NSW preschool funding changes spark sector concern over future of long day care programs

Early childhood education peak bodies are calling on the New South Wales Government to reconsider changes to preschool funding, warning the decision could place significant financial pressure on long day care services that deliver preschool programs to the majority of children across the state.

The concerns follow a state budget decision to replace a COVID-era preschool funding program with a new Universal Preschool Funding model, while the NSW Government continues its commitment to expand publicly funded preschool infrastructure.

According to sector representatives, the changes risk creating unintended consequences for providers that deliver preschool programs within long day care services, where around 73 per cent of NSW children currently access preschool, well above the national average.

A spokesperson for NSW Education Minister Prue Car said the new Universal Preschool Funding model replaces temporary pandemic-era funding arrangements.

Under the revised model, operating costs will be fully funded for eligible not-for-profit community preschools, while families accessing long day care will continue to receive fee relief through existing government initiatives.

However, providers operating preschool programs within long day care services say the removal of direct preschool funding leaves many services facing a significant funding gap.

The issue is particularly challenging for services participating in the Australian Government's Worker Retention Payment, which limits providers' ability to increase fees while supporting higher educator wages.

The Early Learning and Care Council of Australia (ELACCA) has described the decision as one that could have significant implications for workforce sustainability and children's access to preschool programs.

Chief Executive Officer Amanda Walsh said many services have relied on the previous funding arrangements to employ degree-qualified early childhood teachers, strengthen educational programs and improve access for vulnerable children.

She warned that removing this support could place additional pressure on services already managing workforce shortages and increasing operating costs.

Sector representatives have also questioned whether the funding changes align with broader government commitments to strengthen the early childhood workforce.

The funding changes come as the NSW Government progresses construction of 100 new public preschools, with work already underway at 95 sites.

The government's long-term strategy also includes a commitment to expand publicly owned and operated long day care services for children aged from birth to five years on school sites.

While peak bodies have welcomed additional investment in public preschool infrastructure, they argue it should complement rather than replace support for preschool programs delivered through long day care.

For many families, long day care remains the primary pathway into preschool education, providing integrated early learning alongside extended care hours that support workforce participation.

Industry representatives argue this delivery model has become central to meeting the needs of working families and ensuring children can access quality preschool programs regardless of service type.

They say funding arrangements should reflect how preschool education is currently delivered across NSW, rather than creating differences between service models.

Peak bodies are now urging the NSW Government to review the funding changes and work with the sector to develop a model that supports all preschool providers delivering funded early childhood education programs.

While the government maintains the new funding model, fee relief measures and investment in public preschool infrastructure will improve access over the long term, providers say the immediate financial impacts on long day care services cannot be overlooked.

As the debate continues, the discussion is likely to focus on how governments can expand universal preschool access while maintaining the mixed-market model that currently delivers early childhood education to most children across New South Wales.