OVERVIEW OF ACCC CHILDCARE INQUIRY

As all early learning service providers would now be well aware, in October last year the Australian Competition and Consumer Commission (ACCC) was directed by the Treasurer to conduct an inquiry into the market for the supply of childcare services.

The aim of the inquiry is to explore the factors that contribute to the cost of Early Childhood Education and Care (ECEC) services in Australia. The inquiry will examine and consider matters including costs and availability of labour, the use of land and related costs, finance and administrative costs, regulatory compliance costs, the costs of consumables and how the family fees charged since 2018 have changed following updates in childcare policy settings.

The ACCC will be looking at how operation costs and fees for families differ across the sector, particularly between not-for-profit and privately-run services, regional, remote and metropolitan locations.

The inquiry into the early learning sector is now well underway. Whilst participation in the inquiry is compulsory for large providers (owners of 40+ services), the rest of market's participation is voluntary only. Small providers are categorised as owners of 1-4 services, with medium categorised as owners of 5-39 services.

As service providers already have to collect info for the Department of Education, Skills and Employment (DESE) and the Australian Children's Education & Care Quality Authority (ACECQA), the ACCC will access any relevant information already collected and try not to double up on data collection.

The ACCC is meeting regularly with the Productivity Commission in the context of their inquiry into our sector, and also working with the NSW Tribunal on their similar state-based inquiry in order not to duplicate efforts and share information where relevant.

The ACCC Childcare Inquiry Taskforce aim to visit selected small ECEC service providers during March and April.

Meanwhile a sector-wide survey is also expected to be released for voluntary feedback from all ECEC services at some stage in April.

You can read the ACCC's activity timetable on their website here - just scroll down to the dates.

You can read the Terms of Reference of the inquiry here. 

 

SEEKING EXPRESSIONS OF INTEREST FROM SMALL-TO-MEDIUM SERVICE PROVIDERS BY 31 MARCH 

The Australian Competition and Consumer Commission (ACCC)'s inquiry into our sector has progressed to the third phase listed on their scheduled activities. This means they are seeking voluntary Expressions of Interest from small-to-medium early learning service providers, which have been defined as providers which own less than 40 services.

The ACCC has now engaged with over 350 small service providers (owners of 1-4 services) and the ACCC Childcare Inquiry Taskforce (the Taskforce) is confident that they have adequate data to represent the small-sized segment of the market. However small-sized service providers may still volunteer to be involved until the 30 March deadline. 

The Taskforce is still actively seeking expressions of interest from medium-sized service providers (owners of 5 - 39 services), as they need higher numbers of volunteers for this segment of the market. The deadline for submitting the Expression of Interest is 31 March.

Within this group, the ACCC aims to engage a diverse range of providers, from different care types and size of centres with representation across cities, regional and very remote areas. They are seeking to hear about your individual experience as a provider, in order to understand the costs associated with running your business and the fees that your families pay.

Those that volunteer to participate will be asked questions about their operating costs along with the fees charged to families since 2018 and how these have changed following changes in childcare policy settings.

The ACCC will send an information pack to those early learning providers which volunteer to participate, at least two weeks prior to their face-to-face ACCC visit, so that you can prepare yourself for the visit and the questions to be asked.

IMPORTANT NOTE: Small to Medium size services providers are participating on a voluntarily basis, and can withdraw at any point of the process with the ACCC Inquiry.

 

 

IMPORTANT OPPORTUNITY TO INFORM THE INQUIRY 
As the small-to-medium providers part of the ACCC inquiry is voluntary, the process relies on small-to-medium service providers putting their hands up.

As previously stated, the ACCC is confident they now have enough date from small-sized (owners of 1-4 services) service providers. However they are still accepting volunteers in this group until 31 March. 

The Taskforce is now seeking medium sized (owners of 5-39 services) to volunteer. We therefore strongly urge those of you who fit into the medium-sized category to volunteer to participate.

The Australian Childcare Alliance (ACA) encourages you to consider the inquiry as a feedback channel to voice the challenges of operating a group of early learning services and create a different dialogue to the mainstream media.

We see this phase of the ACCC inquiry as an opportunity for you to extend yourself as owner/operator to help shape and inform the discussions about our sector. Your insights, experiences, data, and context are valuable in painting the bigger picture of what it means to operate an early childcare centre in the current climate.

Your contribution to this inquiry can help inform the government, policy makers and decision makers of the complexities, challenges, and experiences within the ECEC sector, that are often misunderstood or misrepresented. This information will in turn flow onto the wider community.

 

PROCESS OF PROVIDING INFORMATION 
If you are the owner/operator of 1-39 services, you can volunteer to participate in the inquiry by submitting an Expression Of Interest (EOI).

NOTE: The ACCC is no longer actively seeking owners of 1-4 services and are now actively seeking owners of 4-39 services.

After you have submitted the form, you may be contacted by the ACCC to discuss the process for providing your information. Whilst the ACCC did face-to-face interviews at small-sized services to collect information, the collection of information from medium-sized providers will be via email - services will be asked to complete and return the relevant forms electronically.

