A pay boost for childcare workers is an investment that will be paid back "many times over", says the prime minister, as the opposition brands it a "sugar hit".
Improving conditions and pay for workers had a multiplier effect not only for child development and women's empowerment but for the economy, Anthony Albanese said.
Early childhood and out-of-school hours staff will get a 10 per cent pay rise from December, with an additional five per cent from December 2025 as part of a $3.6 billion package.
"To see tears of joy and of relief from the workers here says how much this means to people who work in the sector," Mr Albanese said while announcing the pay boost at a Sydney childcare centre on Thursday.
"This isn't babysitting, this is early education.
"When you allow for a system with greater workforce participation of women, boost to productivity, boost to business, that repays the investment many times over."
The changes will mean workers in the industry get an extra $155 a week from the end of 2025, but only if childcare centres cap fee increases for parents.
A cap of 4.4 per cent will apply for the initial pay rise, while a limit will also apply for the second part of the pay rise but is yet to be determined.
The government has committed to supporting childcare centres after the 15 per cent pay rise comes into effect in full, promising organisations will not be left to fork out for a higher wages bill.
Opposition Leader Peter Dutton said while wage increases were always welcome, future economic conditions might mean the extra income would not account for much.
"Nobody begrudges an increase in the wages of any worker, let alone childcare workers, but it's not going to be a benefit to the childcare workers if we just see interest rates stay higher," he said.
"This is a one-off sugar hit."
The government confirmed it has received a final report from the Productivity Commission on its review into the childcare sector.
A draft report from the commission released in November recommended the government provide universal access to childcare for up to 30 hours a week for all children aged up to five.
While the sector has welcomed news of the wage increase, it's less than the 25 per cent pay rise advocated for in the lead up to the federal budget in May.
The chief executive of advocacy group The Parenthood, Georgie Dent, said the wage rise was historic.
"This has been decades in the making and is a victory for every early childhood educator and teacher – past, present and aspiring, as well as children and families," she said.
"It is also momentous for gender equity as it directly addresses the chronic undervaluing of a highly feminised workforce, and bolsters a critical enabler of women's workforce participation."
The Australian Education Union said the move was a good step but Victorian branch president Meredith Peace said more funding was needed.
"Early childhood teachers and educators are also looking to the federal government for additional investment for the inclusion of entitlements that address workload," she said.
"With 11,000 more teachers and educators required in Victoria over the next decade, professional pay and good working conditions are key to attract and retain this growing workforce."
