Child care subsidy plays a crucial role in making early childhood education more affordable for Australian families. With child care costs varying widely depending on location and provider type, many parents seek ways to manage expenses while ensuring their children receive quality care. Government support, such as the child care subsidy, helps ease financial pressure by covering a portion of child care fees based on household income and work activity. As policies continue to evolve, understanding eligibility, benefits, and new initiatives can help families maximise their savings and access essential early education services.
Understanding Child care Costs and Subsidies in Australia
Child care fees in Australia can vary significantly based on location, provider type, and the number of hours a child is enrolled. According to recent reports, full-time child care can cost anywhere between $70 to $200 per day per child. For families with multiple children, these expenses quickly add up, making it crucial to find ways to mitigate costs.
The Child Care Subsidy (CCS) is a government initiative aimed at making early childhood education and care more affordable for Australian families. The subsidy covers a percentage of child care costs based on household income, ensuring lower-income families receive more substantial support. To be part of the programme, a single parent or couple must be Australian residents with a child under 13 years old, whom they care for at least two nights a fortnight, and who is enrolled in an approved child care service. The child themselves must be immunised and not attend secondary school.
Key elements of the programme include the following.
Income-Based Support
Under a CCS payment matrix for 2024-2025, parents of just one child who have annual income up to $83,280 receive a subsidy of up to 90 per cent of child care fees. The percentage gradually decreases for higher-income families with annual income ranging from $83,280 to $533,280.
Activity Test
The subsidy is linked to parents’ work, study, or volunteering commitments, ensuring those engaged in productive activities receive financial assistance.
Multiple Child Discount
Families with more than one child in care have a different payment matrix. The CCS matrix for second and younger children sets the subsidy rate at 95 per cent for family incomes up to $141,321. The $141,321-$186,321 bracket sees the percentage drop by $3k every one point to 80 per cent for $186,321-$265,611. On the far end, families with multiple children and the annual income exceeding $365,611 will see the children set at the standard CCS rates.
Child Care Subsidy Boost Saves Money and Grows Workforce
On 28 January 2025, the Department of Education published new figures pointing to the CCS being effective in helping Australian families save on child care from September 2023. The findings reveal some plus points shown below.
Substantial Savings
The study estimates that, on average, a family with an annual income of $120,000 who paid for 30 hours of childcare per quarter saved up to $2,768. Up to one million families benefited in the process.
Increased ECEC Workforce Participation
One of the primary goals of the subsidy is to encourage more families to consider sending their children to Early Childhood Education and Care (ECEC) centres, which will also hire more staff to handle the increased child population. The Department of Education stated that the current regime’s Worker Retention Payments have increased the wages of over 200,000 ECEC staff, starting with a ten per cent increase over award rates in December 2024; another five per cent will be added before the end of 2025.
ECEC provider Goodstart may have also benefited from the increased demand for ECEC workers that the CCS has brought about. The company reported that, year-on-year, job inquiries had spiked as high as 60 per cent with completed applications going up 30 per cent. Jobs and Skills Australia data from December 2024 recorded a 22 per cent year-on-year decline in ECEC job vacancy rates.
Maximising Your Child Care Subsidy
Check Eligibility
Parents should review their household income and work activity to determine their subsidy percentage.
Update Centrelink Details
Keeping Centrelink records up to date ensures the correct subsidy is applied.
Consider Flexible Child care Options
Some child care providers offer flexible hours that align with work schedules, reducing unnecessary costs.
Claim Additional Benefits
Some states offer supplementary child care assistance programmes; families should explore regional benefits.
Expanding Access to Early Learning
The success of the CCS has prompted the federal government to push forward with more initiatives for the child care sector. A $1-billion Building Early Education Fund is being planned for activation in July 2025 plus initiatives to guarantee at least three days of high-quality early education to every child in the country. Education Minister Jason Clare said both are checkpoints to building a universal ECEC system.
To make it happen, he noted that the next Labor regime aims to build more ECEC centres in outer suburbs and parts of regional Australia with significant numbers of households in need of child care services. However, Mitchell Institute director Peter Hurley said that while the government has good intentions in building additional ECEC centres, market decisions will determine where they operate. Worse, he hinted that the subsidies might be cancelled out by certain ECEC centres needing to increase service fees to remain afloat.
Conclusion
Child care costs remain a significant financial consideration for Australian families, but government initiatives like the Child Care Subsidy provide substantial relief. The new subsidy adjustments introduced in September 2023 have helped families save thousands of dollars annually, increased workforce participation, and improved access to early education. As the government continues to refine child care policies under the current administration, more Australian families can benefit from financial assistance, making quality child care more accessible and affordable for all.
DISCLAIMER: This article is for informational purposes only. 2 Ezi has no relationships with the federal government and does not assist in the disbursement of any subsidy. It has no business partnerships with any ECEC industry stakeholder.
