Anthony Albanese pledge: three days of childcare for all in votes chase

Anthony Albanese will guarantee families earning up to $530,000 access to childcare subsidies three days a week as part of a pre-election cash splash.

Anthony Albanese visits a childcare centre in Brisbane in July. Picture: Dan Peled

Anthony Albanese will guarantee families earning up to $530,000 access to childcare subsidies three days a week as part of a pre-poll cash splash estimated to cost taxpayers more than $427m.

At a campaign-style rally in Brisbane, the Prime Minister on Wednesday will unveil next steps in Labor’s long-term universal childcare plan and announce that a re-elected Albanese government will overhaul the activity test ­requiring parents to be working, studying or training to access ­subsidies.

Ahead of Jim Chalmers releasing the mid-year economic and fiscal outlook next week, Mr Albanese will offer every family access to childcare subsidies because “parents do not need to work a certain number of hours a week to want the best possible education for their child”.

Linking the childcare policy to the cost-of-living crisis that has triggered plunging support for the government, Mr Albanese will say that “making childcare more ­affordable is good for families and good for the economy”.

“We know that making early education and care affordable for families delivers real help with the cost of living every week.

“It gives working parents more choice and more flexibility … more opportunities to balance caring responsibilities with career opportunities,” Mr Albanese will say.

“It helps businesses hold on to valued and experienced employees. And in doing so, it boosts productivity and participation across our entire economy. Let me be clear: universal and accessible doesn’t mean compulsory or mandatory. The choice will be up to parents, as always, as it should be. But we want families to have a real choice.”

The three-day guarantee, valued at $427.6m over five years, will be funded in the mid-year budget update alongside other yet-to-be announced election policies. The government is still mulling over the implementation of a flat childcare fee.

Productivity Commission modelling released in September estimated ditching the activity test for five days would cost around $2bn a year. The overall cost to the budget would be closer to $2.3bn after factoring in reductions in personal income tax collection.

The government is only proposing to abolish the test for three days of care. Should a parent want to access the other two days, the activity test would still apply.

The commission found that abolishing the activity test would lead to a 4 per cent rise in hours of childcare, with about 80 per cent of the increase attributed to families not previously using childcare.

Amid internal government discussions over “flat fee” pre-election childcare sweeteners for families, the Productivity Commission has warned against the policy because it would cost $8bn a year and benefit mostly higher-­income families.

Adding to pressures on the government, Jobs and Skills Australia earlier this year warned that an extra 21,000 staff were needed in the childcare sector to meet current demand, even before factoring in chances to funding and the activity test.

Selling his “Building Early Education for Australia’s Future” election pitch, Mr Albanese will say since the 2022 election, the government has “brought down the cost of childcare for over one million families … and we are boosting the wages of up to 200,000 early educators by 15 per cent”.

“The coming budget update will show commonwealth funding for childcare subsidies is increasing by $3.1bn over the next four years – to support an extra 200,000 children to attend early ­education,” he will say. “Alongside this, 34,000 more early educators have joined the workforce, with another 125,000 in training, including in Free TAFE, across the nation. We are training more early ­educators and we’re paying early educators more.”

The childcare subsidy and ­activity test were introduced by the Coalition in July 2018, replacing the previous two forms of childcare support: the childcare benefit and childcare rebate. In its first budget, the Albanese government committed nearly $5bn to its cheaper childcare package, which increased the maximum subsidy rate to 90 per cent for those earning $80,000 or less and dropping down 1 per cent for each extra $5000 of annual income until hitting zero at a combined income of $530,000.

Amid warnings from the Parenthood advocacy group that 160,000 children from low-­income households are being locked out under current settings, Mr Albanese will say early education “is an opportunity every child deserves”.

“For the whole of the 20th century, it’s been understood that every child has the right to go to school – and government has a responsibility to make that possible,” he will say. “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. We will replace the Liberals’ activity test with a new three-day guarantee in early education,” he will say.

“Under a re-elected Labor government, every family earning up to $530,000 will have ­access to the childcare subsidy for three days a week – guaranteed.

“Our three-day guarantee will ensure every family can afford three days of high-quality early education.

“Three days of early education: affordable for every family, funded for every child, building a better education system every step of the way.”

Tying his universal childcare vision to Labor’s creation of the NDIS, Medicare and superannuation, Mr Albanese will attack Peter Dutton for calling his government’s Cheaper Child Care plan “dodgy” and a “sugar hit”.

The Treasurer on Tuesday confirmed that there would be a “little bit of slippage in the mid-year budget update”, which he linked to $2bn in extra money for natural disasters.

“It’s actually one of a number of estimates variations seeing a little bit of slippage in the bottom line compared to budget,” Dr Chalmers

Research released this week by the Australian Childcare Alliance, representing 3000 small to medium family-run childcare businesses, revealed that moving to a supply-driven funding model over a demand-driven system would see operators become fin­ancially unviable in a repeat of the crisis in the aged-care sector over the past decade.