Prime Minister Anthony Albanese has pledged that a re-elected Labor government will guarantee three days of subsidised child care for all families, without the need for an activity test. This promise is set to apply to families earning up to $530,000 annually, and the scheme is expected to cost $427 million over five years, starting in January 2026.
Currently, an activity test determines how many hours of subsidised care a family can access. This test includes requirements such as paid work, studying, volunteering, or job hunting. The more hours a parent spends on these activities, the more subsidised care they can receive. However, exemptions exist for low-income families and others in special circumstances.
Under Albanese’s proposal, families using more than three days of subsidised care would still be required to meet the activity test.
The Productivity Commission’s recent inquiry into early childhood education and care recommended the complete removal of the activity test.
In a speech ahead of the announcement, Albanese criticised the activity test for placing additional burdens on parents who are already working hard to find employment. He argued that it prevents children from accessing early education and learning vital skills.
“Denying children access to early education means denying them the opportunity to develop the skills they need before starting school,” Albanese said.
He pointed out that those most affected by this lack of early education are often the families who would benefit the most. “Our Three Day Guarantee will ensure that every family can afford three days of high-quality early education,” he added.
Labor’s long-term goal is to create a universal child care system that is simple, affordable, and accessible to all families. However, Albanese emphasised that the plan does not mandate attendance. “The choice will always be up to parents,” he said. “We want to ensure that families can make that decision without being influenced by their location or occupation.”
Albanese highlighted that the current government has already taken significant steps towards a universal child care system. One of its major achievements has been the introduction of cheaper child care, which has saved over one million families an average of $4,400.
The upcoming budget update is expected to reveal an additional $3.1 billion in Commonwealth funding for child care subsidies over the next four years, benefiting 200,000 more children.
The Productivity Commission’s report noted that the activity test was originally introduced to boost workforce participation. However, the inquiry found that the test has led some disadvantaged families to believe that early childhood education is only for those with jobs.
“The tightening of the activity test in 2018 aimed to reduce subsidised hours for families not meeting the requirements,” the report stated. “However, subsequent evaluations showed no clear evidence that the test had a significant impact on labour force participation or other outcomes.”
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