Labor Child-Care Policy 2025 | 90% Subsidy & Free Preschool

Labor's 2025 child-care package raises the Child-Care Subsidy to 90% for incomes up to $120,000 and introduces 15 hours of free preschool for all 3-year-olds by 2028.

90% CCS to $120k income

Labor's signature child-care reform increases the Child Care Subsidy to 90% for families earning up to $120,000, representing the most significant expansion of government support for early childhood education since the introduction of universal child care.

This policy change addresses the 'second earner penalty' that particularly affects women's workforce participation, where high child-care costs make returning to work financially unviable for many families. The enhanced subsidy reduces out-of-pocket costs by approximately 60% for eligible families.

CCS reform structure

• Subsidy taper starts above $120k: Full 90% rate maintained until household income reaches $120,000 threshold
• No subsidy below activity test 8 hrs unless on JobSeeker: Maintains work incentives while supporting job seekers
• Hourly cap indexed to Educator Award wage growth: Prevents providers from inflating fees to capture subsidy increases
• Additional subsidy for multiple children: Enhanced support for families with more than one child in care

The policy includes robust safeguards against fee inflation, with hourly caps tied to educator award wages and penalties for providers who increase fees beyond reasonable cost growth.

Universal 3-year-old preschool

Labor's universal preschool policy extends free early childhood education to all 3-year-olds, following international best practice in countries like France and the UK. The program aims to improve educational outcomes while providing additional workforce participation support for parents.

Research demonstrates that quality early childhood education delivers significant long-term benefits, including improved literacy and numeracy outcomes, better social-emotional development, and reduced educational inequality. The program is designed to complement existing child-care arrangements rather than replace them.

Universal preschool framework

• 15 hrs/week free preschool by 2028: Universal access regardless of family income or work status
• Delivered through long-day-care centres & standalone preschools: Flexible delivery models to suit different communities
• Funded jointly with states (50-50): Commonwealth-state partnership with matched funding requirements
• Quality standards alignment: All providers must meet National Quality Standard requirements

The delivery model allows families to choose between standalone preschool sessions or integration with existing long-day-care arrangements, providing flexibility for working parents while ensuring all children access quality early learning.

Workforce & wage support

Labor's child-care policy recognizes that sustainable reform requires addressing the sector's chronic workforce shortages and low wages. The package includes the most significant investment in early childhood educator wages and training in Australian history.

Workforce investment and training initiatives

Labor's comprehensive workforce strategy addresses the sector's most pressing challenges through significant wage increases, targeted training programs, and infrastructure investment. These measures aim to attract and retain skilled early childhood educators.

• Multi-year bargaining to lift educator wages 25%: Structured wage increases over five years through enterprise bargaining supported by government funding
• HECS forgiveness for ECEC degree graduates in rural areas: Complete student debt forgiveness for early childhood education graduates who work in regional Australia
• $300m for centre upgrades in growth corridors: Infrastructure investment to expand capacity in high-growth suburban areas with limited child-care availability
• Professional development funding: Ongoing training and upskilling opportunities for existing educators to improve quality and career pathways

Workforce development initiatives

The comprehensive workforce package includes:

• Qualification pathways: Streamlined recognition of prior learning and accelerated training programs
• Professional development funding: Ongoing training and upskilling opportunities for existing educators
• Career progression support: Leadership development and management training programs
• Retention incentives: Bonus payments for educators who remain in the sector for specified periods

Frequently Asked Questions

Labor's child-care policy represents a transformational investment in early childhood education, addressing affordability, accessibility, and quality simultaneously. The combination of higher subsidies, universal preschool, and workforce improvements creates a comprehensive framework for supporting families and improving child outcomes.

For more information on Labor's family policies, explore the Labor Party profile or check current CCS changes.