5 Year Forecast for Early Childhood Education Providers
There’s been a lot of talk in recent months about the new child care subsidy and how it will impact financially on families and childcare centres alike. And although it is set to change the sector, there are many other factors that will see subtle shifts in the landscape over the coming 5 years. Preparing for these developments ahead of time will ensure that all early childhood settings continue to meet demand and provide the very best service to families.
The most significant potential changes to be aware of are:
- The impact of the Child Care Subsidy (CCS)
As mentioned, the new CCS has attracted a lot of attention in 2018. Changes to the way that Federal Government assistance schemes are delivered to low and middle-income earners has already boosted industry demand by making child care services more affordable for these families. With this assistance set to increase consistently in the coming years we can expect to see more families accessing services Australia wide. As demand increases, we will see an increase in service providers which currently sits at around 10820 businesses including long day care, occasional care, family day care, OSHC and vacation care.
- Increased maternal workplace participation
A recent industry report by Ibis World cites an increase in maternal workplace participation as strengthening demand for childcare over the next five years. As cultural shifts continue to see more and more mums return to the workforce following maternity leave, revenue is expected to grow at an annualised rate of 5.6% over the next five years through 2022-2023 to $15.8 billion. Similarly, shorter parental leave periods being offered and accepted equate to a greater demand in child care services for children aged 0-1-year-old.
- Changes to demographics
The child care sector is driven primarily by children aged 14 years or younger, so it makes sense that when we see an increase in this demographic, we also see an increase in the demand for child care centres and family day care. Over the next five years, the age group of 0-5-year old’s is expected to grow even further and with it a demand for child care places in long day care, occasional care and family day care.
- Growth for Out of School Hours Care
Outside of school hours care continues to be one of the fastest growing segments of the market due to the changing needs of working parents. Some centres are experimenting with changed and expanded operating hours to cater for changing labour participation rates and work hours, with increasing numbers of parents working shifts or part-time.
- An increase in kindergarten programs being delivered by child care services
Long day care centres currently account for 53.5% of all 4 and 5-year old’s enrolled in a preschool program. This means that child care services are delivering the majority of programs across preschools, kindergartens and other early learning settings. As previously explained, the latest childcare subsidy has changed and is now activity tested. As more parents return to work, the demand for work-friendly child care hours is expected to drive this percentage up even further.
- Greater employment options for early childhood educators
As with the former point, the increase in services will also see the increase in employment options for professionals. Employers may continue to develop strategies in supporting staff to gain formal qualifications to meet regulatory requirements under the National Quality Framework. Alternatively, flexible working hours, a family friendly culture or offering above award wages could become just some of the ways that centres retain staff.
- Increased wages
Industry wages have increased over the past five years due to multiple internal and external factors. These include the number of volunteers in child care settings falling as well as the increase in the requirement for a service to employ a minimum number of qualified early childhood teachers. The result of these factors has therefore been an increase in wage costs to providers. This trend is set to continue in the foreseeable future.
- Changes in ownership structure
New corporate operators continue to change the industries ownership structure. Individual operators will increase profits by targeting locations that have favourable demographic and competitive factors. Acquisition and merger activity will continue amongst the corporate players.
- More flexible opening hours
As the needs of working families evolves, it is predicted that operators will be granted additional flexibility with regards to operating hours. In addition to better meeting the needs of changing family structures and work patterns, this will also allow centres to think outside of the box by offering half days and other perks to their families. The greater the number of operating hours, the greater the number of work-friendly options for all families to utilise.
- Changes in ownership structure
New corporate operators, such as G8 Education and Affinity, continue to change the industries ownership structure. Individual operators will increase profits by targeting locations that have favourable demographic and competitive factors. Acquisition and merger activity will continue amongst the corporate players.
With the industry experiencing growth, it is a fantastic opportunity for existing stake holders to invest in expansion. Change offers an opening for innovation across all elements of the existing childcare model and the flexible nature of family structures means that the changes in demand are broadening. While its tempting to enjoy this period of growth, it’s important to continually seek to identify areas of improvement so that child care services continue to meet needs and community expectation.