Childcare changes hit harder in certain cities

Childcare fees in Perth are growing at six times the rate of local inflation, the most disproportionate hike in the country.

Childcare fees in Perth are growing at six times the rate of local ­inflation, the most disproportionate rate of price hikes anywhere in the country. Picture: iStock

Childcare fees in Perth are growing at six times the rate of local ­inflation, the most disproportionate rate of price hikes anywhere in the country.

In the year to March, inflation in Perth was just 1 per cent but prices for childcare services jumped 6 per cent. The rate of fee growth in Sydney, Melbourne, Brisbane and Hobart was also 6 per cent but local inflation in those capital markets was higher at 2 per cent.

This snapshot was taken before centres took the new financial year — and $3.5 billion extra in childcare funding through a redesigned subsidy — as an excuse to jack up prices by as much as 10 per cent.

The childcare rebate was last extended under Labor in 2008 when it was almost doubled, leading to a 14.6 per cent fee hike in one year. In the intervening years, however, prices continued to rise by an average of 6.8 per cent even without new money.

Education Minister Simon Birmingham hailed the ­Coalition’s new Child Care Subsidy this week which will lift rebates for most families and remove the cap for those with household incomes under $186,000. Senator Birmingham has pledged the new scheme, with hourly instead of annual caps, will help reduce pressure on fees.

Economic analysis by corporate adviser Conrad Liveris showed prices continued to soar and, he said, subsidies only made the problem worse.

“There is no correlation between increasing subsidies and reducing prices,” he said. “They are a failed experiment which result in childcare operators increasing prices.”

Labor education and training spokeswoman Tanya Plibersek was in Perth this week with the party’s candidate for the seat of the same name, Patrick Gorman, to criticise the new childcare scheme.

“It means that 279,000 or so families will actually be worse off from this week onwards because of the government’s changes,” Ms Plibersek said.

“And frankly one of the most disturbing elements of the new changes is that it’s not just high income families who miss out because they’re now over the threshold. You see about 88,000 very-low-income families who are missing out because of the changes.”

The lowest rate of childcare fee growth relative to the local consumer price index was in Canberra, with fees rising at almost twice the rate of inflation.