The Taskforce aims to support providers through each step, with follow up phone calls to accommodate any difficulties and offer support through the whole consultation process.

The ACCC has provided an overview of the type of information they will be seeking from volunteer services here. 

If you are in one of the regions that the Taskforce is specifically focussed on, you may receive an email or a letter from the ACCC inviting you to register your interest.

 

QUESTIONS & ANSWERS (Q&As) - as of 20 March 2023
ACA posed a number of questions to the ACCC on our members' behalf. Please see below for the list of questions and ACCC responses. 

How many small-medium ECEC service providers is the ACCC seeking to participate in the inquiry?
The ACCC is seeking to hear from about 300 small-to-medium service providers. They are seeking a broad range of geographic areas.

The ACCC has directly contacted some services from specific regions which the Taskforce is focusing their attention and efforts on, to invite them to volunteer, to make sure these services have the best opportunity to be included.

The EOI process has been open for a few weeks – how many have volunteered so far?

So far the ACCC has engaged with over 350 small-sized service providers and is confident that they have enough data to represent this group.

The Taskforce is now targeting the medium-sized owner/operators and is calling on more volunteers from this market segment.

How long do the ACCC officers spend on site when they visit a small-sized service provider?
The ACCC Taskforce has already commenced site visits to collect information from the 1-4 owner/operator service providers. The Taskforce team members appreciate the need to keep their visits as brief as possible and not impose on the service's operations. As a practice they will contact the relevant centre a week or so before the visit to give an indication of the information they are seeking and allow preparation time. Generally they will spend an hour or two with the owner/operator or relevant team member.

Can you provide greater detail on the information you will be asking for?
The ACCC is seeking to collect numbers and figures that would be in documents such as tax returns or business activity statements spanning 1 January 2018 to 31 December 2022.
They are collecting information about all the sites a business operates, as well as some limited information about the ‘head office’ where a business has one.

An indication of questions they will ask about for each site / service a business operates include:

• business details (ABN, provider CRN, services CRNs)
• the total number of places each site/service has for children and the number of children each site/service educated and/or cared for in 2022
• there is a focus on staff – vacancy numbers, FTE numbers per site, breakdown of types of staff per site.
• Site/service total expenses/ total labour expenses and total land expenses for the calendar year in 2018, 2019, 2020 and 2021.
• Site/service costs, with a focus on 2022, including how much is spent on staff remuneration, and other things like rent / mortgage, utility bills, insurance and consumables like nappies and office supplies.
• Site/service income, with a focus on 2022, including income from payments from parents and guardians and any government support (other than from Child Care Subsidy, Community Child Care Fund or Business Continuity Payments as they will seek that data directly from the Australian Government).
• Site/service expenses, with a focus on 2022, including capital expenses, land and building, finance and administration costs, regulatory compliance costs and consumables
• Site/service schedule of fees from 2018 to 2022.

The ACCC will not ask for any individually identifiable information about children, and we are not assessing businesses individual performance or compliance, and the information we publish in our reports will mostly be aggregated.

The ACCC Childcare Inquiry Taskforce understands that this is a significant amount of detail for businesses to provide, however, it will ensure that the ACCC has an accurate picture of costs and prices across the sector. This will enable the Taskforce to accurately assess the level of competition and understand the factors affecting supply and demand and provide reliable advice to government, on which it can make evidence-based policy decisions

Can you provide a template response document for service providers to use as a starting point in providing this information?
Yes - the ACCC Childcare Inquiry Taskforce would be happy to send out the information collection template spreadsheet and information pack to interested providers.

If you would like to register your interest to participate in the inquiry please complete the online form here by 31 March 2023.

As a small/medium-sized provider, how private is my information if I participate in the inquiry?
The ACCC explained that their information gathering processes are bound by strict statutory requirements which specify when and how the ACCC can disclose their collected business information.

The ACCC takes this role very seriously, with the aim of holding any collected data responsibly - this includes the voluntarily collectedinformation. They may choose to publish aggregated data about segments of the market, which does not identify any individual providers.

In the rare event that the ACCC thought it reasonable to publish individual business data, they would be required to contact that business/organisation, provide the exact text they proposed to publish, seek the business/organisation's feedback and consider that feedback before eventually publishing the relevant statement.

Whilst the ACCC could not rule out this practice, they informed us that the likelihood of this happening in any ACCC inquiry is relatively low.

The final report is due in December - will raw data be available at any stage?
No – this is a function of the strict statutory requirements surrounding the ACCC collection of data. The ACCC will not publish raw data and will generally only present aggregated (i.e.de-identified) data.

Will the ACCC produce a template form to assist service providers in understanding the type of information and level of detail required?
Yes. Whilst the ACCC has already listed at a high level of what sort of information is being collected on the ACCC website, they have now produced a template spreadsheet which they will send to volunteers along with an information pack, once the Expression of Interest online form has been completed.

 

The Australian Childcare Alliance hopes the above responses provide some clarity around the information collection process. We  encourage those owners of 5-39 services who haven't yet done so to register to voluntarily participate in the inquiry.

If you would like to register your interest to participate in the inquiry please complete the online form here by 31 March 2023.