Child care fees increases wipe out family savings from July 10 subsidy increase

Government analysis shows around 96 per cent of families will be better off under the childcare subsidy changes, but Canberra parents have been told by centres that daily fees will be rising by up to $30 per day thereby eliminating any savings.

Megan Salic was excited to hear her return to work after parental leave coincided with the July 10 increases to the childcare subsidy.

Her chosen service decided to increase the daily fee by $19 and using the government's starting blocks calculator she discovered that her out-of-pocket childcare costs would actually go up.

"We sort of assumed that the fees would go up a bit once the subsidy came but it was just a bit shocking when the fees went up as much as they did," she said.

"Obviously, [the subsidy increase] helped to cover the increase in the daycare's fees. But as the government has promised, it was supposed to help families lower childcare costs and that's just not going to be the case for us."

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From July 10, families earning less than $80,000 will have the subsidy rate lift from 85 per cent to 90 per cent and families earning up to $530,000 will be eligible for subsidised child care.

Providers have told parents their costs have gone up due to a rise in wages, utilities, rent and supplies.

Wonderschool operations manager Sarah Wilcox said fees would be increasing in the new financial year in line with the consumer price index.

"It's never been more expensive for providers to keep children learning, happy, healthy and safe," Ms Wilcox said.

"The sector continues to deal with a national shortage of skilled and qualified staff and hasn't yet bounced back from the pandemic lockdowns. The recent change to the national minimum wage and superannuation will also add to increase costs for all providers."

A G8 Education spokesperson said fee increases were largely related to staff remuneration and investments into quality care and education.

"We are mindful of affordability for our families and they will be the first to know if there are any changes to our fees," the spokesperson said.

Early Childhood Australia chief executive Sam Page said it was not uncommon for services to have a mid-year increase in fees largely tied to the increase in wages on July 1.

"It's disappointing to think that families won't benefit as much as intended," Ms Page said

"Which points to the problems with the current system. It's just too complicated. There are too many unknown variables.

"I don't think there's a strong line of sight from the government to the cost of delivery and the cost that providers are facing. At the same time, the subsidy being a voucher system that's paid to parents, it doesn't cover the full cost of service delivery."

There an hourly rate cap used to calculate the subsidy, which is currently $12.74 per hour for centre based care, but there is no limit on the fees a provider can charge.

Some Canberra centres will now charge up to $165 per 10-hour day, exceeding this hourly rate cap.

In recent years child care fees have generally been raised about 5 to 6 per cent annually, however this year some parents have been informed of increases of close to 20 per cent.

The Australian Competition and Consumer Commission will conduct and inquiry into child care costs to consider the impact of the subsidy changes on fees and investigate the drivers of rising early childhood education and care costs.

The Productivity Commission will separately conduct an inquiry into how to build an affordable, accessible, high quality, early education system.

Ms Page said other countries subsidise early childhood education much more heavily than Australia, such as the Canadian province of Quebec where parents pay just $8.85 ($9.77 AUD) per day for a subsidised childcare service.

"There's absolutely no doubt that it's worth the investment. It's really just about time we stopped asking parents to subsidise it as much as they've had to," Ms Page said.

For Ms Salic, not returning to work is not an option amid the rising cost of living and finding a place for a baby in another centre would be extremely difficult.

"I'm not saying that the policy is bad, but there's a chunk of us that are sitting in that middle class that this isn't helping at all," she said.

"It would be good to maybe think about how it's done, maybe not based on income. It's just a blanket cost for everybody."

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