Joint Media Release – Release of ACCC Child Care Pricing Interim Report

SENATOR THE HON KATY GALLAGHER
ACTING TREASURER

THE HON JASON CLARE MP
MINISTER FOR EDUCATION 

THE HON DR ANNE ALY MP
MINISTER FOR EARLY CHILDHOOD EDUCATION

 JOINT MEDIA RELEASE

 5 July 2023

RELEASE OF ACCC CHILD CARE PRICING INTERIM REPORT

From 2018 to 2022 child care fees grew faster than inflation according to the ACCC’s child care price inquiry interim report released today. 

The Albanese Government commissioned the ACCC inquiry to get a greater insight into the factors driving fee increases and to ensure we’re closely monitoring fees following the introduction of the Cheaper Child Care reforms. 

The interim report looked at child care fees from 2018 to 2022, and found fees have increased across all service types by between 20 per cent and 32 per cent.                                                    

According to the interim report, parents indicated affordability is the most important consideration when deciding how much child care to use. 

This highlights the importance of the Government’s Cheaper Child Care reforms, which came into effect this month – providing cost of living relief for more than 1 million Australian families.  

In releasing the report, the ACCC has reminded providers that they need to be transparent and honest about the reasons for any price changes. 

As part of its ongoing investigations the ACCC will closely monitor fees following the introduction of the Cheaper Child Care reforms.

Other key findings in the report include: 

  • The average fee of larger providers was higher compared to small and medium providers. 
  • About half of households with the lowest incomes spend 5-21 per cent of their disposable income on child care and those on the highest incomes, spend 2-9 per cent.
  • Indigenous children are less likely to be enrolled in child care than non-Indigenous, around 10 percentage points below the total Australian child population.
  • Vulnerable households face more issues in terms of availability, choice and quality of care. In particular, quality ratings tend to be lower in areas of relative disadvantage.
  • The number of family day care and centre-based day care services charging above the hourly rate cap has almost doubled from 2018 to 2022. 

The report provides early insight into the ACCC’s investigations into prices, supply and demand for early childhood education and care (ECEC) and will inform its findings to be delivered to Government by the end of the year.  

The ACCC’s final report will make recommendations to Government on whether the current price regulation mechanisms are working well enough, and whether more can be done to keep fees in check and out-of-pocket costs down for families.  

The ACCC inquiry complements the Productivity Commission inquiry into ECEC which will provide advice about how to make the whole system more affordable and more accessible to set up early education for the next decade and beyond.

The ACCC’s interim report is available at here.

Quotes attributable to Acting Treasurer Katy Gallagher: 

“Making child care cheaper is one of the best ways we can ease pressure on working families and increase participation in our workforce. 

“Ensuring operators do the right thing and treat families fairly is vital which is why this inquiry is an important part of our plan to help families cope with rising cost-of-living pressures. 

“The interim report out today confirms why the ACCC’s action is so important.” 

Quotes attributable to Minister for Education Jason Clare: 

“Child care is important, but it’s also expensive. This report confirms that child care fees have increased faster than inflation from 2018 to 2022.

“That’s why our Cheaper Child Care package is so important, bringing those costs down for more than 1 million Australian families.

“But it’s vital that families are receiving the full benefit of these changes.  

“The ACCC is watching what’s happening right now to see whether providers across the country are playing by the rules. 

“If they don’t then the ACCC will recommend what actions we need to take to ensure the full benefit of Cheaper Child Care is passed on to families.” 

Quotes attributable to Minister for Early Childhood Education Dr Anne Aly: 

“It’s clear lower income families are feeling the impact of the cost of early childhood education – thanks to our changes to the Child Care Subsidy these families are now better off.  

“This important work has provided a consolidated view of what’s really happening in the early childhood education and care sector.

“This is just the first part of the ACCC’s review, I look forward to the final report at the end of the year.  

“We want to ensure Australia has a worldclass early childhood education and care sector, that is affordable and accessible and works for all families no matter their background.”