Preschool program enrolments at long day care (LDC) centres have surged over the past five years. Although traditionally offered in standalone preschools, LDC centres are also increasingly providing preschool programs due to changes in demand. Longer opening hours and government rebates for parents have made LDC centres more attractive choice compared with preschools. Enrolment growth at standalone preschools has suffered as a result, with revenue growth for the Child Care Service industry doubling that of the Preschool Education industry over the past five years.
The Federal Government’s Universal Access to Early Childhood Education initiative has financially supported preschool programs over the past five years, boosting both industries’ revenue over this period. An annualised 2.1% rise in the number of females in the labour force has also benefited these industries, increasing demand for preschool program enrolments. These trends are expected to contribute to preschool program enrolments rising by 5.5% over the five years through 2016-17.
These trends have boosted revenue for the Preschool Education industry and the Child Care Services industry. However, growth in preschool program enrolments between the industries has been strong divided. While preschool enrolments are anticipated to rise marginally over the five years through 2016-17, preschool education program enrolments at childcare centres are projected to soar. More parents have been choosing childcare centre preschool programs over those at standalone preschools. This has been reflected in the industry’s revenue growth rates. While revenue for the Preschool Education industry is forecast to expand by an annualised 7.3% over the five years through 2016-17, revenue for the Child Care Services industry is expected to surge at an annualised 14.3% over the same period.
Parents have been choosing childcare centres with preschool programs instead of preschools for two reasons. First, childcare centres are open for longer hours and more weeks per year than standalone preschools. Preschools are typically open between 9 am and 3 pm, and only operate during school terms, or approximately 40 weeks per year. LDC centres are open for at least eight hours a day and generally run for 48 weeks per year. LDC centres’ longer opening hours have been attractive to working parents seeking to enrol their children in child-care programs that fit with their working hours.
Second, the Federal Government subsidises preschool program enrolments at LDC centres, supporting parents enrolling their children at LDC centres through the Child Care Benefit (CCB) and the Child Care Rebate (CCR). Standalone preschools are not considered approved childcare centres by the government, and are not eligible for the CCB or the CCR. The CCB is an income-tested benefit that can be claimed as a lump-sum payment or as reduced child-care fees. The CCR is a non-income-tested benefit covering 50.0% of child-care costs for up to $7,500 per child each year.
The increasing affordability of preschool services at childcare centres has made the CCB and CCR particularly attractive to households with low real disposable income, as shown rising demand from the bottom three income quartiles over the past five years. The Child Care Services industry is likely to continue taking enrolments from the Preschool Education industry while standalone preschools have shorter opening hours and are eligible for fewer government benefits.
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