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Supply & Demand
Australia’s child care services market to reach USD 8.8 billion by 2034, driven by policy reform and AI integration
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Fiona Alston
Dec 03, 2025
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Australia’s early childhood sector is set for sustained growth over the next decade, with market projections estimating the industry will reach USD 8.8 billion by 2034. According to new data released by the IMARC Group, the child care services market, currently valued at USD 6.6 billion is expected to grow at a compound annual growth rate (CAGR) of 3.23 per cent between 2026 and 2034.
This projected expansion is underpinned by a convergence of social, economic and technological factors, including rising demand for formal care, evolving family structures, targeted policy support, and the emergence of artificial intelligence (AI) in early learning environments.The findings were detailed in a market report published on 27 November 2025, offering in-depth analysis of the sector’s growth drivers, demographic trends and operational shifts.
A key driver of the projected growth is the increasing participation of women in the workforce. As more women return to full-time or part-time employment, particularly in dual-income households, the demand for structured, reliable and accessible early childhood services continues to rise.
Urbanisation, cost-of-living pressures and changing family dynamics are also reinforcing demand, especially in metropolitan centres and growth corridors across New South Wales, Victoria and Queensland.
Government policy has played a significant role in market expansion. The Child Care Subsidy (CCS) continues to reduce out-of-pocket costs for eligible families, while targeted affordability reforms introduced in July 2025 are expected to benefit more than one million families. These reforms were designed to make early learning more accessible for low- and middle-income households, further stimulating enrolment.
Parental understanding of the importance of early childhood education in shaping lifelong cognitive and social outcomes has also contributed to increased uptake of long day care, preschool and OSHC programs.
AI transforms operational models in early childhood services
Artificial intelligence is increasingly being adopted by early learning providers to optimise operations, personalise learning, and improve safety and compliance. The report highlights several specific use cases:
- Administration: AI tools are streamlining enrolments, automating billing, and managing attendance tracking.
- Learning personalisation: Machine learning is being trialled to tailor learning paths to individual developmental milestones.
- Safety monitoring: Smart camera systems and real-time alerts are enhancing child protection and compliance standards.
- Parent engagement: In September 2025, several providers launched AI-powered parent communication platforms with real-time activity tracking and notifications.
- Resource planning: Predictive analytics is supporting workforce planning and occupancy forecasting, helping providers optimise staffing and meet regulatory ratios.
These innovations are being embraced by both large-scale operators and emerging providers, as services seek to manage increasing operational complexity and deliver quality experiences at scale.Diverse service models and regional segmentation
The IMARC report segments the Australian child care services market across multiple domains:
Service type:
- Long day care
- Family day care
- Preschool/kindergarten
- Outside school hours care (OSHC)
- In-home care
Age groups:
- Babies (0–1 year)
- Toddlers (1–3 years)
- Preschoolers (3–5 years)
Application type:
- Full-time and part-time care
- Casual and vacation care
- Before- and after-school programs
Facility type:
- Private centres
- Public providers
- Not-for-profit/community-managed services
Regional segmentation includes New South Wales and the ACT, Victoria and Tasmania, Queensland, South Australia and the Northern Territory, and Western Australia.
This detailed segmentation reflects the diversity of service offerings across states and territories, and the varied needs of Australian families.Market leaders and expansion activity
The report identifies several leading providers operating across the national child care landscape, including:
- G8 Education
- Goodstart Early Learning
- Guardian Childcare & Education
- Affinity Education Group (excluding NSW Growth restrictions and enhanced oversight imposed on Affinity Education Group in NSW)
- Busy Bees Early Learning
- Only About Children
- KU Children’s Services
- Mission Australia Early Learning
In August 2025, both Goodstart and Guardian announced centre expansions across Sydney, Melbourne and Brisbane, responding to growing demand in high-density population corridors.
Employer-sponsored child care models are also emerging as an area of interest, particularly among businesses seeking to enhance workforce participation and staff retention.
The projected growth of Australia’s child care services market reflects a broader societal shift in the way early learning is valued and delivered. As policy reform, technology and demographic change continue to reshape the sector, providers will need to balance innovation with regulatory compliance and workforce sustainability.
Ongoing investment in infrastructure, professional development, and technology is expected to support this expansion, ensuring early learning services can continue to meet the needs of children, families and communities across Australia.
Source: IMARC Group. (2025). Australia Child Care Services Market Report 2025–2034. For more information read the full report here.
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