ABS reports 1.3% out of pocket expense increase as Cheaper Child Care savings erode

The Australian Bureau of Statistics has released its quarterly Consumer Price Index (CPI) series in which it reports that net out of pocket expenses for families using centre based early childhood education and care services rose 1.3 per cent in the three months to June 2024. 

 

The increase comes on the back of two previous quarterly 3 per cent plus increases that when combined have served to erode much of the savings created by implementation of the Cheaper Child Care Bill last year. 

 

Prices on average across Australia are now 5.7 per cent below those recorded in June 2024, just prior to the affordability measures being implemented, but notably much of the 13.2 per cent increase the measures created have now been eroded. 

 

 

The erosion in affordability, a function of fee rises since the Cheaper Child Care changes came into place, is particularly notable in Canberra which has seen savings of 11.9 per cent virtually wiped out in twelve months. 

 

Substantial reductions in affordability can be seen across nearly all states and territories major metropolitan areas with the exception of Hobart which is still seeing fees just over 10 per cent below the pre Cheaper Child Care changes. 

 

 

Viewed over a time series the step lower in net out of pocket costs is clearly evident with relative increases in prices over the period showing the gradual erosion in affordability gains and which metropolitan areas are leading and lagging. 

 

When considering a longer perspective it is clear that changes in funding policy act to improve affordability immediately post implementation but over time structural forces such as rising wages and rents lead providers to raise their fees which in turn reverses policy driven gains. 

 

 

The ABSs most recent release confirms this trend remains in place with prices to date having eroded 7.5 per cent of the 13.2 per cent gains from last year with further erosion likely to have occurred in the current quarter. 

 

That being said, and as we look ahead to the introduction of the Albanese Governments “worker retention payments,” and the associated fee increase caps that are a precursor to participation, the rate of change in net out of pocket expenses will more than likely start to fall as approved providers across Australia sign up to the new scheme.