Childcare in the ACT: most expensive, with steepest increases, in Australia

According to data released by both the Productivity Commission and the Australian Bureau of Statistics, the cost of childcare in the ACT is more expensive than anywhere else in the country, and rising at a faster rate.

The Productivity Commission's report on government services, released this week, found Canberra is the most-expensive place in the country to send kids to childcare, with a median-weekly cost for a government approved service of $595. That means Canberrans are paying $70 above the national average.

Separately, the consumer price index figures released by the Australian Bureau of Statistics show out-of-pocket costs in Canberra rose by 3.8 per cent between December 2019 and December 2020, well over the general inflation rate of 0.9 per cent.

Across the country childcare costs rose 2.4 per cent last year, despite the majorly disruptive effect of the pandemic, which resulted in the government mandating free childcare for a 12 week period, when centre costs were covered by a combination of the JobKeeper wage subsidy and government grants.

There's more than 32,000 children in childcare covered by the federal government's childcare subsidy scheme in the ACT. Subsidies are calculated based on how much a family earns, how many hours children are in care, and other recognised activities like education and training.

Experts and advocates can't necessarily point to a single factor that explains why prices in Canberra are so high, and increasing at a higher rate. It's believed the higher average incomes in the capital are a contributing factor, with families earning more receiving less of a subsidy as it tapers away.

Grattan Institute chief executive Danielle Wood explains many factors can contribute to fluctuations in price across the country, including parental incomes and other local conditions.

"What we are seeing is consistent with history, gradually prices kind of rise over time and that really reflects the fact that this is a very labour-intensive industry, wages tend to rise faster than prices, so you get a gradual growing of costs and out-of-pocket costs for parents unless there's some kind of government decision," she said.

The current increases reflect similar patterns seen in the sector over many years, Ms Wood said - prices rise, the government adjusts the subsidy and funding arrangements, prices drop, and then begin to rise again.

"Overall we do have very high out-of-pocket childcare costs in Australia compared to most countries, and right across the income distributions, those out-of-pocket costs are a big drag on workforce participation for second earners, which studies show are still mainly women."

Georgie Dent, executive director at The Parenthood, an advocacy group for parents and carers, says the increase to the cost of childcare must be seen in the context of stagnant wage rises.

"It means families are going to be in a position where they are feeling the pinch more significantly than ever before."

Ms Dent says in some jurisdictions the savings achieved in the government's 2018 overhaul of the childcare subsidy have already been eaten up by price increases. And while Ms Dent agrees with Ms Wood on the economic impact of a lack of access to childcare, she points to the impact on children themselves, who miss out on the educational opportunities from being in childcare.

One of the few policies laid out by Labor leader Anthony Albanese since the federal election is in childcare, where he has pledged the party would increase the maximum childcare subsidy from 85 per cent to 90 per cent, slow down the rate at which the subsidy tapers off, and remove the annual cap if elected to government.

Labor MP for the seat of Canberra Alicia Payne has toured a number of local facilities with Mr Albanese, and she says the cost of childcare is a major impediment for women returning to the workplace, or taking on more hours, when the cost of getting childcare outweighs any extra income. As well as impact on gender equity and career progression for women, it's having an economic impact, Ms Payne says, with lower participation in the workforce.

"It's not just about people who need to get back to work, that's a big part of it, it's also about supporting families in crisis and need," she said.

"We've got a lot of women who work and have relatively high incomes but there is the other side where centres are providing food and other care to children at risk."

Labor's spokeswoman on childcare Amanda Rishworth said the data confirms what families are already experiencing.

"The pain for parents is only going to get worse, with the Morrison government itself predicting significant fee hikes for years to come," she said.

Education Minister Alan Tudge, who took on the portfolio in the December reshuffle, said the government has increased childcare funding to $10.3 billion, up 77 per cent since coming to office.

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"Out-of-pocket childcare expenses in Canberra are 8.6 per cent lower now compared to when we introduced the childcare package in July 2018," he said.

"There are more than 280,000 more children in childcare now than when we came to office."

Mr Tudge didn't directly respond to questions on how the government was suppressing out-of-pocket costs outside of the existing subsidy.

"People shouldn't forget that childcare costs increased by 53 per cent last time Labor was in office and their proposed childcare package would benefit those earning more than $350,000 the most," he said.