LDC attendance touched a new record in Q4 2024 but growth rates remain concerningly subdued

The number of children attending a long day care (LDC) centre reached a new record level in the three months to December 2024 however the rate of growth continued to underwhelm, new data from the Department of Education has shown.

The December quarter saw 857,940 children attend an LDC service, marginally more than the prior record level recorded in December 2023, with over 81 per cent of those attending living in New South Wales, Victoria and Queensland. 

The historic pattern of seeing the largest numbers of children attending in the final three months of the year is intact but the increase relative to prior years continues to underwhelm, with the 0.8 per cent growth rate recorded under half of last year’s and well below historic trends. 

That being said, the last three quarters have now recorded growth of below 1.0 per cent for the first time in well over a decade signalling very strongly that the current affordability and availability mix, as well as families personal circumstances, is not incentivising the enrolment of additional children into the LDC system.  

Notably, the current Government’s Cheaper Child Care bill reforms implemented in July 2023, which came with a massive jump in Child Care Subsidy (CCS) spend has failed to generate any meaningful demand growth at all, a rare occurrence when compared to other major affordability changes like the implementation of the CCS in 2018. 

Whether this is due to cost of living pressures or birth rate related factors is unclear at this stage but what is clear is that despite deteriorating demand fundamentals the steady supply of new centre openings is continuing with a 3.8 per cent rise in LDC centres recorded year on year. 

The gap between demand (attendance) growth and supply (total centres) growth remains at the widest point for at least the last two years and although early learning is a highly localised pursuit, the persistent divergence will at the margin be placing some providers under tangible competitive pressure. 

When considering the number of children attending an LDC service on average the medium, since COVID-19, has been lower, and with cautious enquiry and enrolment growth cited by the larger ASX listed providers in their recent 2024 reporting it is unlikely that a major bounce back will be recorded in the first quarter of 2025. 

Against that backdrop approved providers will be encouraged with the finalisation of the legislation that will allow for the implementation of the Three Day Guarantee on 1 January 2026, a development that will more than likely boost demand in communities where the Activity Test was previously a barrier to entry however, it remains to be seen whether it will be sufficient to catalyse a return to pre COVID-19 rates of growth. 

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