A Strategic Assessment of the Children's Services Industry

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STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRYOver the past four years, total available places have been increasing on an annual basis by 3.7per cent across Australia, with Western Australia, Northern Territory and Queenslandincreasing at faster than average rates (6.5 per cent, 6.2 per cent and 4.9 per cent annually).These increases have been driven predominantly by the growth of long day care, followed byout of school hours care. The annual average rate of growth of these two sectors over a fiveyear period was 7.3 per cent and 4.5 per cent respectively. Other service types have declinedduring that period, with variations between the States and Territories. In examining theseincreases the Commonwealth’s removal (in July 2006) of the previously existing limit onoutside school hours care and family day care places should be noted.Appendix B provides greater detail of supply data by region, funding source, and over time.Figure 5.5: Four year annual average change (%) by type and geographical locationSource: SCRGSP 2002, 20085.2 Demand for children’s servicesDemand is a measure of the quantity and characteristics of the services that parents buy at agiven price. The other determinants of demand are the number and ages of children and thenumber of mothers who are employed outside the home. Other demand factors are maritalstatus, family income, number of children in the family, parents’ career goals andopportunities, whether relatives live nearby, educational goals for children, types of careavailable in the community and how accessible or affordable a potential option might be.Demand for children’s services can be measured in several ways. This can be by determiningthe number of available places, where the full time equivalent place is treated as a unit ofservice. Alternatively, demand can be determined by the number of children that are accessingthe different services by age and level of usage. Both methods will be presented below.The first measure of demand for child care that will be used is by taking the utilisation rateand multiplying it by the number of available places. The utilisation rate is available for longday care centres and family day care. It is calculated as the total child hours paid for as a45
STRATEGIC ASSESSMENT OF THE CHILDREN’S SERVICES INDUSTRYpercentage of total available hours (SCRGSP, 2008, DEEWR, 2008a). The nationalutilisation rate for centre-based long day care in 2006 was 73.9 per cent. This measure wasused by Treasury in 2007. Although accurate as a measure of aggregate demand, utilisationrates are a blunt measure which can give a misleading impression of ‘slack’ in the system. Itcould be, for example, that the unused hours in a child care service are hours in the earlymorning and late afternoon. Such hours cannot readily be sold to parents, especially givenAustralian parents’ preference for relatively short hours of care. Long day care centres areobliged to offer these hours, however, as a condition of approval for Child care Benefit. (Andit is important that these hours be available for families that need them, even if centres are notfull to capacity at the beginning and end of the day.)Table 5.1: Commonwealth and State/Territory Government Funded Children’s Services(2006)NSW Vic Qld WA SA Tas ACT NT AustCentre-Based LDCplaces available103,229 54,768 75,782 21,977 14,063 4,271 5,272 2,863 282,225Utilisation rate (%) 78.2 70.1 71.2 69.8 72.0 72.4 77.1 75.9 73.9Family Day Care(a) 24,830 16,194 16,204 5,484 6,364 2,732 2,160 1,170 75,138Utilisation rate (%) 63.2 61.2 64.8 60.3 74.9 64.6 52.0 56.3 63.3Demand Determined by Total Available * Utilisation RateCentre-Based LDC 80,735 38,370 53,949 15,349 10,124 3,092 4,063 2,172 208,536Family DayCare(a)15,688 9,917 10,495 3,309 4,767 1,765 1,124 658 47,577Total Demand ofLDC and FDC96,423 48,288 64,445 18,658 14,891 4,857 5,186 2,830 256,113Current Vacant oravailable placesCentre-Based LDC 22,494 16,398 21,833 6,628 3,939 1,179 1,209 691 73,689Family Day Care 9,142 6,277 5,709 2,175 1,597 967 1,036 512 27,561Source: SCRGSP (2008)Another method of presenting demand for children’s services is to examine the proportion ofchildren who are using these services.According to the 2006 Australian Government Census of Child care Services (DEEWR,2008a), the estimated number of children attending long day care was 420,110, with 80 percent of the children attending for less than 30 hours a week. As at May 2006 (time of theCensus), 5 per cent and 23 per cent of children in long day care centres and family day carerespectively attended school.46
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A Strategic Assessment of the Children's Services Industry

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