It seems Australia’s for-profit childcare providers — who provide around 70% of childcare centre places, and 70% of all childcare in major cities — didn’t get the Reserve Bank’s memo that profits aren’t driving inflation. That is, at least according to the leftwing firebrands at the Australian Competition and Consumer Commission (ACCC).
The ACCC’s interim report on the childcare sector contains some interesting data on the costs facing the families and carers of the 1.275 million under-five Australians in childcare. It shows that for-profit childcare providers charge more than non-profit providers across all types of care: childcare centres, family day care and outside-school-hours care. It also shows that for-profit childcare centres have increased fees by 20% since 2018 — outstripping both the wage price index (10%) and the consumer price index (15%).
Why might that be the case? “For-profit providers may also seek to maintain profitability and consider the profit level when setting fees,” the ACCC suggests.
The commission says that parents and carers have at least been getting a little bit more for their money. “The share of childcare services with an ACECQA rating that are meeting or exceeding the National Quality Standard has risen from about 78% in September 2018 to 89% in December 2022. On average, National Quality Standard ratings are significantly higher for centre-based day care and outside school hours care services than for family day care…”
And to complicate the profits-driving-inflation narrative, even though for-profits dominate the childcare centre sector, non-profit childcare centres have increased their fees by almost as much in the same period — 19%, bearing in mind that their fees are lower to start with.
Things get even more complicated when you try to apply standard economic assumptions to childcare. Those of us who spruik greater competition as a tool to reduce profit-gouging by corporations might have to eat their words: the ACCC report shows that greater competition does nothing to reduce childcare fees — “the average daily fee for centre-based day care services is higher in areas with more services within a two-kilometre radius of the service” (emphasis added).
That may be because those kinds of childcare centres are likely to be in more affluent urban areas — with higher land costs, and with poorer access to childcare workers who are less likely to be able to afford to live nearby. But, the ACCC says, they also “may be more likely to operate in more advantaged areas and charge higher fees, as they expect households have a higher willingness or capacity to pay”.
Even so, for-profit providers charge higher fees than non-profits no matter where they are — major cities, regional centres, or remote locations (although for-profits are less likely to operate in remote areas).
And the argument that bigger means more efficient doesn’t apply in childcare either — at least not in a way that parents and carers can see. Large providers always charge more than medium-sized providers, which charge more than small providers, no matter where the service is located. And that applies to non-profits as well.
This is only an interim report. Some of the issues raised about pricing profits will be further explored. But it seems parents and carers wondering why they’re paying so much more for childcare are unlikely to get much help from standard economics.
I would not be shocked that there is a degree of cartelism within the industry where prices are signalled between providers to keep them high and profitable whilst preventing parents from having a meaningful choice.
Additionally, this is yet another area where our decades of neoliberalism have led to a core service be eroded away and turned into a money sink by the private sector. There is no meaningful choice for parents when it comes to providers. It’s often about finding a place that works for everyone and has availability. The price is the price, the options just don’t truly exist.
yep No Shi$ Sherlock; the rot and stench of corporate middlemen stealing piracy model is rampant like a poison ivy ; vile men and few women in suits moving the health, education, social services including mental health and womens’ bodies and autonomy – moving PUBLIC asset class into indentured slavery, data collection and poorer new feudalism – go gor a job ? Get used as free labor or told by their partners at the top this one can be stoken from too by their ” new workers ” in the sub classes of subcontracting middle men via telehealth
Government pays. Whenever the mantra is government pays the sky is the limit in regard to profit.
Non profits are just as bad because they are really just profit making that spend their profits on executive salaries and acquisitions.
When the government funds private enterprise, the costs are always higher.
Exactly. Rorting the govt is a time-honoured tradition in all countries, Australia is no different. In his book “All the Trouble in the World”, PJ O’Rourke described the four ways to spend money.
1. You spend your money on yourself. You’re motivated to get the thing you want most at the best price. This is why middle-aged men haggle with Porsche dealers.
2. You spend your money on other people. You still want a bargain, but you’re less interested in pleasing the recipient of your largesse. This is why children get pyjamas at Christmas.
3. You spend other people’s money on yourself. You get what you want but price no longer matters. The second wives who ride around with the middle-aged men in the Porsches do this kind of spending.
4. You spend other people’s money on other people. This is how governments spend money.
Or the male partners of cashed up older men or the contractors of mental health services who only employ 20 something with certificates from privatised “training ” providers used by their affiliates and partners
total truth Vicki ; the Charity !!! ahem website ! look at what scams can fulfill the description ; let alone the blinking NOT FOR PROFIT ( aged care development capital accuring ) model
Gravy train……..
Captive audience. Answers pretty much all the questions.
yep no wonder the dirty scum are making money out of aged care, people who have illness or injury or our elders who are ripe for the picking – Australian big healthcare and pharma lobby and ” research” lying about the costs of first line medications to get em off tge benefits list – nothing to do with the reason being nasty “opioid” synthetics ? No ? Never an issue in terms of the degree and incidence of harm before Was it Purdue produced the cheap powerfully harmful opioids : oxycodone and its affiliated muck 100 times cheaper ; now the consumer is told opioids and opiates are the same ! No they are not – so what if a dying oerson is made to feel better on an opiate ; not on opioids ; no opioid is good they are cheap and create zombies ; aka epidemic in Us – but they will only provide that option due to profit versus costs – opioids are bad opiates are first line and good for pain relief
Not only are profits driving priceinflation, they’re also driving wage inflation.
A living wage in a capital needs to be over $100k. That’s ridiculous.
Nearly as ridiculous as average house prices being over $1m.
$1m means nothing. $1b barely means a thing.
This is hyperinflation.
And don’t even start on “productivity”. Ridiculous prices breed layabouts and wasters. We have people earning more money from sitting on their arses in some overpriced house – a dead asset – than actually going out and doing a job.
People quit actual jobs to become property speculators. Not even developers who at least develop land (albeit sometimes to such a poor standard that the building collapses). No pekoe just flipping assets that already exist and they end up paying less taxes than actual working human beings.
People are freaking out about immigration (as usual) but who exactly on their right mind would move here?
Anyone who does is either being mis-sold or misguided. And anybody who is here will leave. What’s the point?
$1m means nothing. Winning the lottery might even qualify for a mortgage for a family home.
eho would move here ask the 1.5 million in the next 5 years thats who wanting to bring 2 parents in some cases when we have no homes for us ? But the same developers and the neo morons running our resources like lithium to benefit dictatorhip regimes and crazy stuff this ; giving the offshores partners the jobs in upscaling the technology and producing the high vslue end products – free trade was Howard mantra fir sell out the bottom to support the feeders