Labor’s cheaper childcare policy reveals parents in cities lose out

We look at the winners and losers of Labor’s new cheaper childcare plan. Which category do you fall in?

The much anticipated changes to the child care subsidy rate should benefit nine out of 10 families.

However, some families paying the highest fees are disappointed they won’t get the financial relief they were hoping for, with the situation excerbated by rising childcare fees.

Benjamin Balk, founder and CEO of Kindicare, a website and app that helps parents compare childcare centres, has looked at the winners and losers ahead of the changes due to kick in on July 10.

“The vast majority of Australian families will be better off from July, with the subsidy now covering a higher proportion of early learning fees for most families, and accessible to families with household incomes up to $530,000 a year,” Mr Balk said.

But there are a number of surprise winners – and a few losers, including families living in the cities where fees are higher than the hourly subsidy cap rate, single mums and the taxpayer.

WINNERS:

Majority of working families with children under 5

More than 90 per cent of Australian families will be better off under the child care subsidy changes that take effect from July 10. Despite fee increases, most with children attending early learning services will save money.

Property developers

With more of the income of early learning providers being paid through government subsidies, it effectively creates an environment where owners of childcare facilities are receiving Government backed rent making them safe assets, with most rents increasing at CPI which is higher than interest rates, creating a profitable environment for property developers and commercial real estate investors.

Child care providers

The increase in subsidy will mean that more of the revenue of childcare providers is coming directly from Government, rather than payments direct from parents. This will improve cash flow and reduce the risk of bad debts from families struggling to pay. In addition, the subsidy increase is likely to drive greater demand.

Child care staff

With the largest cost for any early learning operator being staff and an award rise to 5.75 per cent is one of the main drivers of child care fee increases by early learning providers.

The Federal Labor Government

Labor has been successful in implementing one of their major election promises that they campaigned on at the last election.

LOSERS:

Urban parents

The hourly rate cap limits the amount of subsidy that can be claimed per hour depending on the type of care and the age of the child. For long daycare this cap is $13.73 per hour from July, or $164.76 for a full day session. Parents affected – mainly in metro areas – will have to bear the full cost out of pocket for any further increases.

Single mums and parents studying and working casual or part time hours

The activity lest limits the amount of subsidy that a family can access which affects children from families where one or both parents aren’t currently studying or working as well as affecting those parents, particularly from single parent households, where working hours are less structured or consistent.

Working mums with partners on high incomes

In many cases, the secondary income earner can see some, or all of their wage, go to childcare costs providing a clear disincentive to re-enter or participate in the workforce.

Families earning more than $530,000

Families with a combined household income of more than $530,000 per annum cannot access any child care subsidy, meaning their family’s access to early childhood education and care is completely out of pocket.

Taxpayers

Subsidised early childhood education and care doesn’t come cheap with taxpayers to foot a bill next year that is forecast to exceed $12.5 billion next financial year.

KindiCare founder and CEO Benjamin Balk.

Go to the KindiCare calculator to see how you will fare when the new subsidy rate hits on July 10.

PRICE PAIN IN 222 SUBURBS

Daycare centres in 222 suburbs across the country are charging more than the hourly subsidy rate cap set by the government.

Parents sending their kids to childcare in those suburbs will benefit the least when Labor’s new cheaper childcare policy kicks in on July 10, especially if fees increase again in the next six months.

It comes as a number of major daycare groups have announced a mid year fee increase to help pay for a 5.75 per cent staff award wage rise and other costs.

New data reveals that parents – in mainly urban suburbs – who are already paying more than the hourly rate cap of $13.73 or $164.76 a day for a 12 hour session, will have to suck up any future fee rises themselves.

Benjamin Balk, Founder and CEO of the KindiCare app and website, said the new changes meant families could claim up to 90 per cent of the hourly fee.

The changes will benefit nine out of 10 families.

KindiCare founder Benjamin Balk. Picture: Supplied.

But while the government is also increasing the hourly cap by 7.8 per cent on July 10, it is not keeping up with the fee increases.

“The child care subsidy legislation has applied this flat hourly fee cap nationally,” Mr Balk, who has provided the exclusive data, said.

“Suburbs in more expensive cities such as Sydney and Melbourne are impacted much more than other capital cities, such as Adelaide, Hobart and Darwin which have no centres charging fees that are higher than the hourly rate cap.”

Parents in some suburbs in Brisbane, Western Australia and the ACT are also impacted.

G8 Education is increasing its fees by 3.88 per cent in July following an increase in January of six per cent. Compounded, that works out to be over 10 per cent in fee increases this calendar year.

