Childcare costs to soar as staffing crisis, cost of living and rising interest rates bite

A chronic shortage of childcare workers nationwide is increasing pressure on parents, with some providers lifting fees by as much as $55 a week amid soaring costs and rising interest rates.

A chronic shortage of childcare workers nationwide is increasing pressure on parents, with some providers lifting fees.

A chronic shortage of childcare workers nationwide is increasing pressure on parents, with some providers lifting fees by as much as $55 a week amid soaring costs and rising interest rates.

Industry leaders and analysts said rising operational costs, such as food and rent, as well as the ­financial burden of meeting regulatory requirements, were behind increased fees.

A spokeswoman for not-for-profit SDN said childcare fees would increase from between $6 and $11 a day, depending on the size and running costs of the centre and the age mix of children.

She said staffing made up the majority of the costs, something exacerbated by sector-wide staffing shortages and Covid-19.

“Also educators in our centres continue to test positive for Covid and seasonal flu, and because we need to meet minimum staffing ratios by regulation we have to rely on more expensive casual and agency staff to keep our centres open,” she said.

Childcare expert Nesha Hutchinson said about 700 centres nationwide collapsed ­because reduced demand as a ­result of Covid-19 meant they were no longer viable.

Childcare expert Nesha Hutchinson.

“If childcare centres are increasing their fees as of the first of July, it’s generally so they can ­remain financially viable as ­opposed to just shutting the doors, which is happening a lot at the moment,” she said.

KU Children’s Services chief executive Christine Legg said staffing comprised about 80 per cent of the not-for-profit’s costs and prices for daycare had ­increased by 3 per cent in 2022.

“To be fair, the early childhood sector – certainly our workers – are really tired, they are fatigued,” said Ms Legg, adding fees ranged between $118.50 and $174 a day ­depending on the age of the child and location of the centre.

“They’ve been frontline workers since Covid began.

“They’ve always been vulnerable, always been there for children and families.”

G8 Education, which operates a number of centres nationwide, declined to say whether fees would increase but said daily fees were calculated based on running costs including rent, food, maintenance and the “operational ­environment … Fee reviews take into account changes in the operational environment, including prevailing economic con­ditions and outlook.”

KPMG senior economist Sarah Hunter said as well as wage increases, the childcare sector had to grapple with general inflationary pressures such as the rising cost of food and compliance with regulatory requirements.

She said the high cost of childcare was prohibitive and limited the participation of women in the workforce. “That predates Covid and predates the current environment, that’s a general structural issue in the economy,” she said.

IBISWorld senior analyst Victoria Baikie said for-profit operators could make money from childcare as demand meant parents would pay fees regardless of cost. “It is a growing industry due to the increasing presence of dual-income households, which require childcare more,” she said.

“The demand is still quite high, which supports prices continually going up.”

The Parenthood executive ­director Georgie Den. Picture: Sam Ruttyn

The Parenthood executive ­director Georgie Dent said the cost of childcare was the biggest source of financial pain for parents following housing, and it was unaffordable for families to ­absorb fee increases.

“Parents are effectively paying the wages of the educators, centre directors, rent or building costs of early learning facilities,” she said, drawing a comparison with primary school education. “Fees are funnelled through a lot of layers before they get to educators.”