Still no sign of new LDC supply surge as Q1 2023 sees moderate growth of 3%

The growth in supply of new long day care (LDC) centres across Australia continues to grow at a moderate pace according to the latest Australian Children’s Education and Care Quality Authority (ACECQA) NQF Snapshot.

 

The number of LDC centres grew by 3.0 per cent year on year in the three months ended March 2023, a level that is substantially below the peaks recorded prior to the COVID-19 pandemic in 2020 and still below levels recorded since late 2016. 

 

 

The growth trends experienced are consistent with anecdotal evidence from key sector stakeholders that workforce shortages combined with inflation impulses have acted as headwinds to launching new greenfield projects across the sector. 

 

The first quarter of the year has often been an important launch period for new services however Q1 2023’s open rates were around 25 per cent lower than that recorded in March 2020. 

 

 

That being said, although overall growth rates and numbers remain moderate compared to previous highs there does appear to be a small bounceback from the low levels recorded across 2022. 

 

It remains to be seen whether the strong current demand dynamic for early learning services, which will be further boosted in July when a new round of Child Care Subsidy affordability measures are passed, creates sufficient incentive for developers to begin greenfield projects more meaningfully.

 

Across the larger states and territories the most notable trend is Victoria’s LDC opening rates which have now fallen back to seven year lows 4.2 per cent. There has been a gradual decline in open rates in Victoria since 2019 and current levels are 50 per cent below the highs recorded in 2017. 

 

 

Queensland saw a pick up in activity in the March 2023 quarter, as did New South Wales but to a lesser extent. The ACT, South Australia, Northern Territory and Western Australia all recorded the same or marginal changes with Tasmania stand out with a fall in growth from 4.6 per cent to 3.0 per cent. 

 

Although overall growth of LDC remains moderate compared to the past, it as a setting, has generated sufficient growth relative to preschool and kindergartens to see the ratio of the two touch a new record high. 

 

 

The number of preschool and kindergartens across Australia increased by 0.2 per cent in the March quarter, with perhaps unsurprisingly, Victoria generating most of that growth with the addition of 20 of the 22 new services. 

 

With multiple jurisdictions committing more openly to three and four year old preschool and kindergarten initiatives the creation of meaningful additional stand alone premises to deliver these programs are not yet evident in the data whilst LDC growth continues. 

 

Across the other key settings, family day care recorded another sizeable year on year contraction with a fall of 11.2 per cent. There are now just 452 schemes in operation, around 60 per cent lower than in 2016. 

 

The outside school hours care settings followed a recent strong string of quarterly growth with a 3.9 per cent increase driven predominantly by New South Wales and Victoria which both recorded growth of above 5.0 per cent. 

 

To read more about the Q1 2023 supply data access the ACECQA snapshot here.