June 2022 Newsletter

Childcare funding in Australia

New Australian Government promises childcare-cost review

Labor’s childcare policy promises “cheaper childcare” for 96 per cent of families from July 2023
New Minister Anne Aly to oversee the portfolio
Childcare centre properties continue to sell for sub-5 per cent yields.

Childcare funding in Australia is set to be a major focus for the new Albanese government, as sector property continues to run hot.

The ALP has promised to reduce the cost of childcare for the majority of Australian families from mid-2023, and to take steps to bolster childcare skills and staffing.

Policies include increasing subsidies for childcare and extending all initiatives to outside hours school care. Details include:

Lifting the maximum child care subsidy to 90 per cent for families with one child in care
Increasing subsidies for families earning up to $530,000
Raising subsidies for additional children in care.

The Albanese government said it would invest $5.4 billion in these initiatives from July 2023. They have also committed to seek additional guidance from the Productivity Commission to review the implications of a universal 90 per cent subsidy.

Following the May election, the Australian Childcare Alliance congratulated the new government, saying the election result underscored that accessibility and affordability of childcare was a key issue.

Anne Aly new Childcare Minister

New South Wales-based MP Dr Anne Aly is the new Early Childhood Education Minister and has already stamped her mark on the policy platform.

In an interview with The Australian in June, Dr Aly said she would consider bringing forward the subsidies to ease cost of living pressures on families.

“If there is an opportunity to do that, obviously, the earlier we deliver our commitments the better because of the pressures that are currently facing families around the cost of living,” she said.

“It’s always good and better to deliver your commitments before the due date, especially in the current economic circumstances.”

But she said one of the key goals for government was ensuring recruitment for the sector was sustainable amid rising staff shortages.

Dr Aly has been open about her own journey as a single parent to two boys after leaving a violent marriage, while juggling her career as an academic.

“For me, access to childcare meant I was able to lift myself out of poverty and chart a pathway to a better life for myself, and particularly for my children,” Dr Aly told the Australian Financial Review.

“That meant I was able to secure the financial freedom that enabled me to have choices in life. If you understand those things from a lived experience, it gives you insight into what we do – not just about policy, legislation and economics, but how it actually has a real impact on people’s lives.

“You never really lose that part of yourself who used to cry every night because you didn’t know where you were going to find the money to put food on the table the next day.”

What does the new government mean for childcare property?

The increased childcare funding and future policy stability are expected to have a positive impact on childcare property.
Childcare Concepts Founder Phillip Malek said improvements to the sector would support demand from families.

“The current system can act – in some cases – as a disincentive for the primary parent to return to work full time,” he said.

“We in the industry want to help families to gain the benefits of high-quality early childhood education as well as enabling primary carers to fully engage in their work.”

Mr Malek said the childcare sector continued to provide excellent services to support families. He said the proposed ACCC and Productivity Commission reviews into childcare pricing would identify further areas to gain efficiency in the system.

Childcare properties would continue to provide steady returns, he said, amid the rising interest-rate environment.

“Childcare property investments offer secure, stable returns that are underpinned by significant government incentives,” he said.

Recent childcare property sales

Childcare properties continue to sell for strong prices – resulting in tight yields of less than 5 per cent – across the country.

A new 130-place centre on 4031sq m in Narre Warren, Melbourne, sold for $10.1 million (4.2 per cent yield) in April. Further, an Albion Park centre south of Wollongong sold for $1.6m at a yield of 4.35 per cent.

Childcare Concepts offers full-service childcare property agency services. Current listings range from DA-approved sites for development, established centres, and those with capacity for additional places.