ACCC reveals true cost of childcare

Short-staffed childcare centres are paying workers 20pc more than the award wage, with parents spending as much as $23,000 a year in out-of-pocket costs | SEE HOW YOUR AREA STACKS UP

Long waiting lists for childcare mean some babies will be walking and talking before they start daycare. Picture: istock

Short-staffed childcare centres are paying workers 20 per cent more than the award wage to keep them on the job, as 125,000 kids languish on long waiting lists for daycare.

An investigation by the Australian Competition & Consumer Commission found daycare fees have soared faster than inflation and wages since taxpayer subsidies to families increased in 2018.

Parents are spending as much as $23,000 a year in out-of-pocket childcare costs, which are now on a par with private school fees.

The ACCC has advised governments to build and operate their own childcare centres, or else pay grants or subsidies directly to childcare operators, in areas that are unprofitable for private operators.

It found the Albanese government’s increase to subsidies in July last year reduced parents’ out-of-pocket expenses for daycare by 11 per cent – but warned the relief could be short-lived.

“Our inquiry finds that historically when subsidies increase, out-of-pocket expenses decline initially but then tend to revert to higher levels,’’ its report states.

“Subsequent fee increases erode some of the intended benefit for households over time.

“The design and implementation of the child care subsidy has had only limited effectiveness in placing downward pressure on fees and constraining the burden on taxpayers.’’

The ACCC calls for an end to the “activity test’’ requiring parents to work or study in return for subsidised childcare, in a recommendation hailed by advocacy groups The Parenthood and Thrive by Five, as well as the ­nation’s biggest childcare chain, Goodstart Early Learning.

The ACCC found that some vulnerable children who would benefit the most from early childhood education – such as those with unemployed parents, as well as refugees and Indigenous children – are missing out.

Fresh data reveals that families’ out-of-pocket costs have soared as high as $90 per day – roughly $23,000 for a year of full-time daycare. Parents are paying between $60 and $90 per day in out-of-pocket costs across swathes of suburbs in Sydney, Melbourne, Brisbane, Perth and the ACT.

Parents with inner-city postcodes are spending one-third of an average take-home pay packet on daycare fees, as high rents and staff shortages inflate daycare centres’ running costs.

Parents will be counting the cost of childcare as wages rise to keep staff on deck.

The ACCC report shows that 14,000 childcare centres are paying staff up to 20 per cent above award wages. It warns that one in four childcare operators is losing money, or only just breaking even.

“Most childcare entities or businesses do not appear to be making excess profits, and approximately 25 per cent of childcare providers structured as companies are making almost no profit or suffering a loss,’’ the report states.

ACCC chair Gina Cass-Gottlieb said some children were falling through the gaps of the “one size fits all’’ childcare funding model.

She said waiting times for a place in some centres are so long that parents are unable to work, are quitting their jobs or cutting back on work hours to care for their children at home.

“In regional or remote areas, it’s much more likely children will be on a waiting list and may never ­receive a place,’’ she said.

“For families with children with disability, they can find there are no places available, and they’re turned away. It’s creating barriers to workforce participation and, of course, to the early childhood education benefits for children.’’

ACCC chairwoman Gina Cass-Gottlieb warns that vulnerable children could be missing out on early childhood education. Picture: Sam Ruttyn

ACCC data shows that nearly 100,000 babies and toddlers, along with 25,000 preschoolers, are on waiting lists for a childcare place.

The report cites a parent who had to wait 14 months for a spot in the age group for babies to two-year-olds. “If I had wanted to return to work when my child was four months old, I would have had to have placed her name on a waitlist preconception,’’ they said.

The ACCC said some centres were turning children away even though they have the space, because they cannot find enough staff to meet mandated ratios.

One in four daycare centres lacks the required number of degree-qualified early childhood teachers.