Childcare subsidy gobbled up by fee increases ‘higher than inflation’ as companies profit, parents fume

Parent groups have savaged Australia’s largest childcare provider for price gouging. READ THE FULL STORY

Parent groups have savaged Australia’s biggest childcare group for “price gouging”, and called for government intervention, after it logged a jaw-dropping profit during a cost-of-living crisis.

The uproar came after ASX-listed Gold Coast company G8 Education revealed it made an extra $100 million in revenue despite looking after fewer children than the year before.

The group, with 430 centres across brands including Kool Kids, Casa Bambini, Creative Garden and Community Kids, has hiked fees more than 23 per cent in two years, including one just last week.

The ACCC says childcare fees nationwide had climbed “significantly higher” than wages and inflation, swiftly absorbing any savings for families from newly-introduced subsidies.

G8 Education made a $56.1m net profit last year. Photo: iStock

Advocacy group The Parenthood’s CEO Georgie Dent said the government needed to intervene to ensure childcare was more accessible and affordable.

“There is no reason for fees to be so high. It is infuriating this is occurring in the middle of a cost-of-living crisis,” she said. “G8 attributes the increases to a ‘diligent focus on cost management’, but let’s call this what it is – price gouging.”

Ms Dent said fee hikes were unsustainable and forced families, especially mothers, to sacrifice careers and children’s access to early education.

“We’re not just in a cost-of-living crisis, we’re actually in a cost-of-working crisis, in which parents – usually mothers – literally cannot afford to work because of the way the subsidy system is set up and the fact there is nothing to stop providers from increasing prices,” she said.

“The government must create a system where parents can freely choose working and caring arrangements that work for them.”

Georgie Dent.

Jay Weatherill.

The sentiment was echoed by the Minderoo Foundation, a lobby group founded by billionaire Andrew Forrest and wife Nicola.

Ex-South Australian Premier and head of Minderoo’s Thrive by Five campaign Jay Weatherill said profit growth based on fee hikes highlighted the need for government action.

“The Federal Government must take concrete action to ensure families are not being taken advantage of,” he said.

“The Federal Government has taken measures to provide families with vital financial relief through increased child care subsidies, but in many instances, these increases are absorbed by fee hikes by childcare providers.”

Mr Wetherill said a $10 a day early learning price cap would provide significant financial relief to families and enable more children to access the benefits of high-quality early learning.

“Direct market intervention through daily price caps would help the Federal Government ensure every Australian family has access to high-quality affordable early learning,” he said.

G8 Education enjoyed a 53 per cent increase in profit. Photo: iStock

The ACCC’s report said fees for centre-based childcare had increased by an average of 30 per cent since 2018, with increases averaging nine per cent even once adjusted for inflation.

It said while the government’s measures had initially reduced out-of-pocket expenses by 11 per cent, most fee hikes came in July, coinciding with the childcare subsidy increase.

A statement from G8 Education said recent fee increases came on “the backdrop of a year which has seen high inflation and an 8 per cent wage increase for our team members”.

“The early childhood sector has participated in two high profile reviews recently by the Australian Competition & Consumer Commission and the Productivity Commission,” it said.

“Both of these reports found that pricing in the sector is appropriate, there is no profiteering and no need for price control.

“They also found the sector requires a mix of for profit and not for profit providers if Australia is to continue to meet its growing early childhood education needs.”

The statement said G8 was “acutely aware” of the impact of fee increases and had “worked to minimise the impact of rising costs throughout 2024”.

Minister for Early Childhood Education and Minister for Youth Anne Aly during Question Time at Parliament House in Canberra. Picture: NCA NewsWire / Martin Ollman

Minister for Early Childhood Education Dr Anne Aly said the ACCC’s report noted that issues and policy responses could not be considered in isolation, but must be assessed across the whole sector.

“The Government commissioned important reviews and inquiries to help ensure the ECEC sector is working for families, including tasking the Productivity Commission with undertaking a broad inquiry into the early learning sector,” she said.

“The ACCC report, along with the Productivity Commission review, will help us to identify areas for improvement in our early childhood education and care system for the future.”

The content summaries were created with the assistance of AI technology then edited and approved for publication by an editor.

Originally published as Childcare subsidy gobbled up by fee increases ‘higher than inflation’ as companies profit, parents fume