Goodstart is increasing its fees by 7.8 per cent, one of its highest ever increases, however, it is also increasing wages by seven per cent.

Generic photo of children at a daycare centre / childcare centre. Picture: iStock

Most other large providers who provided mid year fee increases to KindiCare, that have not yet been announced publicly, range between seven per cent and 11 per cent.

“It used to be one fee increase a year, but in the last couple of years there have been out of cycle increases,” Mr Balk said.

One Sydney mum, who is also an educator and who did not want to be named, said she and her husband had a joint income of around $80,000, but because they pay some of the highest fees in the country, they won’t benefit from the cheaper childcare policy.

“Our fees were $170 and are due to go up in a couple of weeks to $190,” said the north shore mother of a two-year-old.

“We won’t be worse off, but we won’t be any better off after July 10, which is really disappointing.

The cheaper childcare policy should benefit nine out of 10 families, according to the government.

“I can’t see where this money is going. The centre is only meeting standards, it is not exceeding. I think they’re taking advantage.

She said to add insult to injury while many educators are set to get a 5.75 per cent wage rise, she is not getting one because she is already being paid above award wages.

“It’s such a broken system,” she said.

Minister for Early Childhood Education Anne Aly said from July 10 early childhood education and care will be more affordable for around 1.2 million Australian families, including 265,000 families in regional areas.

“There are already hourly rate caps in place, putting downward pressure on fees, and we’ve also tasked the ACCC with investigating the many factors that drive cost,” she said.

The suburbs where at least one daycare centre is charging more than the hourly subsidy rate cap effective from July 10, 2023:

