Service charging practices and sessions of care
June 2023
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Overview
This snapshot presents findings from the 2018–2021 evaluation of the Australian Government's Child Care Package.
One of the intended outcomes of the Child Care Package was to improve the flexibility of child care provision. While this relates to various aspects of child care (such as hours of the day that care is available, the capacity to change bookings or have casual bookings), one aspect that has received significant attention is how child care is charged, and the underlying 'sessions' of care that feed into this. This snapshot explores these aspects of charging and sessions.1
Charging practices
A significant proportion of child care is purchased by families on a sessional basis. In the case of Centre Based Day Care (CBDC), before the introduction of the Child Care Package this tended to align with a day of care, with the length of the session defined by the opening and closing times. In the case of Outside School Hours Care (OSHC), there were typically up to 2 sessions: a before school session - from the opening of the service until the commencement of school, or after school care, from the end of school to closing. Variations to this existed. These included Occasional Care Services that offered shorter sessions or charged by the hour, and some services that offered half-day sessions. While Family Day Care (FDC) frequently also used a sessional approach, there has been a strong trend towards charging this on an hourly basis. In Home Care (IHC) services, like FDC, also often charged on an hourly basis.
With the introduction of the Child Care Package, the concept of the session is important, as it defines the number of hours charged (and therefore, potentially subsidised), and is also relevant in the calculation of the hourly fee.
Service types and charging practices
In the Survey of Early Learning and Care Services (SELCS), conducted for the evaluation in June-July 2019, the specific session charging arrangements of services were reported as:
- 39% charge by the day, or they only have one session length
- 43% said families can choose from one of a number of sessions
- 11% have multiple sessions but with some only offered to particular families (e.g. vulnerable families)
- 4% charge on an hourly basis
- 3% had other charging arrangements.2
Figure 1 shows that hourly charges were more often used in FDC and IHC services. For both CBDC and OSHC it was common to either have only one session length or to have multiple session lengths families could choose from. In the case of OSHC, this likely reflects when there is both before school and after school options.3
Figure 1: Charging practices by service type
Note: Excludes those who reported 'don't know'.
Source: SELCS Wave 2 (June-July 2019)
Hourly charging for FDC and IHC is related to this care being for specific children, provided by educators who are contracted or employed by a provider, typically in the educator's or child's home. This is contrasted with care provided in a CBDC or OSHC setting, where there are additional issues related to the care of multiple children, staffing regulations and ratios and other workforce issues (see also Changes to Sessions and Operational Issues, below).
Overall, in July 2019, 30% of services agreed (strongly agreed or agreed) that changes introduced in July 2018 had led to changes in the way fees were charged at their service. Changes were most likely for CBDC services (36% reported the way fees were charged had changed) and FDC services (42% agreed that the way fees were charged had changed.) Analysis of the DESE administrative data indicated that for the for-profit FDC sector there had been a considerable move to hourly charging for child care, rather than charging on a longer sessional basis. Changes for CBDC are discussed in relation to the focus on sessions of care, in this snapshot.
The Child Care Subsidy and sessions
The family activity test for the Child Care Subsidy (CCS) determines the maximum number of hours of child care that can be subsidised per child per fortnight. Depending on the activity test result, this maximum 'allowed hours' may be 100 hours per fortnight, 72 hours, 36 hours, 24 hours or zero hours. Any hours charged to families beyond the allowed hours are subject to full payment by the family.
Session length and approved hours
The session length matters, as this is how families are charged for care. If families use child care each day, and their service has only an 11-hour session, for example, these families will be charged 110 hours of child care per fortnight. For families with an allowable 100 hours per fortnight, they would have 10 extra hours they would need to pay full fees for. Similarly, the allowable 24 hours per fortnight could cover 2 days a week of child care if the service offers 6-hour sessions, but if only longer session lengths are available, or a longer session length is required to meet the family's needs, then a number of hours are not covered by the subsidy if the family use 2 or more days of child care a week.
Some services have altered their session length, or introduced alternate session lengths, so that families' fortnightly care use can better fit to the maximum allowed hours. In particular, there has been a strong perception among stakeholders and providers that services were expected to introduce a 6-hour session to ensure there were short sessions that permitted children with 24 allowed hours per fortnight to attend for 2 days a week.
Fortnightly allowed hours versus weekly child care bookings
As noted above, the 'allowed hours' prescribes how many hours, per fortnight, will be subsidised. However, services typically book child care according to a weekly schedule. In effect, this means that families who use more child care than is covered by their allowed hours will often have their hours of care subsidised in one week in the fortnight, but then be paying full fees for a number of hours in the second week.
Sessions and the notional hourly rate
The hourly fee is a key part of the CCS calculation, but because most children are provided care on a sessional basis, rather than on an hourly basis, the concept of this hourly fee is not straightforward. The hourly fee in the context of sessional child care is based on dividing the session fee by the nominal length of the session. When services offer multiple sessions, the hourly fee parents are charged can vary across sessions. See also fees and sessions, below.
