What does a new Labor government mean for Australian childcare?

graphic showing children playing at a childcare centre funded with government childcare subsidy

Australia has voted, and there is now a new Labor government. As childcare is both a critical resource and one of the largest expenses for so many Aussie families, a potential increase to the government childcare subsidy (CCS) was a key talking point in the election.

So, now that it’s decided, what’s going to change? Where did Labor stand on CCS?

It can be hard to remember all the parties’ policies and campaign promises from the last few months, so let’s break down what a Labor government under Anthony Albanese could mean for your childcare costs.

The key points of the Labor childcare subsidy plan are:

  • ​​Lift the maximum childcare subsidy rate to 90 per cent for families for the first child in care.
  • Increase child care subsidy rates for every family with one child in care earning less than $530,000 in household income.
  • Keep higher childcare subsidy rates for the second and additional children in care.
  • Extend the increased subsidy to outside school hours care.

What is the childcare subsidy?

Your childcare subsidy is the portion of your childcare fee that the government covers. The amount of CCS your family qualifies for heavily depends on your annual income, as well as your fortnightly activity hours (how much you work/study/volunteer etc.), how many children you have and the type of care your child attends.

How much will my childcare subsidy be under Labor?

According to Labor’s plan, there will be an additional investment of $5.4 billion into government-funded childcare. This would mean from mid-2023, about 1.26 million families would have access to more affordable childcare.

Currently, under the Morrison government policy, the highest possible CCS percentage is 85%, only available to households making less than $70,015 total annually. On the high end of income, families who bring in $354,305 or more do not qualify for any subsidy.

Under Labour’s proposed changes, the maximum subsidy will increase to 90% for those making $75,000 or less. The highest qualifying income will be raised from around $350,000 to $530,000, meaning a higher subsidy will be available to more families.

Graph comparing liberal and labour childcare subsidy

How will my subsidy for a second child be impacted?

Labour wants to maintain the second child subsidy policy introduced by the Morrison government earlier this year.

From March 2022, the subsidy given to parents for second children onwards is 30% higher, up to a maximum rate of 95%.

For example, if you currently get a 50% subsidy on two children, that will increase to 80% for your second child in daycare.

Will my outside school hours care subsidy change?

Currently, there are different subsidy rates for different kinds of childcare. Centre-based daycare is the highest subsidised, with a $12.31 hourly cap. Outside school hours care - before school, after school and holiday care - has an hourly rate cap of $10.77.

If your child is below school-aged, then outside school hours care is subsidised at the same rate as regular centre-based daycare. If your child is 6 years old or over or enrolled in school, including home school, outside school hours care is subsidised at the lower $10.77 hourly cap.

Labour plans to raise the lower outside school hours care rate in accordance with the proposed CCS increase.

Head over to our family finances hub for more information on the cost of living and family budgeting.