Soaring cost of childcare is ‘simply unaffordable and unsustainable’

Working parents are again feeling the pinch as childcare centres lift fees in response to skyrocketing food and utility bills and higher government subsidies.

Working parents are again feeling the pinch as childcare centres lift fees in response to skyrocketing food and utility bills and higher government subsidies.

The Herald Sun can reveal a centre in Melbourne’s CBD last week upped its fees in ­response to the Morrison government’s higher subsidy rates for two or more children in care, which Labor will keep.

The centre slashed its sibling discount, which it plans to phase out over three years, by a third. It also axed a 5 per cent discount for paying in advance.

In a letter to families, the centre said rising food, resources and utilities bills, along with wage increases for staff, required it to raise fees – which were already more than $155 a day for some families before subsidies.

G8 Education also ­increased its fees last week in response to the “unexpectedly high surge in inflation”.

“We appreciate these cost pressures are being felt across all Australian families and businesses, and we do not take this decision lightly,” a spokeswoman said, adding it was also investing in retaining workers amid sector-wide shortages.

“The childcare subsidy does not affect our operating costs and is therefore not related to how we determine fees.”

It comes after Herald Sun revealed childcare is costing parents up to eight per cent more this year, with Victorians now paying the second-highest fees in the country after NSW.

Even parents in middle-income suburbs are being squeezed, with centres in Blackburn, Keilor East, Caulfield and Glen Iris charging average fees of more than $150 a day.

OECD data shows Australian childcare is the second most expensive in the world, with industry experts predicting more pain for parents to come over the next year.

Centres are reporting their most difficult year in a decade, with staff shortages, inflationary pressures, spiralling rents and lower occupancy rates putting further pressure on costs and fees.

Kids and Co in Docklands manager Tari Klisaris with children Archie, Sophie, Penelope, and Abhiram. Picture: Tony Gough

The Parenthood executive director Georgie Dent said out-of-pocket costs for early learning are up 14.7% since May 2019. “For most working families after housing early learning is the biggest source of financial pain and it is simply unaffordable and unsustainable,” she said.

It comes as some parents from larger for-profit providers report that federal subsidies are not being passed onto them, prompting calls for tighter government oversight.

New government figures show parents in some Melbourne suburbs are paying twice as much as those in country areas for before and after school care and up to 70 per cent more for long day care.

Up to two-thirds of services in mid and high- income suburbs continue to charge well above the federal government fee cap, leaving parents more and more out of pocket.

Analysis of the latest data from the federal Department of Education shows the mean childcare prices range from $8.91 an hour in Gippsland South West compared to $13.35 in Stonnington West, which covers Prahran and Malvern.

The Aussie average is $10.80 an hour.

Even before and after school providers are charging parents in leafy Melb suburbs twice the hourly fee of some country services – $6.18 an hour in Wangaratta and Benalla compared to $12.22 in Stonnington.

KindiCare figures also highlight the gap between city and country childcare costs, with South Yarra posting an average daily fee of $168, central Melbourne $162 and Armadale $159.

This compares to $89 a day on average in the country centre of Ararat, $91 in Yarram and $92 in Benalla.

John Cherry, a spokesman for GoodStart Early Learning, centres were facing significant challenges including “inflation on our inputs heading towards seven per cent, workforce shortages and record sick leave due to COVID and the flu, the ongoing impact of COVID resulting in lower occupancy rates and a booming property market putting pressure on rents on our centres”.

Benjamin Balk, founder and CEO of KindiCare, said fee increases of between four and eight per cent were being posted by centres across the board for the coming financial year.

“Direct government support stopped coming December although covid is still having an impact on low occupancy rates,” he said.

OECD data shows Australian childcare is the second most expensive in the world. Picture: iStock)

“Childcare centres need 65 to 70 per cent occupancy to break even and many aren’t getting that.

“There is also a desperate shortage of educators and many centres are paying above-award wages and incentives just to get staff.

“Prices are going up and there is more pain to come,” he said.

Tari Klisaris, owner of Kids and Co in Docklands, said city centres such as his which were only 60 per cent full were being squeezed financially. “CBD rents are doubling or tripling, and we are also handling the impact of the staff pay increase,” he said.

“All this money needs to come from somewhere, and we would like to see more support.”

Heathmont mother-of-two Diane Collis said rising childcare fees “come on top of kinder costs of up to $500 a term”.

“A lot of parents are struggling to make these payments,” she said.

A federal government spokesperson said the ACCC had been tasked with designing a price regulation mechanism for driving out-of-pocket prices down. “From July 2023, the government will make child care more affordable for 1.26 million families.”

Originally published as Soaring cost of childcare is ‘simply unaffordable and unsustainable’