So we've just had a new administration in this country hand down a budget which is allocating more money to families to help them afford the increase in their child care costs. In addition to providing relief, the aim is to free up tens of thousands of women who should now find it more affordable to be able to (re)enter the workforce.
That sounds like a good investment of the taxpayer dollar, with benefits to the economy all round. Acting against this benefit, however, is the strange decision by the Government to have an investigation by the ACCC into why child care costs have increased 41% over the last 8 years, "well ahead" of inflation.
Let's look at the simple figures. We can assume inflation has been running at around 2% over this period. Child care costs have compounded at 4.3% per annum - or at a 2.3% premium - somewhat significant, but certainly not exhorbitant. But the reasons should be obvious to anyone who has kids in care, or who has followed the industry closely (obviously, not the current government).
Firstly, the industry has been operating under a new set of national regulations over the past decade. A number of costs embedded in that legislation, in conjunction with changes to the underlying industrial legislation, have been phased in only in recent years. The largest being a virtual doubling of staffing ratios for the core 2 to 3 y.o. age group, followed by the requirement to have an Early Childhood Teacher plus an Educational Leader on board; and an enormously costly change to the treatment of casual workers when it comes to setting workplace rosters.
Secondly, an ever-increasing compliance burden from all levels of government that Directors and service providers have had to contend with.
Thirdly, the property boom has meant that rents, land taxes, rates and property-related levies have all increased in tandem, making property costs for many services now the largest cost after staff wages.
Fourthly, the necessity of having to pay staff well above Award wages to hold onto them in what is today a virtually non-existent labour market, where even the temp. agencies struggle to find staff.
Finally, a greater percentage of the profitable kindy age children have been enrolling at government kindies (virtually free) or to ELCs in government-subsidised private schools. This has left services increasingly having to cater for the more costly lower age groups.
It's therefore an absolute miracle of the market that child care fees aren't far higher than what they are. The sector is highly competitive, with most services at well below capacity. If the Federal Government is suggesting the industry is 'profiteering', then it is completely mistaken. It certainly won't require a needlessly costly ACCC investigation to prove otherwise.
