The Australian government wants to make universal child care its political legacy. Prime Minister Anthony Albanese says such care should be as natural as public schooling, and he aims to enter the Labor 'hall of fame' alongside Medicare and the National Disability Insurance Scheme.
The need for reform has been underscored by the 2026 intergenerational report, released last month. It shows that by the 2060s, deaths will outnumber births, meaning the country needs more children. The government says universal child care is key to achieving this, defining it as care that is accessible, high-quality, and affordable.
Yet the path to that goal is not straightforward. The sector has been shaken by widespread allegations of child abuse and breaches of safety standards, which have undermined public trust and forced the government to tighten standards. In addition, the government has not yet decided on the model, but has indicated that it will likely involve a means test. International examples include Canadian provinces with a cap of $10 a day on fees, and Estonia, where fees are capped at low weekly or monthly amounts linked to the minimum wage.
Labor has engaged two consulting firms to produce separate analyses of the challenges. The largest review is being conducted by Deloitte, which is assessing the cost of providing child care services across all parts of the country, from metropolitan to regional and remote areas. This requires the cooperation of around 1,000 child care centres, but they have not responded in sufficient numbers, so the government has forced service providers to submit financial data. Deloitte is expected to deliver its report by the end of the year.
The cabinet is also considering a report by KPMG on the case for government ownership of child care. The government is refusing to release the work, citing cabinet confidentiality rules. KPMG is working on a fund for early education, which allows state governments and non-profit organisations to open centres in areas where there are not enough child care places. The first round of funding, announced this month, distributed $17.3 million among three non-profit providers to build four child care centres in outer metropolitan and regional areas. Dozens more tenders are expected.
The government wants non-profit organisations to make up a larger share of the sector, which is currently 70 per cent privately owned. The minister for child care, Jess Walsh, told Guardian Australia that they want to build more high-quality early learning in outer suburbs and regional areas where families are growing, but there is a shortage of child care places. However, non-profit providers are not necessarily cheaper for parents. According to the Child Care Estimator, fees are about 8 per cent lower at some non-profit organisations, but they consistently have higher quality and safety ratings.
The pressure on families is illustrated by the example of Rachel Hill, a mother of two from Sydney, who works in the non-profit sector. She increased her working hours from two days to full-time to cover rising costs, but the extra money was eaten up by child care costs. She says she did not want to move to full-time work, but it was necessary due to the cost of living. Previously, she paid around $175 a week for four days of care, but now pays $536 a week for five days. Each pay rise, she says, essentially goes to pay for child care.
Hill says her husband has always wanted a larger family, and they would consider having a third child if raising children were affordable. With a small support network, she says it simply does not work. If their circumstances were different, she might have more reason to have additional children, but financially it would never be feasible.
The sector is facing business upheaval. In August, the for-profit provider Edge Early Learning went into administration, and competitor G8 closed dozens of under-subscribed and poorly performing centres. This week, Goodstart Early Learning signed an agreement to take over up to 31 of the 64 centres of Edge Early Learning. Goodstart is a non-profit provider and one of the recipients of funding from the early education fund. Its head of advocacy, John Cherry, says there is an opportunity for expansion in the non-profit sector, but that non-profit providers across the country are operating with very thin margins and facing difficult operating conditions.
