The Australian childcare sector has become one of the most lucrative investments in real estate, with landlords collecting an astonishing $2.7 billion in rent each year. But while investors reap the rewards, families are left struggling with skyrocketing fees.
The Rising Cost of Childcare
As more private investors flood the sector, the cost of childcare continues to surge. Some parents are now paying up to $220 per day, or over $1,000 per week, just to access a system valued at more than $20 billion annually. Despite increasing government subsidies, many centres are still plagued by systemic issues, a lack of transparency, and an alarming rise in serious incidents.
Between 2018 and 2022, childcare fees jumped by 20–32%, according to the Australian Competition and Consumer Commission (ACCC), far outpacing both inflation and wage growth. While some of these increases are linked to rising educator wages, a significant portion is driven by mounting rental costs.
Government Funding: Helping or Hurting?
In its latest budget, the Albanese government pledged an additional $5 billion to the childcare sector, including subsidies for three days of care, a building fund, and wage support for educators.
However, experts warn that unchecked government funding is fueling a growing private rental economy, where landlords and investors are profiting, often at the expense of childcare quality. This is worsening the divide between high demand metropolitan centres and childcare deserts in regional and lower income areas.
Who’s Profiting?
A new analysis conducted for the ABC by the Centre for International Corporate Tax Accountability and Research (CICTAR), led by researcher Bronwyn Lee, confirms that landlords are pocketing an eye-watering $2.7 billion in rent annually.
An ABC investigation has also uncovered troubling issues within the sector, including underqualified staff, neglect, educators facing aggressive financial sales targets, and children being served meals costing as little as 33 cents, all to maximise profits.
The data reveals that over the past decade, 95% of all new childcare centres have been established as for profit businesses. In the long daycare sector, nearly three quarters are now run for profit. Property developers, private equity firms, and large scale investors are rushing into the industry, prioritising financial returns over the needs of children and families.
The Future of Childcare in Australia
With fees continuing to rise and investors tightening their grip, the question remains: how can the system be reformed to prioritise children over profits? Without stricter regulations and oversight, parents will continue to bear the financial burden, while landlords and investors collect billions.