Cheaper Childcare Bill affordability savings continue to erode as prices rise again

The net cost of early childhood education and care (ECEC) as measured by the ABS’ quarterly CPI data series has registered a 3.2 per cent quarterly increase taking the overall rise since the implementation of the Cheaper Childcare Bill affordability measures to 12.1 per cent. 

Overall prices across Australia’s eight state and territory capital city metropolitan areas are now just 2.7 per cent lower than the levels recorded in the three months to June 2024, having clawed back the majority of the 13.2 per cent fall in the net cost of ECEC that occurred immediately after the increases in the Child Care Subsidy. 

A closer look at the actual price moves since the legislation was introduced show material divergences developing across the major cities with Canberra leading the way and Melbourne lagging. 

The cost of ECEC in Canberra is now 3.3 per cent higher than June 2024 with all of the 11.9 per cent savings now gone, whilst prices in Melbourne are still around 6.1 per cent lower than the same period, signalling more modest price increases in the last 12 months relative to its peers. 

The balance of other cities are still showing savings but clearly the majority of savings across the board have now been neutralised by generalised price increases. 

Brisbane continues to have the highest relative price levels, closely followed by Perth where activity in the ECEC space has been particularly vibrant in recent months with growth in new centre openings reaching almost 6.0 per cent, well above other states and territories. 

Consistent with the change in prices since the implementation of the Cheaper Childcare Bill, Melbourne’s overall price levels are at the lower end of the range, a dynamic that has been in place more or less since the end of COVID back in late 2020. 

Looking over the longer term however, it is clear that once again prices are approaching a level that has triggered a policy response with the introduction of the Child Care Subsidy (CCS) in 2018, the pre-election CCS changes in 2022 and the Cheaper Child Care Bill in 2024 being the most recent examples. 

That being said the 4.4 per cent price caps introduced as part of the Worker Retention Payment will undoubtedly anchor prices over the next several quarters which may negate the need for another round of major CCS affordability measures. 

With a General Election just around the corner, during which ECEC is likely to play a prominent role again and cost of living issues are likely to still front and centre, it is entirely possible that new policy measures will be announced to mitigate further price gains.