NSW announces major funding reforms for long day care services from 2027

NSW long day care providers will face a significant change to their funding arrangements from 2027, with program payments to services set to cease and a new model focused on increased fee relief for eligible children to replace Start Strong for Long Day Care.

The NSW Government has announced reforms to early learning funding for long day care (LDC) services from 1 January 2027, describing the changes as designed to deliver greater “fairness, consistency and stability”.

Under the reforms, the existing Start Strong for Long Day Care program will be replaced by a new Fee Relief for Long Day Care program.

While fee relief funding will increase, the Government has also confirmed that program payments for long day care services will cease in December 2026.

The change represents a significant restructuring of the way NSW funding will support preschool participation within long day care settings.

The reforms will not affect funding already allocated for 2026.

Current funding arrangements under the 2026 Start Strong program and Disability and Inclusion program will remain in place.

For providers, this means existing 2026 allocations continue while preparations are made for the new funding model commencing next year.

Under the new Fee Relief for Long Day Care program, the NSW Government will increase fee relief funding for eligible children attending long day care to support families with the cost of preschool.

Fee relief for three-year-old children will also continue.

There is, however, an important eligibility requirement: services will only be eligible for fee relief if they provide a preschool program.

Eligible families will continue to receive the Australian Government's Child Care Subsidy (CCS), with the NSW Government noting that the Australian Government remains the primary funder of long day care.

Alongside the increase in fee relief, the NSW Government has confirmed that program payments for long day care services will cease in December 2026.

This is an important distinction for providers.

Fee relief and program payments currently perform different functions within the Start Strong for Long Day Care funding model.

Fee relief is directed towards reducing the cost of preschool for eligible families, while program payments provide a separate funding stream to eligible services to support the delivery of preschool programs.

From 2027, that separate program payment stream will no longer operate under the new arrangements announced by the Government.

The change does not mean NSW funding for long day care is ending. Rather, the Government is restructuring its investment, with increased funding directed towards fee relief while program payments to long day care services cease.

The full financial implications for individual long day care providers are not yet clear.

The Government has not released the 2027 funding rates or detailed program arrangements, making it too early to determine whether individual services will receive more or less NSW funding overall under the new model.

The effect is also likely to depend on the final funding rates, eligibility requirements and circumstances of individual services and their enrolments.

For providers, however, the removal of program payments is likely to be an important consideration when planning budgets, staffing and preschool program delivery for 2027.

Services will also need to understand what will be required to satisfy the condition that a preschool program is being provided in order to access fee relief.

The NSW Government said further information about the 2027 arrangements, including funding rates, will be released with the 2027 program guidelines.

Those guidelines will provide important detail for providers seeking to understand the practical and financial consequences of the reforms.

Until they are released, it is not possible to quantify the effect of the changes on individual services or determine whether increased fee relief will offset, in whole or in part, the removal of program payments.

What is clear is that NSW long day care funding will look different from 1 January 2027.

Start Strong for Long Day Care will be replaced by Fee Relief for Long Day Care, fee relief will increase, support for eligible three-year-old children will continue and program payments to long day care services will cease.

For providers, the release of the 2027 funding rates and program guidelines will be the next critical piece of the picture.

Read the full details about the NSW funding reforms for early learning services in 2027 here.