The G8 Education Ltd (ASX: GEM) share price has been one of the best performers on the ASX 200 on Monday.
At one stage today the childcare centre operator's shares were up as much as 6% to $3.14. They have since dropped back a touch, but are still up 4% to $3.09 at the time of writing.
Why is the G8 Education share price charging higher today?
Investors have been snapping up the company's shares today after Labor announced that it would spend $4 billion over four years to make childcare free for most low-income households.
In addition to this, a federal Labor government would aim to make childcare cheaper for families that earn up to $174,000.
According to the ABC, Labor leader Bill Shorten said increasing the current subsidy from 85% of the hourly fee cap to 100% would make childcare free for around 370,000 Australian families. This is expected to save them approximately $1,400 a year on average.
Mr Shorten said: "Labor will increase the subsidy families receive, we will kickstart the process to limit out-of-control childcare price increases, and we will review the impact of the system on vulnerable and very low-income families."
The report indicates that households earning between $70,000 and $100,000 would see their subsidy increase to between 85% and 100% of the hourly fee cap, whereas those with income between $100,000 and $175,000 would see the subsidy increase to between 60% and 85%.
Should you invest?
Whilst this certainly appears to be a positive for the industry, I do have concerns that it will once again encourage increasing childcare centre supply and ultimately weigh on G8 Education's occupancy levels.
In light of this, I plan to stay clear of the company and focus on other investment options which have exposure to the education sector such as IDP Education Ltd (ASX: IEL) and SEEK Limited (ASX: SEK).
