Childcare centres told to ‘play by the rules’ ahead of increase to subsidy

The consumer watchdog is expected to play close attention to childcare providers looking to use a subsidy increase as cover to hike up fees.

Childcare providers planning to slug parents with higher fees to cover a subsidy increase have been warned the consumer watchdog will be paying close attention.

The federal government has said the more generous subsidy, which will cost $5.4bn over four years and apply from July, would slash out-of-pocket fees for around 1.2 million families.

But there are concerns any providers will use the subsidy as cover to hike up fees to meet rising costs.

Education Minister Jason Clare said the Australian Competition and Consumer Commission was monitoring whether providers were “playing by the rules or not”.

“Whether they’re lifting prices in accordance with inflation or not. And if they don’t, then they stand ready to act and give us the recommendations we need to make sure parents get value for money here,” he said.

The Prime Minister visited a childcare centre on Friday to celebrate the subsidy increase. Picture: NCA NewsWire / Nicki Connolly

The ACCC was directed to review spiralling prices in the sector last October. An interim report was handed to the government on Friday and is expected to be released in the coming weeks.

The final report will land on the Treasurer’s desk in December.

A review by the Productivity Commission is also under way as the government sets its sights on introducing a Medicare-style model of universal care in the long term.

Prime Minister Anthony Albanese, who appeared alongside Mr Clare at a Melbourne childcare centre on Friday, called the policy a win-win for workforce productivity and for children.

“This is an economic reform. This is not welfare. This is about boosting productivity. It's about boosting women’s workforce participation,” he said.

“But it’s also good for our youngest Australians. We know that over 90 per cent of human brain development occurs in the first five years.”

But deputy Liberal leader Sussan Ley wasn’t convinced the benefit would flow through to parents’ hip pockets and asked how Labor planned to pay for universal childcare.

The policy aims to boost women’s workforce participation, Picture: Getty Images

“(Mr Clare’s) promising free child care in the future when we can’t even get cheaper child care now. A universal scheme – who’s going to pay for it?” she told Seven.

“Is this government going to have to raise taxes to do that? Meanwhile, the subsidies that we're talking about that come in tomorrow are being eaten up by increases in fees, and that’s what I’m seeing all around me.”

“Parents are not necessarily going to find that they’re paying less.”

Thrive by Five, an early childhood campaign run by the Minderoo Foundation, urged the government to take action to crack down on greedy providers using the subsidy increase to mask an “unacceptable” hike to fees.

“Families will be better off financially regardless of increases, but providers who use this nation-building reform to build more profit off the backs of educators and families shouldn’t be given a free pass to price gouge,” director Jay Weatherill said.

Originally published as Childcare centres told to ‘play by the rules’ ahead of increase to subsidy