Hundreds of childcare centres charging above government's top subsidy rate

Sophie Mackay with her son, Alexander, who goes to daycare in Artarmon three days a week.
Sophie Mackay with her son, Alexander, who goes to daycare in Artarmon three days a week.  Photo: Wolter Peeters

Hundreds of childcare centres are charging more than the government's hourly subsidy cap for daycare fees, with childcare operators saying families in Sydney and Melbourne are wearing the highest out-of-pocket costs.

As the Coalition's new childcare funding model nears its one-year anniversary, the Department of Education says about 10 per cent of Australia's 7765 centre-based care services – which include long daycare and occasional care – have an average hourly fee above the government's hourly rate cap.

Industry experts say the higher fees are concentrated in metropolitan areas, particularly in Sydney and Melbourne, where issues such as high rents are driving up costs, and daily fees can be well over $100.

"We know that early childhood education is more expensive in metropolitan Sydney and metropolitan Melbourne, as a result of the cost of real estate, and the childcare subsidy is a flat rate no matter where you are in Australia," said Australian Childcare Alliance vice president Nesha Hutchinson, who also owns and operates three childcare centres in Sydney.

Under the new system, which came into effect last July, the government subsidises a proportion of families' childcare fees based on how much parents earn and how much they work. The subsidy percentage is either applied to the hourly rate charged by the childcare service or the government's fee cap – whichever it lower. For families who send their children to a long-daycare centre, the rate cap is $11.77 an hour. Centres decide how many hours they charge families per day.

According to Morrison government, a "typical family" is about $1300 better off a year under the new childcare subsidy set up, which also put an extra $2.5 billion into the system. Pointing to the consumer price index, the Department of Education said the out-of-pocket childcare costs for families had decreased by more than eight per cent since the new system was introduced last year.

"Child care fees are a business decision for each service," an Education Department spokesperson said. "The government’s Child Care Finder website enables families to compare the fees of child care services in their area."

 

When asked, the Department of Education said more detailed information about the number of families being charged fees above the hourly rate cap and the location of services where the hourly fees are higher are "not publicly available".

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Early childhood peak body Early Childhood Australia said while the new childcare subsidy system was predicted to reduce costs for most families, about 25 per cent were likely to be worse off because of the income or work test requirements.

"Early Childhood Australia is interested in the detail regarding which families have been positively and negatively affected but we haven’t got access to detailed data for analysis at this stage and reports from the evaluation have not yet been released," said ECA chief executive Samantha Page.

Sydney mother Sophie Mackay sends her one-year-old son, Alexander, to daycare in Artarmon, which charges $155 a day. This was the cheapest service she could find in her area.

The family is eligible for a subsidy of about 85 per cent, but Ms Mackay notes, Alexander's daycare is well over the hourly rate cap, which leaves her further out-of-pocket.

Alexander goes to daycare three days a week, with Ms Mackay keen to send him for more, but the sums don't add up. Ms Mackay said if she worked more, she would qualify for less government support because her income would be higher. "That's where we get caught," she said.

Ms Mackay said Alexander, who celebrated his first birthday on Saturday, was learning new social and motor skills at daycare, "trying to follow the other kids".

"The most important thing for me is the education that Alex gets out of it," she said.

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