent higher than just prior to the affordability measures passed by the Coalition prior to the election last year. 

Melbourne, on the flip side, appears to have been rather more modest in its approach to fee increases compared to other metropolitan areas and in so doing still provides its families with a modicum of savings post affordability policy changes. 

Overall fee increases across Australia, although higher than before the implementation of the CCS, are still in aggregate lower than prior to the last set of affordability adjustments. 

That being said, with inflation still very much a reality for Australian businesses and families to contend with, one must expect the traditionally quite busy fee raising period in the first quarter of the calendar year to drive prices through the upper bound. 

View the latest ABS CPI data here.