Childcare use softens as CCS spending climbs: what the December 2025 data reveals

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Fiona Alston

Mar 27, 2026

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The latest Child Care Subsidy (CCS) Data Report – December quarter 2025 highlights a growing divergence in early childhood education and care (ECEC) as government investment continues to rise, while participation by children and families softens.

This shift signals a period of recalibration across the sector. While headline figures suggest stability, underlying trends point to increasing pressure on affordability, utilisation, and long-term planning.

A total of 1,502,040 children attended a CCS-approved service during the quarter. However, 1,437,520 children were allocated a Customer Reference Number, representing a 0.7 per cent decline compared with the same period in 2024.

Family participation also eased, with 1,011,600 families using approved care, down 0.5 per cent year on year.

The decline was most evident in centre-based day care, where family participation fell by 1.3 per cent. In contrast, Outside School Hours Care recorded modest growth of 1.3 per cent, reflecting continued demand for school-aged care.

Participation among Aboriginal and Torres Strait Islander children increased by 4.1 per cent, indicating the impact of targeted policy and community-led engagement.

Despite softer participation, CCS expenditure reached $3.98 billion for the quarter, up 2.4 per cent year on year.

Centre-based day care accounted for 86.2 per cent of total spending, driven by higher fees and longer hours of care.

Spending on the Additional Child Care Subsidy (ACCS) rose to $221.7 million, highlighting increased reliance on targeted support for vulnerable children. While this reflects improved access, it also signals growing complexity within the subsidy system.

The average hourly fee across all service types rose to $13.75, an increase of 4.6 per cent year on year.

Centre-based day care fees reached $14.40, sitting just below the hourly fee cap of $14.63. While 61.1 per cent of services remain at or below the cap, average fees in some jurisdictions, including the ACT and Western Australia, now exceed it.

Rising wages, insurance, utilities, food costs, and compliance requirements continue to drive fee increases. These pressures are shaping both provider viability and family decision-making.

A total of 15,271 approved services were operating nationally in the December quarter.

Centre-based day care services grew by 2.2 per cent, adding 215 services over the year. Growth in Outside School Hours Care remained modest, while Family Day Care declined by 3.1 per cent, continuing a long-term contraction.

The development pipeline is expected to tighten further, with high construction costs, planning delays, and shifting investor sentiment influencing new supply.

Children attended an average of 27.6 hours per week, up slightly by 0.7 per cent.

This suggests families are consolidating care into fewer, longer days rather than increasing overall usage. The Northern Territory recorded the highest average weekly hours at 38.9, while Tasmania recorded the lowest at 28.0.

This pattern reflects more deliberate use of care as families respond to cost-of-living pressures and changing work arrangements.

The December data highlights a clear policy tension. Government investment in ECEC continues to increase, yet participation is declining.

This raises key questions for the sector:

whether current affordability settings are influencing behaviour
how demand is shifting across service types
what participation trends mean for workforce participation targets
how supply can better align with community need

For providers, the implications include increased margin pressure, fluctuating occupancy, and more complex planning environments.

The data points to a system that remains stable but is under increasing strain. The challenge for 2026 will be to balance investment, affordability, and access while maintaining service viability.

A coordinated response across policy, provision, and investment will be critical to ensuring the long-term sustainability of early childhood education and care.

Source: Australian Government Department of Education, Child Care Subsidy Data Report – December quarter 2025.

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