Peak bodies respond to ACCC interim report into the market for ECEC supply

Peak bodies and representatives from the early childhood education and care (ECEC) sector have responded to the release of yesterday’s Australian Competition and Consumer Commission (ACCC) interim report into the market for the supply of childcare (sic.) services.

 

The report is the first from the ACCC since it was directed by the Treasurer in October 2022 to conduct the inquiry, which formally commenced on 1 January 2023.

 

The ACCC is consulting widely as part of the inquiry, including through roundtables with stakeholder groups, issuing information requests to ECEC providers, and meeting directly with providers.

 

The inquiry examines four different ECEC options: centre based day care, family day care, outside school hours care and in-home care. 

 

Findings from the interim report are based on large volumes of data Services Australia holds from administering the Child Care Subsidy, preliminary results of the ACCC’s parents and guardians survey and information provided to the ACCC by childcare providers.

 

More action needed for First Nations children

 

SNAICC’s response to the report was that it highlights the urgent need for bold early learning reforms to ensure Aboriginal and Torres Strait Islander children  get every opportunity to engage and benefit from early learning.

 

The report found that only 58 per cent of First Nations children were enrolled in ECEC in 2022, compared with 70 per cent of all Australian children. 

 

“As a direct result of not having access to high-quality early learning, Aboriginal and Torres Strait  Islander children are twice as likely to be developmentally vulnerable when they start school,”  SNAICC CEO Catherine Liddle said.

 

“If Aboriginal and Torres Strait Islander children are able to access high-quality early learning and  childcare, we can set them up for lifelong success.”

 

To support this goal, Ms Liddle called on the Albanese Government to reinstate the funding for Aboriginal and Torres Strait Islander led and operated ECEC services, and to remove the Activity Test, as well as improving access to ECEC in rural, remote and regional communities.

 

Lower fees in not-for-profit sphere

 

A core finding of the interim report was that fees in the not-for-profit sector were seven per cent lower, on average, than in for profit services, something with the Early Learning Association  Australia (ELAA) says is indicative of a potential way forward as Australia navigates workforce and availability pressures in the ECEC sector.

 

The report, ELAA Acting CEO Megan O’Connell says, “also shows that the childcare ‘market’ is not operating as you would expect.”

 

“Parents are choosing centres by location and availability, rather than cost. Areas with multiple childcare providers have higher costs, potentially because of the ability of families in those established areas to pay higher fees is a drawcard for new providers.”

 

“We’ve seen the impact of ‘childcare flooding’ where new providers swamp crowded markets, whilst other areas struggle to attract providers and soon become ‘childcare deserts’. The ACCC interim report provides initial data to confirm that the market is not operating as intended.”

 

The report also confirms the role that not-for-profit organisations play in servicing more disadvantaged areas, and are a larger presence in more remote parts of Australia.

 

“Over half of providers in outer regional Australia are not-for-profit with almost all providers in remote communities being from the not-for-profit sector,” Ms O’Connell notes. 

 

“ELAA urges the ACCC to seek further information to support it to understand the cost drivers in ECEC and where the significant government spend is going prior to releasing the final report at the end of the year.”

 

Report needs a fuller picture, ACA President says 

 

The Australian Childcare Alliance (ACA) noted that while the report found that fees rose faster than inflation and wage growth over the past four years (referencing both the Wage Price Index and the Consumer Price Index) it does not account for changes in policy settings which have substantially increased the cost of running a long day care based ECEC service in that time. 

 

“This report is the first step in this inquiry and a result of a process which we and many operators have been part of,” ACA President Paul Mondo said. 

 

“There have been significant changes to the operating costs of a long day care service since 2018 to meet those new policy settings resulting in increases that are not necessarily in line with CPI,” he continued. 

 

“This means that the indexation of the Child Care Subsidy since 2018 has not kept up with these changes. We know that many of our members are doing all they can to manage costs while providing high quality education.”

 

To access the interim report from the ACCC please see here.