Growing calls for daycare rate cap as providers pocket child care subsidy

Mums’ forums have been inundated with stories of childcare services wiping out government subsidies with exorbitant fee increases, prompting calls for a cap on rates.

Central Coast mum Tash Bavester is speaking out about the “heartbreaking” impact of childcare fee increases. Picture: Richard Dobson

Parents across NSW have been left fuming by hikes to childcare fees far in excess of what they’ve been able to recoup by changes to the government subsidy, sparking calls for a cap.

Mums’ forums have been inundated with stories of daycare centres raising their rates by up to $20 a day, coinciding with increases to the Child Care Subsidy (CCS) and effectively cancelling out the government rebate or leaving families worse off.

One mum on Sydney’s north shore said her child’s centre raised its rates from $170 to $190 per day in July, a hike she described as “just crazy” given fees have only risen by $5 in previous years. Others said their daily rates had been hiked three times this year alone.

“Heartbroken” Narara mum-of-two Tash Bavester called on the federal government to intervene and said the steep increase “just doesn’t add up”.

“The government should have put a cap on price rises … the money’s not going to the workers, it’s going to the execs,” she said.

Sending their two kids, five-year-old Abigail and two-year-old Lincoln, to daycare is a $450-per-week struggle for Tash and Mark Bavester, even with a rebate. Picture: Richard Dobson

Ms Bavester and her partner Mark were expecting to end up with an extra $100 for the grocery budget when the higher CCS rate came into effect in July, but after being slugged with a $15 fee increase, sending their five-year-old daughter Abigail and two-year-old son Lincoln to daycare is now leaving the family $450 out-of-pocket every week.

With half the couple’s combined wages being spent on childcare and much of the rest going towards the mortgage, Ms Bavester said the family has had to make tough choices like cutting out kids’ sport and even basic groceries.

Mums and dads across NSW are being forced to make tough decisions after childcare centres hiked fees beyond what higher government subsidies could account for.

“I have to stock up on toilet paper and dishwashing liquid when it’s on sale because I don’t know when I can afford it next,” she said.

Thrive by Five campaign director Jay Weatherill also backed calls for a cap,and said “more needs to be done” to stop subsidies being use to bolster profits.

“The government just keeps writing cheques and it doesn’t go to parents, it just goes straight into the pockets of the providers,” he said.

An ACCC inquiry in childcare costs, due to be finalised in December, has already found “market forces” have failed to put enough downward pressure on prices, and fees have increased by 20 per cent on average nationwide since 2018.

The Minderoo Foundation’s Thrive by Five campaign director Jay Weatherill has backed calls for a cap.

One-in-five centre-based daycare services are charging above the hourly rate cap of $13.73 paid out under the CCS, an interim report found.

Federal Minister for Early Childhood Education Dr Anne Aly said the government’s changes to the CCS have made 1.2 million families better off since July.

“The ACCC interim report … revealed that the reforms the previous government introduced to cap prices haven’t worked,” she said. “We know there is more work to be done.”

Minister for Early Childhood Education Anne Aly said the changes had made families better off. Picture: NCA NewsWire

Upgrades are also coming to make the government’s official childcare comparison website Starting Blocks more transparent, and will soon show how individual providers’ fees, revenue and profit have changed over time.

Australian Childcare Alliance NSW CEO Chiang Lim said the increase in fees is largely down to the 5.75 per cent minimum wage increase mandated by the Fair Work Commission, as well as increased insurance costs and real estate expenses.

“We try very hard to absorb as much as we can without impacting on the families but in the end, we can only we can only absorb so much,” he said.

“We feel the hurt that families are going through, and we feel the hurt too from worsening labour shortages, and a shrinking pool of educators and teachers.”