Perth's underground network of parenting support has swung into gear. Credit:Michael O'Sullivan So why are we paying more? Kids are spending more time in care The first argument is the most basic: childcare is more expensive if we're using it more. The institute didn't look at the amount of time kids spend in childcare, but government data shows the average number of hours each childspends in care is gradually increasing year-on-year.

More kids are spending time in care More pertinently, in raw terms the total number of children who spend any time in care has increased dramatically. The survey (full name: the Household, Income and Labour Dynamics in Australia survey, or HILDA) also found the proportion of parents using formal care for preschool children was markedly higher in 2014 than 2002. Grattan Institute economist Jim Minifie says this trend is backed by bureau of statistics data. More than a third of children younger than five go to childcare at least once a week, up from about a quarter in 1999. There may be several reasons for this - the growth in the proportion of women in the workforce (up 10 percentage points over the past couple of decades to more than two-thirds), and the number of two-parent families choosing or needing to have both bringing in a wage soon after the birth of a child. For some, this is driven by the challenge of being able to afford property – a dream the survey suggests will soon be out of reach for more than half of all adults. Experts say a growing awareness of the importance of quality early childhood learning in development may play some part, and is likely to drive further demand over time.

More than one-third of children under five now go to childcare. Credit:Peter Braig There is no such thing as free rent When the childcare centre was dominated by not-for-profits – whether local government, community groups or charities – many paid next-to-nothing in rent. Early Childhood Australia chief executive Samantha Page says this is now a thing of the past. As it became clear running a childcare centre could be commercially viable, the peppercorn rents disappeared - even for not-for-profits. Meanwhile, many local governments got out of providing childcare. The new commercial rents have been passed on in higher fees. The rising demand for childcare has seen significant competition for places, and a rush to build more centres. Mostly, they have been built by private operators who exist to turn a profit. (In 1991, just under half of the long-day childcare sector was for profit. By 2012, it was 70 per cent.)

And they are doing what they set out to do. The Productivity Commission found the profitability of childcare service providers headed north after about 2007. Improving quality The other rising factor has been the drive to improve the quality of care. In 2012, the then Labor government introduced the national quality framework for childcare that forced changes in staff-child ratios and minimum qualification standards.

It followed advice that the social and cognitive impact of high-quality early learning was dramatic, particularly for children from disadvantaged backgrounds. The industry says the additional cost of meeting this is now being felt. What is to be done? The structure of childcare subsidies has changed several times, and remains a live political debate. Since 2008, there has been a rebate of half the cost of care up to $7500 a year per child. It's not means tested. In addition, there is a means-tested childcare benefit of up to $212 a week. The government wants to merge the rebate and the benefit, introduce a sliding means-test up to a household income of $300,000, cap the amount of subsidy available per hour to put pressure on the fees charged by operators, and impose a new "activity test" - whether the parent is working or studying a certain number of hours a week.