Major early learning reforms on the horizon: Funding, workforce and access

Australia’s early childhood education and care (ECEC) sector is set for significant changes following the Federal Government’s $5 billion investment to build a more accessible and universal early learning system.

Key initiatives underway include new funding to lift educator wages, grants to expand ECEC infrastructure, and reforms to guarantee access to subsidised care for more families.

Key sector changes include:

• Wage increases for educators through the Worker Retention Payment
• Infrastructure expansion through the proposed Building Early Education Fund
• Improved access to subsidised care through the 3 Day Guarantee

Worker Retention Payment

The Wage Justice for Early Childhood Education and Care Workers (Special Account) Act 2024 supports a 15 per cent wage increase for educators working in centre-based day care and outside school hours care services.

To be eligible, providers must:

• Be approved for the Child Care Subsidy (CCS)
• Employ staff under a workplace agreement paying at least 10 per cent above award rates, increasing to 15 per cent by 1 December 2025
• Apply limits on fee growth over two years
• Pass on full funding benefits to workers through increased wages

The two-year payment program aims to improve retention and address workforce shortages across the sector. More than 60 providers have already signed the Early Childhood Education and Care Multi-Employer Agreement 2024-2026 to access the scheme.

Preschools and kindergartens are not eligible under the current design.

Building Early Education Fund

The proposed Building Early Education Fund would provide $500 million in capital grants to expand the availability of high-quality not-for-profit ECEC services, with a focus on regional, outer suburban and underserved areas.

An additional $500 million is allocated for future investment in Commonwealth-owned or leased early learning centres, following a business case review.

Grants will prioritise services co-located on or near school sites and aim to address long-standing barriers to access highlighted by the Productivity Commission’s inquiry into ECEC provision.

The Fund is yet to be legislated and may depend on the outcome of the next federal election.

3 Day Guarantee

From 5 January 2026, all CCS-eligible families earning under $533,280 annually will be entitled to three days per week of subsidised early learning and care under the 3 Day Guarantee.

Key points include:

• Families will receive six fully subsidised days (72 hours) per fortnight
• First Nations families will continue to be eligible for 100 subsidised hours per fortnight
• Families already qualifying for 100 hours due to work, study or exemption will retain their entitlement
• Families earning above the income threshold will not be eligible, consistent with current CCS settings

The 3 Day Guarantee is expected to increase demand for early learning services and broaden access, particularly for children who were previously ineligible under the activity test requirements.

Providers will need to update their enrolment processes, CCS systems, and compliance reporting to reflect the new 3 Day Guarantee, ensuring eligible families receive their correct subsidised hours and that reporting obligations are met.

This article draws on information originally summarised by MinterEllison. Read their original analysis here.