Anthony Albanese is committing big on early childhood care and education in one of his final major announcements of the calendar year.
The 2025 federal election’s battle lines are being drawn as Australia readies itself for another trip to the polls in the next six months.
It is still early days but Labor’s messaging so far appears to centre around delivering a more equitable future for Australians while chastising the opposition for being “stuck in the past” and “trying to drag the rest of Australia back there to keep them company”.
Which brings us to Wednesday’s announcement – another step on the pathway toward universal childcare.
But how does it affect you? Let’s break it down.
What are Labor’s plans for early childcare?
The prime minister’s speech in Brisbane on Wednesday contained three major announcements for the sector.
Firstly, Labor would introduce the childcare subsidy for three days a week to all families earning up to $530,000 a year from January 2026.
“In the 21st century, every child has the right to go to early education, to help get them ready for school – and our Labor government is going to make this possible,” Albanese said.
In addition to applying the subsidies to more families, a second-term Labor government would also scrap the controversial activity test, Albanese said.
The test determines the level of childcare subsidies parents get based on the number of hours they work or volunteer in a fortnight. It has been criticised by the government’s own women’s economic equality taskforce and the economic inclusion advisory committee as a policy that “reduces rather than enhances economic inclusion, especially for women, and causes additional hardship and disadvantage for children”.
Finally, Albanese also announced he would commit $1bn in funding from July 2025 to help build more childcare centres in areas of need, including in the outer suburbs and regional Australia. The prime minister said this could mean building or expanding more than 160 early education and care centres.
“There are simply not enough childcare centres in the regions or in outer suburbs that are growing fast,” Albanese said.
“This means children in these communities are left behind and families are left with no option.”
How does this change things?
The removal of the activity test will be the clearest change for many families. Under the existing rules, a parent can receive up to 100 hours of subsided childcare each fortnight depending on how many hours they have worked, volunteered or taken part in other recognised activities in that period.
The proposed changes are largely in line with those outlined in a Productivity Commission report in September, which said removing the activity test would increase childcare attendance rates by 10%, with most of that coming from low and middle-income families.
Albanese acknowledged there were more steps to achieve the party’s long-term vision of universal childcare, including lowering childcare fees, boosting places for children, increasing workers’ wages and building more centres in regions and outer suburbs.
“This is work that can only be done through long-term commitment and real investment,” he said.
“It can only be done with a real change in the role government plays – building more centres, backing more choice, stepping up when the market fails.”
How are people reacting?
Advocate groups have largely welcomed the announcement.
The Parenthood’s chief executive, Georgie Dent, said winding back activity tests represented a “paradigm shift” in recognising the importance of early childhood education.
Dent added the activity tests disproportionately affected First Nations children and children from low-income and disadvantaged households, who would benefit most from early learning.
“Children who attend high-quality early learning are more likely to arrive at school developmentally on track than children who don’t,” she said.
The peak body for Aboriginal and Torres Strait Islander children, Snaicc – National Voice for Our Children – described the changes as a “gamechanger for our babies”.
But the proposal is yet to capture Coalition support, whose MPs and senators gave non-committal responses.
In a joint statement from Angus Taylor, Sarah Henderson and Angie Bell, the policy announcement was described as “desperate pitch to lure votes”. The opposition said removing the activity test would only benefit some families while costings hundreds of millions of dollars.
The Greens’ early childhood education spokesperson, Steph Hodgins-May, said the government could scrap the test today, instead of kicking it down the road.
“It’s dangling another carrot after a future election, rather than taking action today,” she said, describing it as a “half-measure”.
What could be next?
Albanese said Wednesday’s announcement represented another step in a “nation-defining journey” toward universal early childcare.
The Productivity Commission’s report also recommended raising childcare subsidies to 100% – essentially making it free – for families earning less than $80,000, which would cover almost a third of all families with children aged 0–12 years.
The report also called on state governments to provide, through public schools, out-of-hours care for children aged five to 12.
Advocacy groups have also called for the introduction of a maximum daily out-of-pocket cost. The Centre for Policy Development’s Growing Together report in June suggested the rate could be capped as low as $10 a day.
The Australian Competition and Consumer Commission warned earlier this year there were “challenges and risks associated with direct price controls”, including lowering quality or pushing providers out of the sector, associated with imposing price caps.
