Factors affecting ECEC fee reviews in the 2026–27 financial year

The 2026–27 financial year is shaping up to be one of the most complicated fee‑setting periods the early childhood education and care sector has faced. Wage reforms, retention payments, fee caps and upcoming changes to card surcharging are all landing at once. Understanding what has already changed, what is happening now and what is coming next will be essential for approved providers.

The first major shifts have already been made in 2026.

From the first full pay period on or after 1 March 2026, the Children’s Services Award moved to a new classification structure following the Fair Work Commission’s gender‑based undervaluation review.

The changes include:

• eight simplified Children’s Services Employee levels
• new minimum pay rates
• staged increases every 30 June through to 2028 or 2029

These reforms are not a one‑off adjustment. They are a multi‑year uplift that will continue to push labour costs higher.

For services, this means fee planning now involves award translation, position mapping and payroll updates, not just applying a percentage increase.

The ECEC Worker Retention Payment has also been in play and continues to influence wage budgets.

What has already occurred:

• 10 per cent above‑award wages from December 2024
• a further 5 per cent from December 2025

The program runs until November 2026, with the delivery of a total uplift of 15 per cent above the award.

However, the funding came with conditions, and participating services have been required to stay within strict fee growth caps:

• 4.4 per cent from 8 August 2024 to 7 August 2025
• 4.2 per cent from 8 August 2025 to 7 August 2026

This creates a clear tension as wage costs are rising faster than the fees services are allowed to charge

The absence of any clear 26/27 budget commitment on the future of wage subsidy arrangements is causing concerns.

Card surcharges: a short‑term lever before major change

Payment processing costs are also shifting.

The Reserve Bank of Australia (RBA) confirmed in March 2026, that card surcharging will end from 1 October 2026.

The RBA found that surcharging rules have become confusing, inconsistently applied and poorly disclosed, and no longer serve their intended purpose.

What is happening now:

• the RBA has completed its review
• the decision to end surcharging has been announced

What is coming next:

• 1 October 2026: surcharging removed and domestic interchange caps reduced

Therefore for  ECEC services, this means surcharging may only be a short‑term tool to recover merchant costs.

Providers that currently pass on card fees will need to plan for how those costs will be absorbed or managed once surcharging ends.

Operational budget influences

Many services are experiencing higher costs across rent, insurance, food, utilities, technology, maintenance and compliance. These increases are not linked to wage reform but have become a steady upward trend in recent years.

In some cases, insurance premiums and property‑related expenses have risen well above CPI, while technology and compliance requirements continue to expand. These pressures add another layer to fee modelling, particularly when combined with wage increases and the limits imposed by fee caps.

Given the combined pressures, fee reviews for the new financial year are likely to involve multiple factors, including:

• moderate fee increases within the applicable cap
• closer scrutiny of non‑labour costs
• updated payroll and classification mapping
• revised payment policies ahead of surcharge changes
• clearer communication with families about cost drivers
• longer‑term modelling that extends beyond a single year

What this means for the sector

The 2026–27 financial year marks a turning point.

Wage reform is essential for workforce sustainability, but in a tightly controlled pricing environment. Providers may need to balance compliance, affordability and financial viability while continuing to support educator retention.