On July 2, Australia's government introduced a new childcare benefit policy, the biggest winner for middle-and low-income families, and government lifted the ceiling on child-care subsidies for low-and middle-income families in an effort to provide more financial aid to those families. Nearly a million families save an average of A $1300 a year per child.
Disheartening, as soon as government's forefoot sent money, the kindergarten hindsight went up. A large number of Australian kindergartens have announced that they will soon increase prices by 10%, or A $12 a day. With a market capitalisation of more than 1 billion, Australia's second-largest early childhood education centre, the G8 Education, announced that its 516 kindergartens would rise 5.5% from July 1, just six months ago. They have just raised 5.25%.Only About Children, which operates more than 40 childcare centres in Melbourne and Sydney, and are also raising fees, from a 15 percent discount to a 15 percent increase in fees per child, who charge as much as A $190 a day. As you know, children spend limited time in kindergarten every day, but most of the time is taken care of by their parents, or even more by their mothers. And this is really hard-working and time-consuming, which makes it difficult to have both work and child-rearing.
In some residents' new districts, because of the large number of newlyweds, the competition for admission to care is fierce, and some parents often apply for waiting lists for their children to enter 10 nurseries, which costs them hundreds of Australian dollars and can not be refunded from unsuccessful applications. In a sparsely populated country like Australia, kindergarten is on the same track as it is at home, and it's starting to take a degree. So, is there any prospect of investing in a local kindergarten?
The answer is yes. Australia's childcare industry is a huge A $13 billion market, with profit growth of 14.3 percent in 2016-2017, according to IBIS research. Compared with just 0.5% of Australia's GDP growth rate in the third quarter of 2016, the childcare industry is growing rapidly. The popularity of the childcare industry in Australia is mainly due to the following four reasons: 1. Government funding support 2. Women return to work 3. The child population has grown rapidly by 4. 4%. Household disposable income growth
A new kindergarten requires a professional license, and the growth rate is still low when kindergartens are so scarce, mainly because of the high threshold of the industry. Australia has a very strict system of industry rules. The nursery care industry is mainly regulated by the National quality Framework of Kindergarten (NQF (National Qualify Framework). At least half of the day child care center (Long day care center) employees are required to obtain at least three levels of early education certificate (Certificate III). As kindergarten workers continue to improve their level of education, wages are rising steadily. Between 2016 and 2017, kindergarten teacher jobs are expected to grow by 11 percent, which will consume about 67 percent of income growth. This is the biggest factor in considering whether to invest in kindergartens.
The profit and cost composition of kindergarten is due to the various forms of nursery care industry, such as the whole day garden, half day garden, family garden and so on, and the nature of operation is different, the profit level of each kindergarten varies greatly. In the case of G8 education, for example, its operating profit margin could reach 22.7 percent, compared with early education, a good starting point for the non-profit nature, with a profit margin of 1.9 percent in 2014-15. However, the industry as a whole, the average profit can reach about 10%. The cost of salary is more than 50%. In contrast, with the exception of fixed costs such as electricity and electricity, rents cost an average of 3.4%, a rate that is very low in most industries.
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Childcare has been seen in Australia as a rigid demand for families, and most middle-class Australians want and already have two or more children, so the Australian population is also facing a high-speed upswing. Compared with other industries, kindergarten education is a less risky and less competitive industry. Not only stable income, but also less vulnerable to technological renewal, and faced with the cost of renewal. Kindergartens will be a good investment option for the foreseeable future.
But the kindergarten industry has passed the fastest growing stage. According to IBIS forecasts, the industry will maintain an average growth rate of 5.8 percent over the next five years after a 12 percent high growth rate between 2016 and 2017.
The biggest uncertainty facing the kindergarten industry is the federal government's ongoing reform of the nursery care industry. The proposed single Child Care subsidy CCS (Single Child Care Subsidy), if adopted, the new policy will be implemented in 2018 and will bring about significant changes in the childcare industry in Australia. Single Child Care subsidy CCS will replace existing childcare benefit CCB (Child Care Benefit) and Child Care rebate CCR (Child Care Rebate). Kindergarten operators will receive direct government subsidies, and profit levels and growth rates are expected to increase.