November 2022 Newsletter

Childcare property news

Childcare subsidies and paid parental leave to be expanded
Childcare property remains solid amid challenging outlook
Queensland Director Hilary Knights appointed director of API Leisure and Lifestyle.

Childcare subsidy boost

Changes to the childcare subsidy that promise to cut fees for 1.26 million Australian families are a step closer with Federal Parliament considering the new $4.5 billion package.

Legislation supporting the cheaper child care initiatives was introduced in September and proposes to:

lift the maximum child care subsidy (CCS) rate to 90% for families earning $80,000 or less
increase CCS rates for about 96% of families with a child currently in care earning less than $530,000
keep higher CCS rates for families with two or more children aged under five in care.

If supported, the changes would come into effect from July 2023. Minister for Education Jason Clare said the cost of childcare has gone up 41 per cent in the last eight years.

“Last year 73,000 people who wanted to work, didn’t look for work according to the ABS—because they couldn’t make childcare costs work for them, ‘’ he told Parliament.

As part of the package, the Australian Competition and Consumer Commission will conduct an inquiry into early childhood education and care prices.

Paid maternity leave extended

The Federal Government also announced a boost to the paid parental leave scheme in August, with new parents now able to access an additional six weeks of Paid Parental Leave.

The total leave payable under the scheme is now 26 weeks or six months. Under the changes, the extended parental leave can be taken in blocks between periods of paid work.

From 1 July 2024, an additional two weeks per year of PPL will be added until the scheme reaches its full 26 weeks from July 2026.

Prime Minister Anthony Albanese said: “This is a modern policy to support modern families. We know that investing in parental leave benefits our economy. It is good for productivity and participation, it’s good for families and it’s good for our country as a whole”.

Childcare property news

Demand for childcare property continues to remain solid despite the subdued economic outlook in Australia.

In industry news, private equity firm Anchorage Capital Partners made a $NZ46 million investment in the Evolve Education Group, the second largest childcare operator in New Zealand. Real estate investment trusts based around social assets such as childcare have also come under pressure.

However, governments continue to offer strong support for the sector. With unemployment in September at 3.5 per cent, many operators are struggling to fill vacancies and cater for childcare demand.

In October, the Federal Government announced it would support additional early childhood degree places and fee-free TAFE and vocational training places for early education in a bid to fix skills shortages in critical sectors.

Economic outlook

The Federal Budget on 25 October delivered some sobering economic news for Australia, with Treasury expecting the economy to grow 3.25 per cent this financial year before slowing to 1.5 per cent in 2023/24.

Federal Treasurer Jim Chalmers said the new forecasts were a full percentage point lower than what was initially forecast in March, reflecting the challenging global economic situation and rising interest rates.

“Australians know this is a time of great challenge and change,’’ he told the Federal Parliament.

“The global economy teeters again, on the edge – with a war that isn’t ending, a global energy crisis that is escalating, inflationary pressures persisting, and economies slowing – some of them already in reverse.”

Inflation is tipped to peak at 7.75 per cent later this year before slowly dropping to 3.5 per cent in 2023/24 and is expected to return to the two to three per cent Reserve Bank target range in 2024–25.

The Australian Bureau of Statistics said the consumer price index rose 1.8 per cent in the September quarter with inflation sitting at 7.3 per cent.

Globally, the International Monetary Fund warned in October that 2023 will “feel like a recession” for many people as more than a third of the global economy contracts this year or next.

High energy prices, currency pressures, ongoing supply chain challenges and the rising cost of living are all impacting the global outlook.

Board appointment for Queensland director

Queensland Childcare Concepts Director, Hilary Knights, has been appointed Non-Executive Director on the board of not-for-profit organisation, Australian Post-tel Institute Leisure & Lifestyle (API).

API Leisure and Lifestyle, which was established in 1923 to provide employee benefits for the PMG, now Australia Post and Telstra, is now a leading provider of lifestyle services and benefits for more than 160,000 members.

In her new role, Ms Knights will support API’s strategy to expand its interests in the childcare sector.

“I’m looking forward to adding my experience and expertise in the childcare sector, property development and marketing to the brain trust of an extremely high calibre board and supporting API’s CEO Peta Pitcher in implementing API’s future plans,’’ she said.

“API’s vision of having a strong focus on community and the creation of inter-generational childcare hubs is close to my heart and I’m excited to be a part of an organisation delivering these values to the sector and greater community”.