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High Confidence in Early Education

Continued lockdowns and disruptions caused by the pandemic have highlighted Australia’s reliance on essential childcare services to maintain workforce productivity.

State and Federal Governments have sent a clear message that childcare equates to a higher participation in the workforce, implementing a range of measures, including subsidy increases and the removal of funding annual caps. This relief package has enabled early childhood operators to remain open throughout the pandemic, providing working families with continued access to care and further reinforcing the sector’s status as an essential service.

National Head of Agency Adam Thomas said that the federal budget included an extra $1.7 billion five-year spend for childcare, in addition to $1.6 billion for universal preschool access.

“This brings the total investment in early education to $10.3 billion,” said Mr Thomas. “The tangible results are profound. It is estimated these changes alone will provide capacity for around 40,000 Australians to work an extra day per week, boosting the level of GDP by up to $1.5 billion per annum.”

In addition, the Government recently announced changes to the Child Care Subsidy (CCS), will come into effect early, removing the cap for all families who receive the CCS from December 2021, and offering a higher subsidy to families with multiple children in care from March 2022.

On the back of strong, ongoing Government support, investor confidence in childcare assets has continued to build over the year, demonstrated by yields as low as 2.99%.

“To say that this year has produced outstanding results for childcare investments is quite the understatement,” said Michael Vanstone, Burgess Rawson’s Associate Director – Childcare.

“We’ve seen outstanding results, and significant yield compression across the board. And due to community lockdowns, the majority of these sales have been purchased sight unseen.”

There are no signs of the appetite for childcare investments abating.

“We expect this momentum will keep pace throughout the ongoing vaccine rollout, and as the economy recovers and Australians find their new work/life rhythm,” said Mr Thomas.

Jason Roberts, CEO and founder of The Sector – Australia’s leading childcare focussed digital publishing company – said childcare occupancy rates across the country have bounced back strongly after a difficult 2020.

“Recently released government data shows that the total number of children attending long day care (LDC) services topped 800,000 in the three months ending March 2021 for the first time ever,” said Mr Roberts. “In fact, not only are enrolments up, but we are also seeing jumps in hourly attendance as well.

This performance is very promising and sends a strong signal that the underlying structural demand for childcare services is robust and will likely continue to strengthen as the economy recovers and additional Government support kicks in.”

Mr Thomas agrees saying that the childcare industry has a strong outlook with a large pipeline of childcare centres and a strengthening of quality services.

“Of course, the ‘COVID baby boom’ will necessitate the need for an expansion of services for younger children in the coming 12 months,” he added.

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