Australian families are navigating a significant shift in childcare support, with a new universal scheme now in effect that guarantees three days of subsidised care per week for eligible households. This major policy change, which commenced on January 1, removes previous activity requirements for the first 72 hours of care each fortnight.
What the New Childcare Scheme Means for Families
The reform replaces the previous childcare subsidy activity test, which tied the number of subsidised hours to a family's engagement in work, study, training, volunteering, or job searching. Samantha Page, CEO of Early Childhood Australia, explained the shift on Sunrise, stating parents will no longer face activity requirements for the first three days of care.
"That means that they can go ahead and enrol their child or children in early childhood education and care, usually long daycare, and as they re-establish themselves in the workforce or return from parenting leave," Page said.
Activity tests will still apply for families seeking more than the guaranteed three days. Those needing four or five days of care per week must continue to meet the standard activity requirements.
Expanded Eligibility and Income Thresholds
A cornerstone of the new policy is a substantial increase in the income threshold for eligibility. Families with a combined household income of up to $530,000 will now qualify for the childcare subsidy under the universal system. The government estimates this change makes an additional 100,000 families eligible for the support.
This high threshold has drawn some criticism, but Page defended it, highlighting disparities in earning capacity within households. "If we set that threshold too low, it can lock out lower-income earners who might be part of higher-income households," she argued.
Early Childhood Education Minister Jess Walsh emphasised the policy's goal of inclusivity. "Every child deserves access to quality early learning – no matter their postcode, or what their parents do for work," Walsh said in a statement. "Too many children have been locked out of quality early education and care because of their parents’ work or study activity."
Policy Background and Future Impact
The change follows a September 2024 report by the Productivity Commission that recommended scrapping the activity test. The commission found the test was harming the families who needed support the most without delivering "substantial" increases in workforce participation.
The old test required each parent to be engaged in eligible activities for at least 16 hours a fortnight to access 72 hours of subsidised care—the same amount now guaranteed universally. The Albanese government is investing $430 million over four years to fund the new policy.
The dual aims of the overhaul are to support parents, particularly mothers, in returning to the workforce while ensuring more children can access regulated early childhood education and care. The move signals a significant shift towards treating early learning as a universal right for children, separate from their parents' employment status.
