Labor makes election pitch to parents with promise of three days of subsidised child care

Labor is making a fresh election pitch to the parents of 1.4 million children in child care with a promise to guarantee three days of care to everyone eligible for subsidies.

The change that effectively scraps the activity test is expected to benefit at least 66,700 families, including many not currently using care.

Prime Minister Anthony Albanese will announce the plan on Wednesday in the second of three pre-election “headland” policy speeches.

Cheaper child care was a key plank of Labor’s election pitch in the 2022 campaign and the Prime Minister wants to build on that with a second-term agenda.

“We know that making early education and care affordable for families delivers real help with the cost-of-living every week,” Mr Albanese will say, according to extracts of his speech.

“It gives working parents more choice and more flexibility, more opportunities to balance their caring responsibilities with career opportunities. It helps businesses hold onto valued and experienced employees.”

Under the new plan, every family earning less than $530,000 would be guaranteed three days of subsidised care each week.

This maintains the existing income threshold where subsidies taper out, in a bid to nullify the argument offering free or cheap care to everyone disproportionately benefits wealthy families.

The activity test was intended to make sure working parents could access care without being crowded out by families where one parent didn’t work but still wanted to use child care.

However, its practical effect has been to make it more difficult for low-income families, particularly single mothers, to start or increase their work hours and there have been widespread calls for it to be dumped.

Parents would still need to meet the activity test to receive subsidies for a fourth or fifth day of care each week under the new plan.

“Let me be clear: universal and accessible doesn’t mean compulsory or mandatory,” Mr Albanese will say.

“The choice will be up to parents, as always, as it should be. But we want families to have a real choice.”

However, his announcement stops short of promising a fixed daily fee of $10-$20 a day or increasing subsidies to make care free for the lowest income families.

There are growing calls for a fixed, low-fee model while the Productivity Commission recommended lifting subsidies at a cost of an extra $4.7 billion a year, and the Government is expected to make moves to further tackle the affordability of care, as The West reported on Tuesday.

Labor plans to make further announcements about child care before the election, due by mid-May.

It wants to examine first what are reasonable running costs for a centre offering quality care.

The Australian Childcare Alliance, which represents small and medium private providers, warned a shift away from subsidies to supply-side funding could risk the viability of centres if that level was set too low.

“We all want the same thing here but rushing change increases the chance of getting it wrong and causing long-term damage to the ECEC sector that will be difficult to reverse,” president Paul Mondo said, citing aged care as an example.

At the moment, just over half of children under five years attend early education, with the average daycare attendance being three days a week.

The Government increased childcare subsidies from the middle of last year, which has led to 100,000 more children being enrolled.

It also funded a pay rise for educators who receive a 10 per cent boost to their pay this month with more to come next year, in a bid to attract and retain staff to the historically poorly paid sector while requiring operators to freeze their fees for 12 months.

Staff at centres run by Goodstart, the largest non-profit operator in the country, received their pay increase on Tuesday.