Budget 2026–27: ECEC sector welcomes stability but warns gaps are growing faster than funding

The 2026–27 Federal Budget has delivered modest movement for early childhood education and care (ECEC), prompting sector feedback that can best be described as measured, cautious and increasingly concerned about the gap between policy ambition and operational reality.

While the Budget avoided major shocks, it also avoided the kind of major structural commitments many in the sector had been hoping for, particularly around wages, inclusion and system reform.

For early childhood leaders, educators and advocates, the Budget appears to confirm a broader theme already emerging across the sector: reform momentum is continuing, but the conditions needed to implement reform sustainably remain unresolved.

The most direct ECEC measure was a further $54.8 million for the Inclusion Support Program in 2026–27, designed to help meet growing demand for services supporting children with additional needs.

The Budget also included $139.7 million over five years, or around $30 million a year, through Thriving Kids for support to be delivered in ECEC and school settings. A further $1.5 million has been allocated to extend The Smith Family’s Let’s Count program.

The funding has been welcomed, but sector commentary has been clear that the top-up does not resolve the deeper structural issue.

Several sector voices have noted that providers and families continue to absorb an increasing proportion of the cost of supporting children with disability and complex needs in ECEC. Concerns have also been raised that wage subsidy rates for additional educators under inclusion programs have not kept pace with the rising complexity of practice or broader operating costs.

Others have pointed to the growing gap between inclusion expectations and the resourcing available to deliver them safely and effectively.

The Budget also included broader investment in Thriving Kids, with supports expected to be delivered in early learning and school settings.

For the sector, however, the concern is that ECEC services may again be expected to absorb part of the implementation load without sufficient workforce capacity, multidisciplinary support or ongoing funding certainty.

Wages remain the most significant unresolved issue.

The Government has continued to point to its support for the Fair Work Commission’s gender-based undervaluation review, which is examining modern award classifications and minimum wage rates to address potential gender-based undervaluation.

However, the absence of a clear Budget commitment on the future of wage subsidy arrangements has caused concern, particularly with the current Worker Retention Payment due to end on 30 November 2026.

This uncertainty is already being felt across the sector. Providers are preparing budgets, workforce plans and fee settings without knowing whether the current wage subsidy arrangements will continue beyond 30 November 2026. For educators, the lack of clarity risks undermining confidence at a time when the sector is trying to retain experienced staff and rebuild trust in long-term career pathways.

Without clarity, providers face significant budgeting uncertainty, while educators are left waiting to understand how wage reform will translate into stable, ongoing pay outcomes.

The proposed National ECEC Commission was another area where the Budget confirmed intent, but not yet investment. The Government has committed to consult on the development of the Commission, a reform widely supported by the sector as a potential mechanism for stronger stewardship, national consistency and long-term planning.

However, the absence of dedicated funding means the Commission remains conceptual rather than operational.

Across the sector, the response to the Budget has been relatively consistent. It avoided cuts. It provided targeted investment. But it did not settle the questions that continue to sit at the centre of ECEC’s future: how wages will be sustained, how inclusion will be properly resourced, and how system reform will be implemented in practice.

In that sense, the Budget offers stability, but not transformation.

For a sector carrying growing responsibility across child safety, inclusion, early intervention, workforce development and quality improvement, the message from leaders and advocates is clear: services cannot keep absorbing more without being resourced to deliver more.

The next 12 months will be critical.

The future of wage subsidies, the implementation of award changes, the shape of Thriving Kids, and the design of the National ECEC Commission will determine whether ECEC moves into a more stable phase, or continues to operate with widening gaps between reform ambition and operational reality.