Childcare sector saturated, small businesses at risk

Childcare sector saturated, small businesses at risk

Author :Ursula Malone , ‘ABC NEWS’

When Mim and Mark Cross could not find child care for their son 21 years ago they took matters into their own hands. The Crosses opened Rosebery Cottage in Sydney’s eastern suburbs and, up until two years ago, their small family-run centre was full.

“We were averaging about 12 enquiries every month,” Ms Cross said. “We had a big, long waiting list.”

But enrolments have dwindled. On some days only one baby is cared for in a space designed to take 15. It’s a similar story around Australia, where a saturation of childcare centres has led to many small businesses being squeezed out of the market. The Australian Childcare Alliance said there were another 1,100 centres in the pipeline around the nation, which if completed would deliver another 90,000 childcare places.

Childcare fees still rising

A survey by Community Early Learning Australia (CELA) — an established industry body for childhood education — revealed 70 per cent of their members had reported a fall in enrolments this year compared to 2017.

Education Minister Senator Simon Birmingham said increased competition was good news.

“Far more parents who I speak with express their concerns about the struggle sometimes to find a place that suits them at the hour or time, so frankly my concern is ensuring there is maximum availability of places as well as maximum affordability,” he said.

But CELA’s CEO Diane Lawson said the influx of new places had not led to lower childcare fees. The CELA survey found fees were going up, with 40 per cent of centres conceding they had to increase prices to cover their costs due to falling enrolments.

“People might think more services, more choices and the price will come down and it’s better for everyone,” she said. “That hasn’t been found to be true in the early childhood space.” Ms Lawson said guaranteed income from government subsidies meant child care had become a solid investment opportunity.

As a result, many community-based centres were struggling financially.

“They don’t run with huge surpluses so they don’t have the deep pockets that business has to weather the storm,” she said.

“Some of the best centres may go out of business.”

'No common sense at all'

There are now eight other childcare businesses within a one-kilometre radius of Rosebery Cottage, all of them with vacancies. Three more are due to open this year and the Crosses are worried they may be forced to close their doors.

“We are all sitting around half empty waiting for people to arrive in the new towers,” Mr Cross said. “The big operators will survive because they can cross-subsidise but the independents are living off their bank balance, so it’s not easy.”

The Australian Childcare Alliance (ACA), which represents 1,600 long day care operators, wants more planning regulation around where new childcare centres can be built.

“There’s no planning, none whatsoever, no common sense at all,” ACA’s New South Wales president Lyn Connolly said.

“You would never put schools where there’s already too many schools, you would never put hospitals where there’s too many hospitals.”

However, the Education Minister has ruled out any intervention.

“It’s not the job of government to protect certain business models,” he said.

“What our job is is to help Australian families access quality affordable child care and that’s what we’re focused on.”

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