AUCHENFLOWER Queensland

BRACKEN RIDGE Queensland

BRISBANE Queensland

HARRISTOWN Queensland

HIGHFIELDS Queensland

LONGREACH Queensland

MORAYFIELD Queensland

NUNDAH Queensland

PADDINGTON Queensland

PEREGIAN SPRINGS Queensland

RED HILL Queensland

RICHLANDS Queensland

WESTBROOK Queensland

ALEXANDRIA New South Wales

ARTARMON New South Wales

ASHFIELD New South Wales

ASQUITH New South Wales

BALGOWLAH New South Wales

BALMAIN New South Wales

BARANGAROO New South Wales

BEACONSFIELD New South Wales

BEAUTY POINT New South Wales

BELLA VISTA New South Wales

BEROWRA New South Wales

BONDI New South Wales

BONDI BEACH New South Wales

BONDI JUNCTION New South Wales

BREAKFAST POINT New South Wales

BRONTE New South Wales

BROOKVALE New South Wales

BURWOOD New South Wales

CAMMERAY New South Wales

CARINGBAH New South Wales

CASTLE HILL New South Wales

CHATSWOOD New South Wales

CLOVELLY New South Wales

CONCORD WEST New South Wales

CONDELL PARK New South Wales

COOGEE New South Wales

CREMORNE New South Wales

CROMER New South Wales

CROWS NEST New South Wales

CROYDON New South Wales

DARLINGTON New South Wales

DOUBLE BAY New South Wales

DOVER HEIGHTS New South Wales

DURAL New South Wales

EDGECLIFF New South Wales

ELANORA HEIGHTS New South Wales

ENMORE New South Wales

EPPING New South Wales

ERSKINEVILLE New South Wales

FAIRLIGHT New South Wales

FIVE DOCK New South Wales

FORESTVILLE New South Wales

FRENCHS FOREST New South Wales

FRESHWATER New South Wales

GLADESVILLE New South Wales

GLEBE New South Wales

GLENWOOD New South Wales

GORDON New South Wales

GYMEA New South Wales

HABERFIELD New South Wales

HAYMARKET New South Wales

HENLEY New South Wales

HORNSBY New South Wales

Hunters Hill New South Wales

HURSTVILLE New South Wales

JANNALI New South Wales

KELLYVILLE New South Wales

KELLYVILLE RIDGE New South Wales

KENSINGTON New South Wales

KILLARA New South Wales

KILLARNEY HEIGHTS New South Wales

KINCUMBER New South Wales

KINGSFORD New South Wales

LANE COVE New South Wales

LEICHHARDT New South Wales

LIDCOMBE New South Wales

LILYFIELD New South Wales

LINDFIELD New South Wales

MACQUARIE PARK New South Wales

MANLY New South Wales

MANLY VALE New South Wales

MAROUBRA New South Wales

MAROUBRA JUNCTION New South Wales

MARRICKVILLE New South Wales

MILLERS POINT New South Wales

MILSONS POINT New South Wales

MONA VALE New South Wales

MOSMAN New South Wales

NAREMBURN New South Wales

NEUTRAL BAY New South Wales

NEW LAMBTON New South Wales

NEWTOWN New South Wales

NIAGARA PARK New South Wales

NORTH PARRAMATTA New South Wales

NORTH RYDE New South Wales

NORTH SYDNEY New South Wales

NORTH TURRAMURRA New South Wales

OATLANDS New South Wales

PADDINGTON New South Wales

PYMBLE New South Wales

PYRMONT New South Wales

QUEANBEYAN New South Wales

QUEENS PARK New South Wales

RANDWICK New South Wales

REDFERN New South Wales

RHODES New South Wales

RIVERVIEW New South Wales

ROSE BAY New South Wales

ROSEBERY New South Wales

ROSEVILLE New South Wales

ROUSE HILL New South Wales

ROZELLE New South Wales

RYDE New South Wales

SEAFORTH New South Wales

SOUTH COOGEE New South Wales

SOUTH HURSTVILLE New South Wales

SOUTH TURRAMURRA New South Wales

ST IVES New South Wales

ST LEONARDS New South Wales

STRATHFIELD New South Wales

SUMMER HILL New South Wales

SURRY HILLS New South Wales

SYDNEY New South Wales

SYDNEY OLYMPIC PARK New South Wales

THE ROCKS New South Wales

TUGGERAH New South Wales

TURRAMURRA New South Wales

ULTIMO New South Wales

VAUCLUSE New South Wales

WAHROONGA New South Wales

WAITARA New South Wales

WARRAWEE New South Wales

WARRIEWOOD New South Wales

WATERLOO New South Wales

WAVERLEY New South Wales

WEST PYMBLE New South Wales

WEST RYDE New South Wales

WILLOUGHBY New South Wales

WOOLLAHRA New South Wales

WOOLLOOMOOLOO New South Wales

ZETLAND New South Wales

ACTON Australian Capital Territory

BONYTHON Australian Capital Territory

CONDER Australian Capital Territory

GOWRIE Australian Capital Territory

GUNGAHLIN Australian Capital Territory

NICHOLLS Australian Capital Territory

ALBERT PARK Victoria

ALTONA Victoria

ALTONA NORTH Victoria

ARMADALE Victoria

ASCOT VALE Victoria

ASHBURTON Victoria

ASHWOOD Victoria

BALACLAVA Victoria

BALWYN NORTH Victoria

BEAUMARIS Victoria

BENDIGO Victoria

BENTLEIGH Victoria

BLACKBURN Victoria

BOX HILL Victoria

BRIGHTON Victoria

BRIGHTON EAST Victoria

BRUNSWICK EAST Victoria

CAMBERWELL Victoria

CARLTON Victoria

CAROLINE SPRINGS Victoria

CAULFIELD Victoria

CAULFIELD NORTH Victoria

CHADSTONE Victoria

COBURG Victoria

DONCASTER Victoria

DONCASTER EAST Victoria

ELSTERNWICK Victoria

ELWOOD Victoria

ESSENDON Victoria

GLEN IRIS Victoria

HAWTHORN Victoria

HIGHETT Victoria

HUGHESDALE Victoria

IVANHOE Victoria

KEILOR EAST Victoria

KEW Victoria

MALVERN Victoria

MALVERN EAST Victoria

MARIBYRNONG Victoria

MCKINNON Victoria

MELBOURNE Victoria

MONT ALBERT Victoria

MOONEE PONDS Victoria

NORTH MELBOURNE Victoria

NORTHCOTE Victoria

PARKVILLE Victoria

POINT COOK Victoria

PORT MELBOURNE Victoria

PRAHRAN Victoria

PRESTON Victoria

RESEARCH Victoria

SOUTH KINGSVILLE Victoria

SOUTH MELBOURNE Victoria

SOUTH YARRA Victoria

SOUTHBANK Victoria

SPOTSWOOD Victoria

ST KILDA Victoria

ST KILDA EAST Victoria

THORNBURY Victoria

APPLECROSS Western Australia

ATTADALE Western Australia

BEDFORDALE Western Australia

BENTLEY Western Australia

CARINE Western Australia

FLOREAT Western Australia

HIGHGATE Western Australia

MELVILLE Western Australia

NORTHBRIDGE Western Australia

PERTH Western Australia

WEMBLEY Western Australia

WEST LEEDERVILLE Western Australia

YOKINE Western Australia

Source: KindiCare

Originally published as Labor’s cheaper childcare policy reveals parents in cities lose out