Competition probe for childcare costs

·2-min read

Spiralling childcare prices will be put under the microscope by the competition watchdog, as family budget are slugged with soaring living costs.

The Australian Competition and Consumer Commission will hold a a year-long inquiry into the childcare sector after costs jumped 41 per cent in eight years.

The government will spend $11 million on the investigation, which will begin in January, and will examine factors driving rising childcare costs and out-of-pocket expenses and recommend ways to ease financial pressures for families.

However, the federal opposition said the inquiry would be too little too late, with most families not seeing relief until at least 2024.

Treasurer Jim Chalmers said it shouldn't cost families more than their earnings to put children in childcare, but that was the reality faced by many.

"For many families, the cost of childcare is an incredible burden," he said in a statement on Wednesday.

"This inquiry is an important part of our plan to help families cope with rising cost-of-living pressures."

From July 1, Labor will lift the maximum childcare subsidy rate to 90 per cent for the first child in care for families earning less than $530,000.

Opposition early childhood spokeswoman Angie Bell said the inquiry would not lead to a reduction of childcare fees for families.

"There is still no plan for how the workforce will meet the increased demand for child care or to address the establishment of new childcare services in childcare deserts," she said.

"Labor needs a plan for fees because last time they were in office childcare fees skyrocketed by 53 per cent in just six years."

Education Minister Jason Clare will introduce legislation to parliament next week to implement the changes, expected to cut out-of-pocket costs for 96 per cent of families with children in care.

Asked whether the $5 billion investment itself could drive up prices, Finance Minister Katy Gallagher said it was a "hypothetical situation".

"I don't envisage a scenario that says that money isn't worthwhile - we think it is," she told the ABC on Wednesday.

But she said it was important to get a greater understanding of the reasons behind price increases in order to make future policy decisions.

The ACTU and Australian Council of Social Service have been arguing for a progressive shift to free universal child care.

Ms Bell said the government's childcare policies did not address needs in regional areas.