Low income families will have better access to early learning through 3 day guarantee

The Three Day Guarantee legislation which recently passed through Parliament will improve access, affordability and simplicity for Australian families accessing early learning, with low income families most likely to be the primary beneficiaries, the Senate Education and Employment Committee has been told.

The Committee published 16 submissions last week, received in response to its inquiry into the bill establishing the Guarantee, which passed Parliament on 13 February. The Committee was tasked by the Senate to review the bill on 6 February, with public submissions due by 28 February and a final report on the bill due by 21 March. 

Surprisingly, on 13 February, the Government, with the support of the Greens and Independents, fast tracked the bill through both houses of Parliament. 

The Guarantee will become law on 1 January 2026, giving all children access to at least three days of Child Care Subsidy (CCS) (72 hours per fortnight) without the need to meet the activity test. 

Families wanting to access more days (i.e. 100 hours of subsidy per fortnight) will still need to show at least 48 hours of recognised activity per fortnight. First Nations families will now automatically receive 100 hours of subsidy, as will carers.

The Department of Education, in its submission, estimates that 66,700 families will be better off with the Guarantee, saving on average around $1370 per year. 29 per cent of these families are single parent families, and 50 per cent of these families have incomes of less than $50,000.

These are the families who currently receive no CCS, or are on the two bottom rungs of the current activity test (CCS 24 or CCS 36). The Department advised that a staggering 33 per cent of all hours of child care paid for by low income families on CCS 24 are unsubsidised, making the activity test itself a substantial cost barrier to children experiencing disadvantage being able to access ECEC. The Department also noted that the number of families eligible for the CCS 24 ‘safety net’ has fallen from 53,000 in 2018 to just  5,340 in 2024. 

Goodstart Early Learning in its submission noted that children from regional and remote areas were particularly adversely affected by the activity test and stand to be among the biggest beneficiaries from these changes.  

Specifically the submission noted that families in outer regional and remote areas were twice as likely to be capped at 24 hours of CCS per fortnight compared to families in major cities. 

Developmental vulnerability was higher and child participation in early learning lower in the regional areas. Goodstart analysis found that of the 35 statistical divisions (SA4) that stand to benefit most from the reform of the activity test, 22 are in rural and regional Australia.

Goodstart’s submission also addressed the question of whether there would be enough spaces to accommodate the additional children wanting three days. The provider estimated that centre based day care had an average occupancy rate of around 80 per cent in September 2024, and therefore could accommodate an additional 223,694 children for three days. 

Goodstart noted that there are extreme shortages of places in some rural and regional areas, and encouraged the Committee to support the $1 billion Building Early Education Fund, further encouraging the Government to get the fund up and running as soon as possible to support these communities. The Australian Local Government Association called on the Federal Government to work with local governments to support the rollout of the Fund.

The Early Learning and Care Council, which represents large early childhood education and care (ECEC) providers, reported to the committee that preliminary insights from member data indicates that, on average, there is capacity to respond to any increase in demand, and over 360,000 additional children could be supported to attend three days per week. 

Submissions from Early Childhood Australia, G8 Education, Anglicare Australia, the National Indigenous Australians Agency, KU Children’s Services, The Front Project, UNICEF Australia, SDN Children’s Services and The Parenthood were all very supportive of the reform.

Associate Professor Ben Phillips, who was part of the 2019 evaluation of the Child Care Subsidy commissioned by the Morrison Government, told the Committee that the evaluation found the activity test reforms had no material effect on women’s labour market participation, which was its intended objective. 

He concluded that relaxing the activity test is not likely to have a dramatic effect on child care use, but may simplify the system, and is “more likely to be beneficial to households who are lower income and more likely to have difficulties paying for childcare in the absence  of a subsidy.”

The committee is due to report on March 21 ahead of the final Budget sitting week of Parliament.

To learn more about the Three Day Guarantee please see here. To view the submission made to the inquiry by the Early Learning and Care Council please see here.