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LDC demand signals mixed as supply creeps higher according to latest DoE report
Jason Roberts
Sep 25, 2023
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The number of children attending a long day care (LDC) service in the three months to June 2023 fell back into the narrow range that has been in place since the end of 2021, a period which has seen enrolment grow at a markedly slower rate than prior to COVID-19. 
What is most notable about this data series is that after many years of a balance in supply versus demand between 2012 and 2018 there have been two shifts lower with the first catalysed by a supply surge post the implementation of the CCS subsidy in July 2018 and the second catalysed by a demand drop after the post COVID-19 bounce back. 
The data revealed in the latest release of the Department of Education’s Child Care in Australia Report shows LDC enrolments growing in the June quarter at 2.1 per cent year on year marking the sixth consecutive quarter of modest growth.
This period of post COVID moderation is in stark contrast to the strong and steady increases in year on year growth rates experienced in the run up and after the implementation of the Child Care Subsidy (CCS) legislation in 2018, a period that was relatively free of the inflation created cost of living concerns that pervade Australia today.
Growth in attendance being easily absorbed by new supply coming on
As demand shows increasing signs of moderating a steady increase in the number of new LDC centres opening and operating has shifted the balance between supply and demand gradually into more and more negative territory.
On average in the June quarter around 88.6 children attend an LDC centre in Australia, down from 89.2 last year, 92.9 five years ago, and 96.2 ten years ago.
What is most notable about this data series is that after many years of a balance in supply versus demand between 2012 and 2018 there have been two shifts lower with the first catalysed by a supply surge post the implementation of the CCS subsidy in July 2018 and the second catalysed by a demand drop after the post COVID-19 bounce back. Stagnant attendance growth does not necessarily equal stagnant occupancy
Although it is clear that the growth in the number of children enrolling in LDC has moderated it is important to recognise that occupancy performance in a centre is a function of not just the number of children that attend, but also the number of times those children attend per week.
Interestingly, this data series is almost the opposite of the attendance data in that prior to COVID-19 growth was growing moderately but post COVID-19 the increase in hours has grown sharply.
On average a child will now spend 32.9 hours in care, up around 10 per cent from the same period last year, an increase that will more than compensate operators for any lacklustre new enrolment demand.
What remains to be seen though at this juncture, despite positive anecdotal data emerging from operators, is how meaningful the impact of the new CCS affordability measures implemented in July 2023 will be on new enrolments and hours in care and also on supply growth as developers look to take advantage of anticipated gains.
To access the latest Department of Education Child Care Reports click here.
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