Session lengths in Centre Based Day Care
Analysis of data compiled from the 'session reports' submitted by services to the Department of Education Skills and Employment enables information about session lengths to be examined more closely. This has been done for the middle fortnights of August 2018, November 2018, February 2019, April 2019, August 2019 and November 2019.4 We focus here just on CBDC sessions.
Figure 2 shows that for CBDC, from August 2018 to November 2019, there was a gradual decline in the proportion of services only offering one session of care length, with increases most apparent for the proportion offering 3 different lengths of sessions of care.
Figure 2: Number of session lengths reported in CBDC services, August 2018 to November 2019
Note: See footnote 2.
Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)
Figure 3 shows that for CBDC services the session length of 10 hours remained the most prevalent session length across the period reported. There was little change in the percentage that reported session lengths of less than 6 hours, 6 hours, 11 hours or 12 hours, but there was growth in the percentage that reported sessions of between 7 and 9 hours, and sessions of 10 hours.
The sessions data presented here is that of sessions used rather than sessions offered. That is, some services might offer session lengths that no family makes use of. This is important in considering the shorter session length of 6 hours. Some services, through survey and interview data, indicated they only offered this session length for use by children with access to 24 allowed hours. The proportion of children with these low allowed hours is small. For example, in the final week of June 2019, 32% of CBDC services had no children with 24 allowed hours enrolled, and only 31% had 2 or more. That only 23% of CBDC services reported a 6-hour session in the November 2019 fortnight in part reflects there being little to no demand for this session length in some services.
Figure 3: Session lengths reported by CBDC services, August 2018 to November 2019
Notes: See footnote 2.
Source: Child care administrative data analytical dataset (daily sessions data for selected fortnights per quarter)
The above findings are based on whether any children in the service were reported to use any of the session lengths. Analysed by a count of children using each session length, the 10-hour session is the most commonly used session length at CBDC services (in November 2019, in 36% of services, this was the most common session length used), and over time has become more common (the proportion was 32% in August 2018).
By comparison:
- In 32% of services the most commonly used session length was 11 hours (down from 34% in August 2018)
- In 19% of services the most commonly used session length was 12 hours (down from 22% in August 2018).
Session lengths in other care types
Using the same data for other service types:
- 69% of OHSC services had 2 session lengths in November 2019, typically reporting a morning, before school, and afternoon, after school, session. Another 21% had one session length. Almost all FDC and IHC services recorded 5 or more different session lengths at each period, reflecting the more flexible delivery of child care for these services
- For OSHC, the most commonly used session length is 3 hours (72% of services), while for FDC and IHC the most commonly used session length is one hour (72% and 76% respectively).
Changes to sessions and operational issues
Almost three-quarters of services reported in June-July 2019 that they had made no changes to session offerings since the introduction of the Child Care Package. However, 20% said that their session offerings had changed due to the changes to government child care fee assistance. Another 4% said their session offerings had changed but not due to the changes to child care fee assistance.
The factor most often cited by services in explaining changes to sessions was the introduction of the activity test, and services described taking a range of actions to align session lengths with the eligible subsidised hours from the test. This included introducing 6-hour sessions for low-income families with 24 allowed hours per fortnight, along with 10-hour sessions to align to the 100 hours allowed category and, in other cases, 9-hour sessions for families with 36 or 72 allowed hours. A smaller number reported introducing hourly sessions to allow families to keep within their range of subsidised hours.
In offering different session lengths, services typically reported they had to structure these to particular times; for example, allowing families to choose a 10-hour session that started and ended at a particular time. This meant that families could only use these shorter sessions if they had certainty that their working arrangements would match the starting and finishing times of these shorter sessions. For 6-hour sessions, this was reported by services to be important to allow the programming of early childhood education and care content to the children attending within this session length.
For all services offering multiple session lengths, services reported that they needed to structure these sessions in some way to also optimise their business operations and manage staff rosters also with consideration of regulations and requirements of staff to child ratios. Some services noted the challenge of changing their business model to offer a range of sessions that could meet the needs of families and ensure the service remained viable, while managing the administration of a more complex range of service offerings. In regard to 6-hour sessions, which were being offered so children could access 2 days of care a week, stakeholders said that these sessions were costly to the services, particularly for those with a high proportion of families accessing the lowest level of subsidised care, and services were concerned that they were not sustainable into the future.
Varied approaches to charging and session lengths
Just over half (55%) of services offering more than one session length reported that they charge the same rate per hour for all session lengths, according to SELCS in July 2019. Services that charged varying rates for different sessions were asked to describe how these charges varied. The more common themes emerging from responses in this survey included the following:
- Some charged the same fee regardless of session length, although a subset of these noted having a different fee for the 6-hour session.
- Some reported that shorter sessions are charged at a higher hourly rate to cover casual staff costs and overheads, and similarly longer sessions have a discounted/reduced hourly rate.
- Many OSHC responses related to the session fee being different for before school care, after school care and vacation care.
Additional comments referred to varying fees for reasons such as the age of the child, to cater for the inclusion of meals or amenities and reduced rates if sessions have outside funding (e.g. preschool funding). In the cases of FDC and IHC, rates set by individual educators varied with educational qualifications and experience.
