Wed Dec 11

Labor guarantees 3 days of childcare and 160 new centres. What does this mean for families?

Written by: Peter Hurley, Associate Professor and Director, Mitchell Institute, Victoria University

The Albanese government has pledged ^[1] two major changes to early childhood education and care in the run up to next year’s federal election.

Labor plans to introduce a “3 day guarantee” (three days a week) of early childhood education and care to all children before they start school. And it will fund the building of 160 centres in regions were services are hard to find.

The new centres will be part of a A$1.03 billion investment ^[2] over four years. The government is proposing these will be non-profit and ideally built on, or close to, school sites.

The guarantee would start in January 2026 and the building fund from mid-2025. What will these policies mean for families?

The ‘3 day guarantee’

The guarantee means parents will no longer need to satisfy an “activity test ^[4]” (by working, studying or volunteering) to qualify for the Child Care Subsidy ^[5].

The government says the guarantee is part of a “universal ^[6]” early childhood education and care system, where access to subsidised care is available to all families, regardless of whether they work or not.

High-quality early learning can have a positive impact on child development ^[7], especially for children from more disadvantaged backgrounds. This is why researchers ^[8] and advocates ^[9] have long-criticised the activity test, saying it unfairly targets lower-socioeconomic families.

A 2022 Impact Economics report ^[10] argued the activity test limited parent’s ability to respond to opportunities and pursue work, study and job search activities – especially those in casual jobs – because they have no or limited access to childcare.

The government estimates ^[11] the guarantee will benefit around 66,700 families in its first full financial year, and more than 100,000 families will be eligible for additional hours of subsidised care.

Prime Minister Anthony Albanese greets supporters.

The Albanese government has pledged to build 160 new early childhood centres. Russell Freeman/AAP

New childcare centres

The government is also planning to build more early childhood centres centres.

This follows Mitchell Institute research ^[12] into “childcare deserts” that showed how accessibility to early learning varies enormously across Australia. Our research found parts of regional and remote Australia had some of the worst access to early learning.

A fund to support building new early childhood centres was a recommendation of a September 2024 Productivity Commission report ^[13]. The report highlighted how a lack of access to capital funds can cause barriers to the building and operation of new centres in areas of low provision.

Co-locating new centres in schools also fits with wider policy initiatives outside of the early childhood sector. A 2023 government-commissioned review ^[14] recommended more support for “full-service schools”. This where schools become centres for different community services, such as allied health care and early learning.

It also follows the United Kingdom where the Starmer government has committed to funding an extra 100,000 nursery places ^[15] in schools with empty classrooms.

Does this reform go far enough?

These new announcements are the latest in a series of extra support for the early childhood sector.

Earlier this year, the federal government committed ^[16] an extra $3.6 billion ^[17] over two years for a pay boost for early childhood workers. At the last election, the government committed about $5.4 billion starting from 2023 ^[18] to make childcare cheaper for parents.

But these newest policies leave some big questions unanswered. The rates for the Child Care Subsidy ^[19] are not changing as a result. This means most families will still pay the same amount to access early childhood services as before.

The number of proposed new centres (160) is also relatively modest compared to the overall size of the sector. There are currently more than 9,000 registered long day-care centres ^[20] in Australia. So the government’s proposed extra 12,000 places will be on top of about 700,000 licensed places already available.

We also don’t know where the new centres will be built.

A young child plays with an activity on a table.

There are already more than 9,000 long care centres in Australia. The federal government says it will build 160 more. Bianca De Marchi/AAP

What happens now?

Prime Minister Anthony Albanese has linked ^[21] these announcements to the creation of other “universal” systems, like Medicare, superannuation and the National Disability Insurance Scheme.

But there are big challenges facing a universal early education and care system.

Our research has highlighted ^[22] how Australia’s subsidies system can incentivise early childhood providers to operate in areas where they can charge more. The Australian Competition and Consumer Commission made similar findings in its 2023 report ^[23].

So making sure there is equal access across Australia to high-quality early learning remains a challenge.

The guarantee will further increase demand for places by expanding the number of children who are eligible for a subsidised place. So, while more families in theory would have access to three days of subsidised care, they may not be able to get it.

In its recent report ^[24] the Productivity Commission highlighted the need for a staged expansion. This is to ensure the system can cope with the extra demand.

The two major changes announced this week, along with the pay boost for the sector, suggests the government is following this staged approach.