Children with complex needs are being turned away from childcare centres due to funding gaps and staff burnout, with industry leaders warning federal government inclusion rules are having the reverse effect.
The government’s inclusion support program (ISP) is intended to provide additional staff for children with complex needs, but the funding amounts to half of that needed, with centres forced to pay the rest.
While the government moves towards implementing a universal childcare system, industry figures said the ISP needed to be fixed before other structural changes were introduced.
Advocates also warned that a child required a formal diagnosis before a centre could apply for the funding, which could then take between two and five months to come.
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Nawaz* told Guardian Australia his son, Zayne, was forced out of two Sydney childcare centres. He said Zayne, who has speech impediment and behavioural issues, was asked by two centres to leave because they could not wait for him to receive NDIS funding. The NDIS operates alongside, but separately to, the ISP, yet both involve wait times of up to several months without any funding in the interim.
“They were not ready to wait, because we almost got the approval,” Nawaz said. “The NDIS person came to our place and did their interview with Zayne and everything … so we said that to the daycare and the centre manager still didn’t wait. They said, no, no, no, you have to find another one.”
He said it was hard having to move his son twice, the first time before Zayne was age two. But he said his son has now settled into a centre run by not-for-profit Goodstart, which was among the operators calling for urgent changes to the ISP.
No longer a ‘niche’ group
Paul Mondo, the president of peak body the Australian Childcare Alliance, said children with complex needs struggle the most when first entering daycare, before they can access government funding.
“If [children] are not supported adequately, that does put undue pressure on that workforce to be able to cope in a really complex environment at times. So sometimes services do make those decisions [to turn away children], which is not an outcome any of us want to see at all.”
The ISP was introduced in 2016 under the Morrison government, providing $23 an hour for up to 25 hours a week for additional workers. But that funding was not indexed, while childcare costs have skyrocketed.
Goodstart said children with complex needs were no longer a “niche” group. Its chief executive, Ros Baxter, said it received $13m in ISP funding across its 700 centres but Goodstart was forced to pay an additional $12.3m to provide adequate care.
She said the base rate for a childcare worker at Goodstart centres was $39 an hour, almost twice the ISP funding.
“We know that somewhere between 25 and 30% of Australian children are starting school behind, and we know that effectively the school system can’t catch them up,” Baxter said.
“It’s seriously the biggest economic crisis that the country could imagine, and it’s building.”
Baxter said while the government has taken “incredible” steps towards universal childcare, inclusion funding was an obvious gap.
In a 2024 report to the government on universal childcare, the Productivity Commission recommended an immediate increase to inclusion subsidies.
A 2023 Deloitte report, commissioned by the government, found ISP payments had increased 11% a year on average since 2016, due to the increasing demand and awareness of disabilities. It also found the requirement for a diagnosis was a barrier for services and excluded some children.
Caroline Croser-Barlow, the CEO of advocacy group The Front Project, said the ISP funds up to 5% of children in childcare but up to 20% of children in schools receive inclusion support.
“[Services] have to wait for a kid to come – then they have to wait for a diagnosis – for the application to be processed … all of which is very reactive,” Croser-Barlow said.
Karen Thorpe, an Australian Research Council laureate at the University of Queensland, has researched the impact of the ISP on staff wellbeing and found it was one of the key factors in those considering quitting.
“If you have a ratio of one to 10 [staff to children], and seven or eight of those children have additional needs and you can’t get enough support … that is the thing that makes staff feel unwell,” she said.
The minister for early childhood education, Jess Walsh, said the government was committed to ensuring “as many children as possible can access quality early learning in mainstream services”.
“The Albanese Labor government has significantly increased support in the ISP since it came to government, with around 26,000 children supported in 2024–25 compared to 15,800 in 2020-21.”
* who asked that his surname not be published for privacy reasons
