LDC supply growth continues to track well below historic averages says latest ACECQA snapshot

The growth in supply of new long day care (LDC) centres across Australia rose 2.8 per cent year on year in the three months ended December 2022 for the second consecutive quarter according to the latest Australian Children’s Education and Care Quality Authority (ACECQA) NQF Snapshot.

The result was the fourth consecutive print below 3.0 per cent marking the longest stretch under this level since at least 2016, and perhaps on record, signaling a continued reluctance on behalf of operators and developers to commit to new greenfield sites in light of ongoing construction cost increases and workforce shortages and longer completion times for ongoing builds. 

A total of 240 new centres were opened in 2022 across Australia. This compares to 253 in 2021 and 294 in 2020 both of which were impacted heavily by COVID-19. Last year’s growth was round 25 per cent lower than the peak in new centre openings 2019 when 319 were opened.

Looking at the performance of the larger states both New South Wales and Queensland once again recorded growth of under 2.0 per cent. Growth under 2.0 per cent is considered muted by historic measures and notably, NSW is now on its sixth consecutive quarter of sub 2.0 per cent growth which is unprecedented. 

Growth rates in Victoria, which have been structurally higher for a number of years, came in at 4.6 per cent per annum, a slight increase on last quarter but below the levels recorded this time last year and the 5.0 per cent mark which has acted as a ceiling for the last year or so.  

Western Australia, South Australia and the ACT, which between them account for around 16 per cent of all LDCs in Australia, saw mixed results with Western Australia recording a down tick in growth and South Australia and the ACT seeing small upticks. 

Regardless of these minor fluctuations, the overall picture across the Australian LDC setting is one of muted new supply relative to historic averages.

Family day care sees a return to contraction – OSHC sector records additional growth

In the family day care (FDC) setting the number of schemes operating across Australia fell again in the December quarter of last year. 

This is a significant development suggesting that the setting has yet to find a new equilibrium after more than five years of FDC scheme closures. There are currently 460 schemes operating across Australia, the lowest level for nearly a decade and nearly 60 per cent lower than the peak recorded in 2016.

At its peak around 230,000 children attended FDC services each quarter back in 2015 but now that number stands at around 90,000. A very significant drop with many of the children that would normally have been in FDC most likely transferring across to LDC services. 

In the outside school hours care (OSHC) setting growth rates in new services remain robust, with the big increase experienced as Australia emerged from COVID-19 sustained for the last three quarters. 

On a state by state basis the increase is being driven by Victoria, up 10.5 per cent year on year and NSW, up 5.0 per cent year on year with the other states and territories recording mixed gains and losses. 

Much of the increase in NSW and Vic is driven by school opening plans, state based initiatives and a rush to reopen services that were shuttered during the extended lockdowns in both states. 

To read more about the Q4 2022 supply data access the ACECQA snapshot here.