Excerpts
The boom is on and childcare has become one of the most profitable plays in Australian real estate — and families are feeling the cost.
As investors rush into the sector, childcare fees are rising sharply. Some parents now pay up to $220 a day, or more than $1,000 a week, to access a system worth more than $20 billion a year and increasingly marked by systemic failures, secrecy, and a rising number of serious incidents inside some for-profit childcare centres.
While some of the childcare fee hikes can be attributed to wage costs, some are due to rising rental costs.
To put it into perspective, between 2018 and 2022, childcare fees rose between 20 and 32 per cent, according to the Australian Competition and Consumer Commission (ACCC), far outpacing inflation and wage growth. The increase coincided with a boost in federal childcare subsidies, now totalling $14 billion a year.
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'Increasingly predatory' landlords
Lee says rent is the second-biggest cost for childcare centres, after wages, so when rent goes up, either parents are squeezed or costs in other areas are cut.
"The focus has been on for-profit childcare operators," Lee says. But she says the relatively new actor in the sector is for-profit landlords "who are increasingly predatory".
She says some of the bigger landlords use complex financial structures to obscure their business models, for example one of the bigger ones has 18 subsidiaries which are structured as trusts, which don't require them to publish financial statements.
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'For them to build profit'
Letiha Loveday, a former centre manager at private equity group Affinity Education, which runs 255 childcare centres around Australia, says some of her targets included occupancy targets, wage targets, revenue and profit targets and budget targets.
"And you weren't actually achieving anything that was actually quality or a part of your job scope in order to meet these KPIs for them to build profit," she says.
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'Money won't fix this mess'
What's unfolding is more than a property trend, it's a systemic shift. Billions in government subsidies and grants are being pumped into a sector where landlords and investors are reaping big rewards.
But more money won't fix this mess. The National Children's Commissioner Anne Hollonds issued a statement after Four Corners aired saying: "our whole approach to child safety and wellbeing in this country is in desperate need of systemic reform, and this includes our childcare sector."
Meanwhile the Albanese government remains largely silent about how it plans to address the deepening crisis in childcare. While it has committed billions more to the sector, including wages subsidies to address some of the wage issues and a building fund to help tackle so-called childcare deserts, it has stopped short of addressing the structural issues exposed in the Four Corners investigation. When asked to respond to the revelations he called them "deeply concerning" but deflected responsibility to the states.
This is despite the Productivity Commission report in September, which outlined concrete recommendations within federal control. They included the establishment of a childcare commission and an independent review of ACECQA, penalties for centres that continuously fail the rating standards and more transparency.
So far the government has not commented on these reforms.