With COVID-19 came an entirely new challenge for the Early Childhood Education and Care (ECEC) sector, as centres were hit hard across Australia in early 2020. Childcare centres lost revenue, and occupancy decreased to an all-time low of 57% for Long Day Care (LDC) in the second quarter of the year.
The third annual Early Years Research 2021 report, based on 4,100 survey respondents from the ECEC sector, suggests that centres were able to bounce back and gain $3.2bn in revenue by Q3-2020. By this time, occupancy was back on an upward trend and the fee-free scheme had ended. The report looks at key performance indicators, including occupancy, NQS ratings, enrolment and more, to assess how early learning and care was impacted due to changing events.
Occupancy dropped 25% year-on-year for LDC providers, with a quick upturn in Q3-20
On the operational front, the Average Daily Rate (ADR) for LDCs stayed steady at $109 in Q2-20. With lower occupancy, this meant a fall in revenue of 23% year-on-year (YoY). Compared to 2019, occupancy was down 17% for large LDC providers and 28% for standalone providers. Services with the lowest occupancy at 49% also happened to be the ones rated Working Towards NQS, while those rated Exceeding NQS recorded 12% higher occupancy than average.
However, as conditions improved, centres saw better growth over the next few months and occupancy was up 28%, for LDC and 22% for Outside School Hours Care (OSHC), quarter-on-quarter (QoQ) in Q3-20. Centres were able to withstand financial pressures, and by Q3-20, LDCs made $338K more in revenue quarter-on-quarter (QoQ) and occupancy was back at 73%. On the other hand, with occupancy still lower than the previous year (at 50%), OSHC gained $50K in quarterly revenue.
86% of centres remained open during the pandemic as a crucial service, with large enterprises experiencing significant losses. 12% of standalone providers saw no negative impact on revenue, while 3% actually gained revenue during Q2-20.
60% Preschool and Kindergartens remained open and did not lose revenue, but 51% of OSHC services had to discontinue services temporarily when enrolment was low. On the upside, no centre had to close down permanently during this time, and a very small proportion of LDCs had to close temporarily to cope with low occupancy.
More services in favour of fee-free scheme ending earlier than July 2020
During the pandemic, the government introduced the fee-free scheme to help centres remain open and to make childcare available to essential workers at zero cost. Under this scheme, centres were paid 50% of the pre-pandemic revenue earned per week, with families having to pay no fees for enrolling their children. The move was welcomed by Australian families, especially those that lost jobs during COVID-19.
Since the government made payments based on previous enrolment levels, centres with more children during and after Q2-20 were at a disadvantage. The government ended the fee-free scheme in July 2020 and the Child Care Subsidy (CCS) was implemented once again, but with less strict criteria keeping in view the impact on employment at a large scale. When surveyed, 41% of respondents believed that the scheme should have ended earlier, possibly due to revenue limitations.
Services offering online learning during COVID-19 recorded $46K additional revenue
Some centres were able to provide home learning experiences to children through virtual programs while in-centre enrolment was low during the Coronavirus outbreak. Children were able to access educational activities remotely, pushing up occupancy by 9% for all centres offering virtual learning programs. For LDCs in particular, this led to 4% more revenue than the average service, and $46,000 in additional annual earnings.
Most services offered online learning as a temporary feature, while a large number of services did not intend to offer this at the time of the survey. Only 13% of OSHC services offered remote learning, compared to 46% LDC and 60% PSK who were able to engage children from home.
Services that were early to adopt innovative educational practices, such as providing remote educational programs, saw higher occupancy overall. For those offering temporary or permanent online learning programs, occupancy was up to 4% higher than the average occupancy during the COVID-19 period. Occupancy was 3% lower than average for services that did not intend to offer them, and 37% of these stayed open but lost revenue during this time.
It is also true that most services suffered losses despite offering virtual learning programs and making other efforts to retain children. However, with growing competition and availability of digital educational resources, centres are expected to consider online learning as a more permanent part of children’s learning and development.