New Peak Body report signals LDC sector in acute distress as closures mount

A new report from the Early Learning and Care Council of Australia (ELACCA) has confirmed that the rate of centre closures across its member base of for profit and not for profit providers has surged in 2026, with further increases anticipated in 2027. 

The council points to financial pressure, supply increases, policy reform and regulatory change as contributing factors, arguing that the loss of high-quality services cannot simply be explained as a market correction.

“Governments need to pay attention, because service closures are hurting children, families and educators,” ELACCA CEO Dr Amanda Walsh said, calling for stronger government oversight of early learning supply.

“The early childhood education and care sector is battling a perfect storm of financial pressure, policy reform and regulatory change. The pressures on providers are immense, and high-quality services are closing, much to the dismay of families and educators.”

Service closures accelerate across both for profit and not profit settings

ELACCA collected data from 13 of its 16 members, including not-for-profit and for-profit providers of early learning and care services, looking back at closures since 2024, and looking ahead for the next 12 months. 

The survey found that the cohort had closed 152 long day care (LDC) services across 2024, 2025 and year to date in 2026 however the number of services closed thus far in 2026 almost double than those closed in all of the prior year. 

Notably, 76% of the services closed in this period were operated by for profit providers, with the remaining one-quarter operated by not-for-profit providers and 13 per cent of the closed centres were rated exceeding the National Quality standard. 

A further 276 services (221 LDC and 55 preschool/kindergarten services) were deemed at risk of closing within the next 12 months with almost all of them (99%) currently dependent on cross-subsidy arrangements within the provider’s business.

Oversupply deemed major contributor, call for action intensifies

Oversupply of ECEC services is a significant problem in Australia the report notes and that the current ad hoc “market correction” process is unlikely to deliver satisfactory results for governments, or for children and families.

The report goes on to note that without government oversight, or at least monitoring, of service closures there is limited system-level visibility of whether quality services are being lost to the detriment of communities, whether closures are creating genuine gaps in provision, or whether new services are subsequently opening in areas that remain oversupplied.

In addition, the report calls out the very real possibility that should the demand landscape evolve in the years ahead, perhaps with the introduction of a more intentional universal child care model or a substantial fall in cost of living pressures, market dynamics could move rapidly to a concentrated undersupply in communities currently most impacted by closures. 

“Ultimately, responding to this instability might be a job for a national commission, but a commission is years away, and we need action now,” Dr Walsh said.

To read ELACCA’s report click here.