What the terms actually mean
When parents talk about “government” vs “private” childcare in Australia, they're usually referring to the difference between not-for-profit and for-profit providers. The distinction matters because it affects fees, how surplus revenue is used, and — statistically — quality ratings.
| Provider type | What it means |
|---|---|
| Not-for-profit (community, council, church, university) | Operated by a community organisation, local council, church, or other entity that reinvests all surplus revenue back into the service. No shareholders or dividends. Includes council-run, church-run, university-affiliated, and parent-managed centres. |
| For-profit (private) (independent, chain, listed company) | Operated by a business (sole trader, partnership, or company) that can distribute profit to owners or shareholders. Includes single-centre independents, small groups (2–10 centres), and large ASX-listed chains. |
Cost differences: the ACCC findings
The ACCC's 2023 Childcare Inquiry provided the most comprehensive analysis of fee differences between provider types. The headline finding:
Not-for-profit centres charge approximately 8% less
on average than for-profit centres for centre-based day care, after controlling for location and service type.
In practical terms, if the average for-profit centre charges $150/day, a comparable not-for-profit in the same area averages around $138/day. Over a year on 3 days per week (48 weeks), that's roughly:
- $12/day × 3 days × 48 weeks = $1,728/year cheaper (before CCS)
- At 77% CCS, the gap fee saving is about $397/year
- At 90% CCS, the gap fee saving is about $173/year
The savings are larger for families with lower CCS rates (higher incomes) because they pay a greater share of the fee out of pocket. For families earning above the CCS threshold ($535,279+), the full $1,728/year difference is out-of-pocket.
Quality ratings: NQS comparison
Australia's National Quality Standard (NQS) rates every approved childcare service on a four-tier scale. The ACCC inquiry and ACECQA data show a noticeable pattern:
| NQS Rating | Not-for-profit | For-profit |
|---|---|---|
| Exceeding NQS | ~28% | ~13% |
| Meeting NQS | ~58% | ~64% |
| Working Towards NQS | ~14% | ~23% |
Source: ACECQA NQS data and ACCC Childcare Inquiry 2023. Percentages are approximate and vary by state. “Excellent” rating (<1% of all centres) is excluded.
Not-for-profit centres are more than twice as likely to be rated “Exceeding NQS” compared to for-profit centres. However, the majority of both types achieve “Meeting NQS” — the standard the government considers adequate for children's development and safety.
What drives the fee difference
The 8% gap isn't simply “profit margin removed.” Several factors contribute:
1. No shareholder returns
Not-for-profit centres reinvest all surplus revenue into the service — staff training, equipment, reduced fees, or building maintenance. For-profit centres must generate a return for owners or shareholders, which adds to the fee structure.
2. Access to grants and subsidies
Community-based and council-run centres may access local government grants, discounted premises (council-owned buildings), or state-specific operational funding that reduces their cost base. These benefits are generally not available to for-profit providers.
3. Location bias
For-profit chains disproportionately operate in higher-fee metro areas where demand (and land costs) are greatest. Not-for-profit centres are more evenly distributed, including in lower-cost suburban and regional areas. The ACCC controlled for location in its analysis, but residual location effects may remain.
4. Fee-setting philosophy
Not-for-profit boards often set fees with affordability as a primary objective. For-profit operators set fees based on market conditions, cost recovery, and target margins. Neither approach is inherently wrong — they reflect different organisational purposes.
How provider type affects your CCS
Your CCS percentage is determined entirely by your family income. It does not change based on provider type, centre location, or fee level.
What does change is your out-of-pocket cost, because the CCS is calculated on the lower of:
- The actual hourly fee your provider charges, or
- The CCS hourly rate cap ($14.63/hour for centre-based day care, under school age)
If your provider charges above the rate cap, you pay 100% of the above-cap amount yourself — regardless of your CCS rate. This is where provider choice has the biggest financial impact.
| Scenario | Fee / day | Rate cap (10hrs) | Above cap | Gap fee at 77% CCS |
|---|---|---|---|---|
| Not-for-profit (under cap) | $138 | $146.30 | $0 | $31.74 |
| For-profit (above cap) | $165 | $146.30 | $18.70 | $52.35 |
| Daily saving | $20.61 | |||
| Annual saving (3 days/wk, 48 wks) | $2,968 | |||
Gap fee = (min(fee, cap) × (1 − CCS%)) + above-cap amount. At 77% CCS: ($138 × 0.23) = $31.74 vs ($146.30 × 0.23) + $18.70 = $52.35.
The rate cap strategy
One of the most effective ways to reduce your childcare costs is to choose a provider whose daily fee sits at or below the CCS hourly rate cap. The rate caps for FY 2025–26 are:
| Care type | Hourly cap | Daily cap (10 hrs) |
|---|---|---|
| Centre-based day care (under school age) | $14.63 | $146.30 |
| Centre-based day care (school age) | $12.81 | $128.10 |
| Family day care (all ages) | $12.43 | $124.30 |
Providers charging above these caps are more common in the for-profit sector, particularly in metro areas. Not-for-profit centres — especially community-managed and council-run services — are more likely to charge at or below the cap.
How to check a provider's type and rating
- Visit the ACECQA National Register: acecqa.gov.au/resources/national-registers
- Search by suburb or postcode to find centres near you.
- Each listing shows the provider management type (community-managed, private for-profit, etc.) and the current NQS rating.
- Compare the fee by calling or visiting the centre. Ask for their daily fee schedule for your child's age group.
- Calculate your gap fee using the CCS Calculator with each provider's actual fee to see the real out-of-pocket difference.
Worked example: same suburb, different providers
The Chen family earns a combined $150,000/year, giving them a 77% CCS rate. They have one child (age 3) attending 3 days/week and are comparing two centres in their suburb:
| Sunshine Community (not-for-profit) | Bright Stars (for-profit) | |
|---|---|---|
| NQS rating | Meeting NQS | Exceeding NQS |
| Daily fee (10 hrs) | $140 | $168 |
| Above rate cap ($146.30) | $0 | $21.70 |
| CCS subsidy / day (77%) | $107.80 | $112.65 |
| Gap fee / day | $32.20 | $55.35 |
| Annual gap fee (3d/wk, 48 wks) | $4,637 | $7,970 |
| Annual saving at Sunshine Community | $3,333 | |
The $3,333/year saving comes almost entirely from the rate cap difference. Sunshine Community's fee is below the cap, so the CCS covers the full 77% of the fee. Bright Stars' fee exceeds the cap by $21.70/day, which the Chen family pays entirely out of pocket.
However, Bright Stars has a higher NQS rating. The Chens need to decide whether the “Exceeding NQS” rating is worth $3,333/year more — or whether “Meeting NQS” at a lower cost better suits their family's needs.
What actually matters when choosing
Provider type is one factor among many. Here's what to consider:
- NQS rating: Check the specific centre's rating, not the sector average. A for-profit centre rated “Exceeding” is a strong choice.
- Fee relative to the rate cap: The biggest cost driver is whether the fee is above or below the CCS hourly rate cap. This matters more than the 8% average fee difference.
- Location and convenience: A centre close to home or work reduces commute time and work-related costs — these matter for back-to-work calculations.
- Program and philosophy: Play-based, Montessori, Reggio Emilia, or Steiner — different approaches suit different children. Visit the centre and observe the educators.
- Availability: Waitlists can be 6–18 months for popular centres. Don't limit your search to one provider type if spots are scarce.