Supply of new LDC centres increasingly outstripping demand says latest DOE data

The growth in new long day care (LDC) centres nationally, although relatively muted compared to pre COVID-19 levels, is increasingly outstripping growth in attendance, new data from the Department of Education’s Child Care in Australia reports shows. 

During the three months to March 2024, the number of LDC centres in operation across Australia increased by 3.2 per cent compared to the same period in 2024, however the growth in children’s attendance saw an increase of just 1.2 per cent, well below the 2.6 per cent rate twelve months earlier. 

Although it is important to remember that childcare markets are highly localised and individual catchments may not be representative of national level trends, the gap in supply and demand growth rates has now widened to 2.0 per cent. 

What is particularly notable is that the widening gap has has come after substantial improvements in affordability triggered by the implementation of the Anthony Albanese’s Cheaper Child Care Bill in July 2024 which saw overall entitlements increase by 26.1 per and affordability as measured by out of pocket costs improve by close to 13 per cent.  

851,210 children attended a LDC service in the three months to March 2024, marginally higher than in the previous three months but not enough to signal with confidence that the previous growth rates are intact. 

The consequence of rising supply relative to demand is that the average attendance per centre continues to move lower, reinforcing a trend that has been in place since the onset of COVID-19. 

On average each LDC in Australia saw attendance of 91.8 children per day, the lowest level recorded for a March quarter on record, and more than likely a signal that occupancy growth across LDC networks is less buoyant than previous years. 

It is unclear what is driving this muted attendance growth, however erosion of CCS affordability gains by ongoing, higher than average LDC fee increases and persistent “cost of living” stresses amplified by rising interest rates are likely to be important drivers. 

Until either one, or both, of these dynamics recedes the risks that attendance growth continues to stagnate are high. 

To read the Department of Education’s Child Care in Australia reports click the link.