August 2022 Newsletter 

Childcare support services extended

• COVID-19 childcare centre supports to stay for another year
• Australian Government continues to support sector as an education and productivity measure
• Brisbane centre sold on 4.5 per cent yield.

Childcare support services implemented during the COVID-19 pandemic will be extended, the new Australian Government has announced.

The measures were due to expire on 30 June 2022, but have been extended for another year as a measure to help families keep their children enrolled in early learning and care.
The support includes:

• allocating each child in childcare 52 absent days a year without missing out on their subsidy – an increase of 10 additional days
• permitting use of a government notice of a positive COVID-19 test as a form of evidence for the extra paid absences
• allowing services to receive the subsidy and waiving the gap fee until 30 June 2023:
  ○ when closed or partially closed due to staff illness
  ○ if a child is absent because they or an immediate family member has COVID-19
  ○ for children not attending care because they are a higher risk of severe disease from COVID-19.

At the time of the extension, the Australian Government estimated about 19 services were temporarily closed each day due to COVID-19 infections and influenza. However, the government continues to underwrite the section, with Minister for Education Jason Clare noting: “Keeping kids enrolled in childcare is good for them, good for families and good for the economy.”

Preschool funding expanded in New South Wales

The New South Wales (NSW) Government also announced a $1.4 billion package to subsidise the cost of preschool. The initiatives were announced in the recent State Budget and mean that from 1 January 2023 all NSW families will be eligible for:

• up to $4000 per year in fee relief for three to five-year olds attending a community or mobile preschool
• up to $2000 per year in fee relief for four and five-year-olds attending preschool in a long day care setting
• the equivalent of five days a fortnight of affordable preschool fee relief for all children in Department of Education preschools.

The Government also announced a two-year pilot to allow more three-year-olds to attend preschool in long daycare settings. NSW Treasurer Matt Kean said: “Every $1 invested in early childhood education delivers a $2 boost to the NSW economy – it is a great investment for any Treasurer.”

NSW State Budget

Childcare was also the centrepiece of the recent NSW State Budget with a $5 billion investment planned over the next decade to expand access to affordable, quality care. The Affordable and Accessible Childcare and Economic Participation Fund established in the budget will provide grants to childcare providers to expand infrastructure and establish new centres.

Providers will be able to bid for funding through a competitive process commencing in the financial year 2023-24 and funding guidelines will be established following sector and Federal Government consultation. The funding can be used to expand infrastructure in busy centres, establish new centres in areas of need, employ staff or reduce fees passed on to parents.

In total, $775 million will be invested over the next four years and providers will be encouraged to trial new service models to meet the needs of modern families. “This package will help break the childcare drought by targeting areas with the least access to affordable childcare, which poses the highest disincentive to parents returning to work,’’ Minister for Women Bronnie Taylor said.

Other budget announcements included a wind back of the land tax discount for early payment. Property investors who paid on time were entitled to a 1.5 per cent discount which will be wound back to 0.5 per cent from January 2023.

Queensland State Budget

The Queensland State Budget included a further boost to the state’s universal access to kindergarten program. An extra $263 million will be invested over four years and $77 million in ongoing annual funding will support the program.

As part of the kindergarten funding reform package, a new funding model will be introduced in January 2023 which will make Kindy free for children experiencing vulnerability or disadvantage at both community Kindy and long day care settings. It will also include new targeted subsidies for families attending both long day care centres and community kindergartens.

Childcare Concepts continues to support approved providers

Childcare Concepts continues to be busy, offering a range of childcare property listings from single centres to portfolios. Principal Phillip Malek said the sector continued to be well-supported by government, through a range of initiatives to bolster demand.

“Last financial year we enabled a record number of portfolio sales,” he said. “The market continues to look for contemporary, well-managed centres across New South Wales and Queensland. Ongoing support from the state and federal governments will continue to boost the sector, especially as we recover from the pandemic impacts. Childcare properties continue to have exceptionally strong underlying fundamentals.”

Major sales and yields

In recent sales news, yields continue to be tight due to strong sales results.

The Australian Financial Review reported an investor purchased a Little Locals operation in the Brisbane suburb of Auchenflower for just more than $11 million, netting a 4.5 per cent yield.

In late May, a Melbourne childcare development site at 125 Greythorn Road, Balwyn North, sold for $5.4 million. It has a permit for 154 places.

Edge Early Learning has expanded its network to 50 sites, following the acquisition of three centres in the ACT, through a funding partnership with HEAL Partners.

For other major operators, G8 Education announced Big W Managing Director, Pejman Okhovat will replace outgoing MD and CEO Gary Carroll as Managing Director and CEO from January 2023.
In a trading update, G8 said the first half of the year had been challenging, with the impacts of COVID-19 abating in the second quarter and occupancy reinstating seasonal growth in line with the previous year. G8 said team member shortages remained the sector’s greatest challenge.

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