LDC supply growth momentum starting to pick up after eighteen months of modest gains

The number of licensed long day care (LDC) centres in Australia rose by 3.5 per cent in the three months to June 2023, marking the largest increase in just under two years according to the latest Australian Children’s Education and Care Quality Authority (ACECQA) NQF Snapshot.

 

The period also saw the highest number of centres opened since March 2020, when the previous high water mark for centre openings was recorded just before the COVID-19 pandemic began, suggesting that developers are now starting to overcome inflation and labour shortage constraints that had previously impacted delivery timetables. 

 

 

It is also likely that developers and operators have worked hard to open their centres prior to the implementation of the new child care subsidy (CCS) affordability measures that came into effect in July 2023 in a bid to support the increased demand from families the changes are likely to bring. 

 

Substantial jump in Queensland key contributor of broader increases 

 

On a state by state basis, Western Australia is currently seeing the fastest overall growth rate but Queensland saw its growth rate jump from 2.8 per cent in the March quarter to 4.3 per cent in June which was a key contributor to the national step up in overall growth rates recorded. 

 

Queensland service approvals are now growing as fast as they were before COVID-19 and only 0.7 per cent away from the fast year on year growth recorded in the state in nearly ten years. 

 

 

Four states are now tracking materially above the national average, with only Northern Territory, New South Wales and Tasmania lagging. 

 

Ratio of long day care centres to preschools break decisively higher 

 

The LDC setting pick up in growth has taken place against a backdrop of contracting supply in family day care (FDC) and kindergarten / preschool services which saw falls of 10.0 per cent and 0.4 per cent respectively in the three months to June 2023. 

 

Notably, the number of LDC services relative to kindergarten and preschool services increased to a new record of 2.89 : 1 moving decisively higher after several quarters of very moderate growth. 

 

 

Given the well telegraphed intentions of key state jurisdictions such as Victoria and New South Wales to work towards the provision of universal preschool / kindergarten for children across the states it seems thus far that any anticipated boost in demand these policies will create will be met by the LDC sector as opposed to sessional type services. 

 

Long stretch of strong growth in OSHC sector comes to an end

 

The long stretch of post COVID-19 outside school hours care (OSHC) service openings, and re-openings has started to subside, two years after it began with this quarter recording growth of just 2.0 per cent, significantly below the 5.0 per cent levels recorded across 2022. 

 

 

Overall there are now 4,954 OSHC services operating across Australia, with NSW and VIC being the largest markets with 1,558 and 1,479 respectively. 

 

To read the latest quarterly snapshot click here.