Fee increase pressure at LDCs remains elevated as 8%+ growth rate persists

The growth in fees at long day care (LDC) centres nationally recorded over eight per cent annualised fee increases for the third consecutive quarter, new data from the Department of Education’s Child Care in Australia reports shows. 

 

The average cost of one hour of LDC was $13.05 in the three months to March 2024, 8.75 per cent higher than the same period in 2023 and 1.6 per cent higher than the three months to December 2023. 

 

 

The increase represents the third consecutive increase above 8.00 per cent, with 8.94 per cent and 8.90 per cent recorded in the third and fourth quarters of last year, signalling that the drive to increase fees in the wake of the introduction of the Cheaper Child Care Bill changes has yet to flush through the system. 

 

Notably, the increases appear to track relatively closely the trend of increased entitlements disbursed to families in the form of Child Care Subsidy (CCS) and Additional Child Care Subsidy (ACCS) which combined are up a massive 25.1 per cent compared to 2023 levels. 

 

 

CCS at LDC services now accounts for 81 per cent of all entitlements disbursed, Outside School Hours Care (OSHC) for 10 per cent and Family Day Care (FDC) for 5 per cent, with the balance made up of ACCS and In Home Care CCS. 

 

An interesting consequence of the impulse to raise fees is that as of March 2024 the highest percentage of LDC services on record now have fees above the fee cap compared to previous first quarter levels with 28 per cent reporting above in the period, compared to 27 per cent last year. 

 

 

This means that 28 per cent of all LDC services are pricing their care and education above the fee cap hourly rate of $13.73 which assumes a 10 hour day is $137.30 per day. 

 

The impulse to raise fees in OSHC and FDC settings relative to the fee cap has been less strong, with both recording falls in the percentage of services with fees over the cap compared to previous years. 

 

As we approach the release of the Productivity Commission’s report into the Early Childhood Education and Care sector it is likely that focus on the inability of built in stabilisers within the CCS framework to reign in persistent fee increases will return. 

 

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