What Australia can learn from the US child care crisis: a cross-jurisdictional analysis for 2026

A recent review of the United States child care system highlights the risks of fragmented policy, underinvestment and inequity. For Australia’s early childhood education and care (ECEC) sector, the findings offer both a warning and a roadmap for reform.

Australia’s ECEC system is more coordinated, but it faces its own challenges. A comparison between the two countries highlights where Australia performs well, where vulnerabilities persist, and where international lessons can inform future reform. 

The US child care system is widely characterised as a market failure. It operates as a patchwork of state-based policies, inconsistent funding streams and limited national oversight. Quality standards vary significantly, and access to subsidies depends on location, income and political context. As a result, affordability, quality and access are often determined by postcode.

Australia presents a more coordinated model at the national level, but it is not a single regulatory system. The National Quality Framework (NQF) provides a shared foundation, including national learning frameworks, minimum standards, and a consistent assessment and rating system, but each state and territory is the regulatory authority, administering compliance, enforcement, and service approvals under their own legislation. Federal funding through the Child Care Subsidy (CCS) and Additional Child Care Subsidy (ACCS) creates a more stable national baseline for affordability, yet operational experience still varies by state due to differences in:

• regulatory practice and enforcement culture
• state-based legislation and instruments
• workforce supply conditions
• local market dynamics
• state-level early childhood strategies and funding supplements

So Australia is more coordinated than the U.S., but it is not centrally regulated in the way some international observers assume. However, coordination does not eliminate complexity. Workforce shortages, affordability pressures and uneven access, particularly in regional and remote communities, remain persistent challenges. The US experience demonstrates how quickly inequity deepens in the absence of strong national coordination. Maintaining a clear federal role in ECEC governance remains critical in the Australian context.

Both countries face significant workforce shortages, but the underlying causes differ. In the US, educators are among the lowest-paid workers in the economy. Median wages fall below a living wage, and turnover is high. Many educators leave the sector within months. The workforce crisis reflects structural underinvestment rather than short-term disruption. In Australia, workforce pressures stem from rising expectations. Qualification requirements, regulatory obligations and the complexity of children’s needs continue to increase. However, wages have not kept pace. The outcome of the Fair Work Commission’s ECEC Work Value Case is expected to influence future wage settings, with implications for service viability.

A sustainable system depends on a stable and fairly compensated workforce. The US demonstrates the risks of prolonged wage stagnation. Australia’s challenge is to improve remuneration while maintaining service sustainability and quality. Affordability remains a major concern in the US. Many families spend between nine and 16 per cent of household income on care, exceeding international benchmarks. More than half of families live in areas with limited supply, and subsidy access is inconsistent.

Australia performs comparatively well. Recent CCS reforms have improved affordability for many families, and the system does not experience shortages on the same scale. However, pressure points remain. Costs continue to rise in some regions, middle-income families face affordability constraints, and access is uneven in regional and remote areas. Infant care supply also remains limited. Australia’s subsidy framework mitigates extreme inequity, but affordability remains a live policy issue. Without sustained investment and targeted supply strategies, access challenges may intensify.

Public investment in ECEC differs significantly between the two countries. The US invests approximately 0.3 per cent of Gross Domestic Product (GDP), among the lowest in the Organisation for Economic Co-operation and Development (OECD). Funding is often discretionary and subject to political cycles, creating instability. Australia invests around 0.6–0.7 per cent of GDP. While this represents a stronger commitment, it remains below levels seen in countries with universal, high-quality systems.

Australia’s investment is comparatively strong but not yet sufficient to deliver universal access, workforce sustainability and long-term system resilience.

Policy stability represents one of Australia’s strongest advantages. In the US, child care policy shifts frequently, often aligned with election cycles. This creates inconsistency and leaves states to address gaps independently.

Australia benefits from broad support for the NQF and CCS, providing a more stable operating environment. National agreements, including the Preschool Reform Agreement, reinforce continuity. However, workforce policy remains fragmented across jurisdictions. Stability supports long-term planning and sector confidence. Protecting national frameworks from political volatility remains essential.

Lessons from the US experience

Lessons worth adopting:

• state-level innovation, including universal or near-universal models
• targeted wage supplements as interim workforce support mechanisms

Lessons worth avoiding:

• over-reliance on market-driven provision
• discretionary or short-term funding models
• fragmented regulatory approaches

The US child care system provides a clear example of the risks associated with fragmented governance, underinvestment and market reliance. Australia’s ECEC system benefits from stronger coordination, more stable funding and a consistent regulatory framework. However, the comparison also highlights ongoing challenges, including workforce shortages, affordability pressures and uneven access. As reform continues, international evidence offers valuable guidance. Strengthening national coordination, increasing investment and addressing workforce sustainability will be critical to building a system that delivers quality, equity and stability for children, families and educators.

Read the full report here.