Fees and sessions
More detailed analysis of session lengths and charging practices undertaken for the evaluation highlighted that services often charge very similar fees to families regardless of session length, effectively having a fixed 'day' rate, with some small adjustments.
For example, in November 2019, 1,632 (35%) of CBDC services were recorded as having 2 session lengths. Restricted to those that had one session length of 10 hours and one of 11 hours (525 services):
- The average fee charged for the 10-hour session was $114 and for the 11-hour session was $117.
- The derived hourly rate (the session fee charged divided by the number of hours charged) of $11.41 for the 10-hour session was markedly higher than the $10.50 per hour for the 11-hour session.
- The average 10-hour session fee was the same (rounded to the closest dollar) as the average 11-hour session fee in 19% of the services.
The evaluation findings indicated that the benefit of having different options regarding session lengths was more to do with keeping the total subsidised hours under the family's hours limit, than with a reduction in fees paid to the services.
Note that the example above also shows that families charged for different session lengths are being charged different hourly rates. This will have implications for the cost of care if the hourly rate exceeds the rate cap.
Flexibility and service charging
As noted in the introduction, sessions of care and service charging practices was addressed in the evaluation as it was considered to be a key aspect of delivering flexible child care to families, particularly through services offering different session lengths to families.
As described above, though, the value to families of having different session lengths was largely related to families being able to align their hours charged to the number of hours they were able to have subsidised. This did not necessarily mean improved flexibility. Sessions operate as a window of time during which a child can receive child care services, with parents having flexibility within this window. A shorter session length means the window within which parents can drop off and pick up children is diminished, and further, shorter sessions often had fixed and limited start and end times Parents and services expressed concern over the potential reduction in flexibility associated with shorter sessions. This was not just with short hours of care but also, for example, those working full-time and being entitled to a 10-hour session where minor additional work demands may delay a return, and be compounded by long commute times. While in some cases, a parent's employment activity may coincide with rigid hours offered for some of these sessions, in many cases, it will not.
Summary
The introduction of the Child Care Package and the activity test has seen some services changing their session offerings so that they have session lengths that match the maximum number of hours families can have subsidised in a fortnight. For CBDC, the main feature of the change to sessions has been an increasing proportion of services offering session lengths of between 7 and 9 hours or of 10 hours. In terms of frequency of use, there has been a shift from sessions of 11 and 12 hours in favour of those of 10 hours. While fewer services have 6-hour sessions, this will, to some extent, be a factor of demand.
Charging practices are varied, with hourly fees more commonly charged in the FDC and IHC services, and longer session-based charging more common in CBDC and OSHC. For CBDC services that offer multiple sessions, some charge the same hourly rate regardless of session length, while others that have multiple session lengths effectively charge a 'day' rate that only varies a little by length of session.
Managing multiple session lengths, or session times, has posed some challenges for services, and has, in some cases, meant families need to adhere to rigid session times to benefit from shorter session lengths. The introduction of new session lengths in services has largely been done in response to the introduction of the activity test, and has provided a means for families to have their total fortnightly child care fall within their allowed hours to maximise their Child Care Subsidy.
Child Care Package evaluation
In July 2018 the Australian Government introduced the Child Care Package. The Australian Institute of Family Studies in association with the Social Research Centre, the UNSW Social Policy Research Centre and the ANU Centre for Social Research and Methods were commissioned by the Australian Government Department of Education, Skills and Employment to undertake an independent evaluation of the new Child Care Package. Findings presented here are based on data collected and analysed for the Child Care Package evaluation. The evaluation commenced in December 2017 prior to the introduction of the Package and reported on data collected up to December 2019.
1 The policy settings described in this snapshot refer to those that applied at the time of the evaluation. There have been some updates to policy settings since this time, and the Department of Education, Skills and Employment (DESE) is now the Department of Education.
2 These 'other' arrangements typically covered services reporting to have variations in fees for particular families (e.g. some reporting it is free for some families, multiple sibling discounts, different fees for non-working families), rates varying for permanent versus casual, and sometimes including an administrative or educator levy.
3 Administratively, there is a maximum session length of 12 hours, so services with opening hours longer than this must have at least 2 sessions, either with these overlapping, or possibly short sessions at the beginning or end of the day, to allow coverage of the whole day. Services with shorter opening hours may also have these approaches to sessions.
4 Data is derived from session reports. Start and end times of sessions were used to calculate a session length. For simplicity, these were rounded down to the nearest hour (with the exception of sessions calculated as under one hour, which were rounded up to one hour). Findings did not alter significantly if alternate approaches were used, such as rounding to the nearest half hour. Any session report submitted for a service was used, and this may include session lengths not typically offered, for example, if families are charged for an additional hour or 2 before or after their usual session of care.
Australian Institute of Family Studies. (2023). The 2018–2021 Child Care Package Evaluation: Service charging practices and sessions of care. (Findings from the Child Care Package evaluation). Melbourne: Australian Institute of Family Studies.