Childcare fee caps to curb runaway prices considered: Clare

Price caps and naming and shaming providers that charge too much are among the options currently being considered by government to limit runaway childcare costs, Education Minister Jason Clare has said.

Speaking on Sky News on Sunday, Minister Clare said while the government had acted to provide further bill relief to families through increased subsidies, it intended to embark on “serious reform” to lock in prices at lower levels.

Mr Clare’s intervention follows the release of a new report into child care costs released by the Australian Consumer and Competition Commission (ACCC) which finds child care costs in Australia are less affordable when compared with most other OECD countries.

In 2022, an Australian couple earning average wages with two children spent 16 per cent of their net household income on net childcare costs, compared with the 9 per cent OECD average, the report says.

Earlier this year, the competition watchdog also found fees had outpaced inflation in the past five years, with increases of between 20 per cent and 32 per cent in the five years to 2022.

In response, the Commission makes a number of recommendations to government including additional subsidies to under-served or vulnerable cohorts, the implementation of price controls, and a stronger price monitoring regime to halt surging child care costs.

Asked about the government’s next steps to curtail increased costs, Minister Clare did not rule out any of the reforms proposed by the ACCC.

“The idea of naming and shaming providers that are just charging you know, over the top fees, makes a lot of sense to me,” Mr Clare said.

“I made the point when our cheaper child care laws came in a couple of months ago … if people were taking advantage of this, just to jack up fees out of proportion with what’s happening in the economy, then there should be pressure placed on them.”

Caps on childcare fees may also be required to prevent providers from hiking prices in response to more lucrative government subsidies, Mr Clare said.

“[Child care centres] are just exploding through that cap. This report says that there needs to be some reform to that cap,” he said.

Mr Clare also pointed to the work currently being undertaken by the Productivity Commission on early childhood education and care which is due to be handed down at the end of the year.

The ACCC’s findings predate the implementation of the government’s increased cheaper child subsidies which kicked in on July 1 at a cost of $5.4bn, estimated to affect 1.2 million families across Australia.

Under the changes, a family earning $120,000 a year with one child in care will save about $1700 in out-of-pocket fees.

For families less than $80,000, the government will cover 90 per cent of childcare fees.

For families with two or more children in care, the subsidy will rise to 95 per cent for the second and subsequent child.

The ACCC report also notes that labour is the largest cost component in child care services.

Earlier this week, childhood educators won the right to bargain for pay rises of up to 25 per cent across multiple centres under the government’s new workplace laws.

The multi-employer pay negotiations cover 12,000 staff employed by 64 providers who are part of the Community Child Care Association and Community Early Learning Australia.

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