Labor pledges $1 billion to build childcare in regional areas

Labor is promising to spend $1 billion building childcare centres in 160 areas where parents have no services, with the potential for government to run them, in a major pitch ahead of next year’s election.

The promise also comes with guaranteed access to three days a week of subsidised childcare for all families earning less than $530,000, scrapping the activity test that hindered low-income parents from finding or taking on more work.

The Government will also develop a benchmark price reflecting the cost of delivering high-quality childcare service across the country, as a step towards a total overhaul of the funding system.

The new building early education fund will be split between grants to States, councils and not-for-profit providers to build new or expanded services, with a priority on putting centres at primary school sites, and money to start going out the door in mid-2025.

The other half of it will be used for government-owned services, which are likely to be in the smallest and remote towns where it is more expensive to operate.

“We know that the market does not go to certain areas, either because it’s not profitable or it costs too much to deliver services in those areas, or for a whole range of reasons,” Early Childhood Education Minister Anne Aly said.

“That means in the regions — and I’ve met with so many regional councils who say they cannot retain the other kinds of staff that they need, nurses, doctors, teachers, because there is no early learning.”

Prime Minister Anthony Albanese said the commitment was more than “just signing off on the plans and walking away” but an investment in owning the centres run by high-quality non-profit operators “to keep the doors of opportunity open in these communities”.

“When the market fails government should step up and act. That is precisely what we are going to do,” he said.

“There are simply not enough child care centres in the regions or in outer suburbs that are growing fast. Too often, that’s because large corporate providers don’t see an opportunity for profit in these places.

“This means children in these communities are left behind and families are left with no option … and child care isn’t a luxury — it’s an essential service for modern families.”

Calls to scrap the activity test that changes how many hours of subsidised care parents can receive depending on how much they work or study have been growing over the past two years.

Dr Aly said it was clear the test had meant the most vulnerable children were missing out on crucial education.

Every family currently eligible for subsidies will continue to be eligible, and an extra 66,700 families are expected to be able to use childcare once the test is scrapped from January 2026.

The work on delivery costs will start immediately and will likely take 18 months.

The Government is actively looking at a supply-side model involving some kind of flat fee for parents, but that is still a way off in part because of the complexity of working out where funding levels should be set.

The Australian Childcare Alliance warned earlier this week there were great risks to quality of care if the level was set too low, pointing to the aged care sector as a cautionary example.

Dr Aly was alive to this risk.

“We know that it costs more to deliver quality early childhood education and care in rural (and) regional areas than it does in perhaps a suburb like my suburb in WA where I live, where there are, I can count 10 early learning centres within walking distance of my house,” she said.

Key points of Labor’s childcare policy

• $1 billion building early education fund – split between grants to existing public and non-for-profit providers to build or expand, and new government-owned centres
• Regional towns and outer-suburbs are hardest hit by service shortages
• $427 million for the three-day guarantee
• Every family already eligible (ie up to household income of $530,000) will be guaranteed three days of subsidised care each week regardless of how much they work or study
• Fourth and fifth days each week still subject to activity test for subsidies
• $10 million to develop an early education service delivery price, as a step towards moving to supply-side funding