Childcare group warns of fee increases up to 20pc as staff receive final instalment of federal pay rise

Families face a whopping rise in childcare fees unless the federal government fully funds its pay boost for early educators past a 2026 cut-off date.

Childcare workers will see an extra $160 a week in their back pocket from Monday, but questions remain about the long-term impacts of the 15 per cent pay increase to early educators.

The pay rise is part of a $3.6bn government package designed to “attract and retain high-quality educators” in a sector with traditionally low wages.

But the peak body for childcare service providers warns of “significant” fee increases for families when the package expires in November next year.

The Albanese government implemented the first stage of the 15 per cent pay increase to 200,000 childcare workers in December, 2024, with the final 5 per cent delivered on Monday.

Childcare providers were given $3.6bn in Worker Retention Payment (WRP) grants to fund the increased staffing costs.

Part of the agreement means providers must cap fee increase for families at 4.2 per cent from August 2025 to August 2026.

But the Australian Childcare Alliance (ACA) warns the pay rise for educators may end up costing families more come next year if a new government funding model is not finalised.

Childcare workers are among the nation’s lowest-paid workers. Picture: iStock

“Close to 80 per cent of providers have signed up to the Worker Retention Payment grants,” ACA vice president Nesha Hutchinson said.

“If the government hasn’t worked out a way to fund this pay rise by November next year, fees to families would spike significantly.

“It could increase by up to 20 per cent with educators’ pay rise. It will have immense consequences.”

The government and union representing childcare workers, United Workers Union, have come out strongly in support of the pay rise, saying it will increase the workforce and quality of care.

Education Minister Jason Clare said the pay rise would attract and retain much-needed educators. Picture: Martin Ollman

“Caring for and teaching kids is some of the most important work in the country,” Education Minister Jason Clare said.

“And our early educators deserve to be paid fairly for that work.

“We know the pay rise is working to bring more people into sector and help to keep the great educators we’ve already got.”

United Workers Union president Jo Schofield said: “Educators with secure jobs and reasonable rates of pay in well-staffed centres are able to provide the consistency of education, care, support and safety that has been so sadly lacking in the worst examples seen this year.

“The pay rise has provided stability for educators in a rocky year for the sector, and that stability has allowed families and children to receive the quality education and care they deserve.”

Government data shows a 6 per cent increase in the childcare workforce between August 2024 and 2025, and vacancy rates down by 14 per cent since October last year.

Originally published as Childcare group warns of fee increases up to 20pc as staff receive final instalment of federal pay rise