Cost-of-living pressures continue to shape childcare choices as affordability remains a key concern for families

While recent childcare subsidy reforms have reduced out-of-pocket costs for many Australian families, affordability remains one of the most significant factors influencing how families access and use early childhood education and care (ECEC).

Across Australia, providers, policymakers and family advocates continue reporting that cost-of-living pressures are affecting childcare decisions, with some families reducing days of attendance, delaying enrolment, increasing reliance on informal care arrangements or reconsidering workforce participation due to the financial impact of care fees.

The issue comes as governments continue pursuing reforms designed to improve affordability and increase participation in early learning, including the introduction of the new Three Day Guarantee, which will provide eligible families with at least 72 hours of subsidised care per fortnight from January 2026.

Affordability remains central to childcare access

Recent Child Care Subsidy (CCS) data released by the Department of Education shows that more than 1 million Australian families continue to access approved childcare services, however usage trends suggest affordability remains a significant consideration for many households.

The Department's December Quarter 2025 CCS report recorded 1,011,600 families using approved care services, representing a decline of 0.5 per cent compared with the same period the previous year. Centre Based Day Care usage also declined by 1.3 per cent, equating to 9,280 fewer families using the service type.

While the reasons behind attendance fluctuations are complex and influenced by multiple factors, affordability continues to be identified as one of the key barriers impacting access to care.

The Productivity Commission's inquiry into early childhood education and care noted that affordability, availability and accessibility remain among the most significant barriers affecting family participation in ECEC.

Childcare remains one of the largest household expenses

Despite government subsidy increases introduced through the Cheaper Child Care reforms, childcare continues to represent one of the largest recurring household expenses for many families with young children.

The Australian Competition and Consumer Commission (ACCC) found that affordability improved immediately following the July 2023 subsidy reforms, with out-of-pocket costs falling across income groups. However, the ACCC also noted that lower-income households continue to spend the highest proportion of their disposable income on childcare.

The ACCC further found that childcare fees have historically increased faster than both inflation and wage growth, creating ongoing affordability pressures despite government investment through subsidies.

Recent childcare cost estimates suggest centre-based care can range between approximately $120 and $205 per day before subsidies depending on location, service type and provider.

For many families, this means childcare decisions continue to be weighed against broader household expenses including housing, utilities, groceries, transport and insurance.

Families continue balancing work and care decisions

Cost-of-living pressures are increasingly influencing how families balance employment and care arrangements.

Policy analysis commissioned by the government has previously highlighted that workforce shortages and childcare accessibility challenges continue to impact workforce participation, particularly for women.

Advocacy organisations have also argued that rising childcare costs can influence decisions around workforce participation, additional workdays and the number of days children attend early learning services.

The Productivity Commission has similarly identified affordability as one of the key drivers influencing participation in both ECEC and the workforce.

For some families, childcare remains a critical support enabling employment, while others continue to report that increasing fees reduce the financial benefit gained from additional working hours.

Reform efforts continue

Governments continue exploring a range of reforms aimed at improving affordability, access and participation.

The forthcoming Three Day Guarantee reforms are intended to simplify access and provide greater certainty for families, particularly those previously affected by activity test requirements.

The Productivity Commission's vision for a more universal ECEC system also places significant emphasis on reducing barriers to participation, improving affordability and strengthening access for disadvantaged families.

Recent government data indicates more than one million families continue to rely on approved childcare services across Australia, highlighting the essential role ECEC plays in supporting children's development, workforce participation and family wellbeing.

Providers continue navigating their own cost pressures

At the same time, providers continue balancing affordability for families against rising operating costs.

Labour remains the largest cost for most ECEC services, with workforce shortages, wage increases, compliance obligations and broader inflationary pressures continuing to affect service delivery across the sector.

This creates an ongoing policy challenge: how to ensure childcare remains affordable and accessible for families while supporting a sustainable, high-quality sector capable of attracting and retaining educators.

As governments continue progressing universal early learning reform discussions, affordability is likely to remain one of the most closely watched issues across the ECEC landscape.

For many families, the question is no longer whether they value early learning, but whether household budgets can continue to absorb rising costs alongside broader cost-of-living pressures.

References and Sources

1. Department of Education, Child Care Subsidy Data Report – December Quarter 2025.
   https://www.education.gov.au/early-childhood/about/data-and-reports/quarterly-reports/child-care-subsidy-data-report-december-quarter-2025
2. Productivity Commission, Early Childhood Education and Care Inquiry Final Report.
   https://www.pc.gov.au/inquiries-and-research/childhood/
3. Australian Competition and Consumer Commission (ACCC), Child Care Price Inquiry.
   https://www.education.gov.au/early-childhood/about/strategy-and-evaluation/accc-price-inquiry
4. ACCC Media Release, Changes proposed to make childcare affordable and accessible for all families.
   https://www.accc.gov.au/media-release/changes-proposed-to-make-childcare-affordable-and-accessible-for-all-families
5. Australian Parliament, Early Childhood Education and Care (Three Day Guarantee) Bill 2025.
   https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/bd/bd2425/25bd047
6. Services Australia, Child Care Subsidy changes.
   https://www.servicesaustralia.gov.au/child-care-subsidy-changes
7. Department of Education, Child Care Subsidy Data Reports.
   https://www.education.gov.au/early-childhood/about/data-and-reports/quarterly-reports