On Tuesday, Treasurer Jim Chalmers confirmed the implementation of the initiative that will provide a maximum of three days of fully subsidised childcare per week
From 1 January 2026, households earning less than $533,280 annually will be eligible for the three-day Child Care Subsidy (CCS) regardless of their activity level.
The three-day guarantee scraps the activity test which requires each parent to work, study, or volunteer for at least 16 hours each fortnight to be eligible for the 36-hour subsidised childcare.
The activity test determines the hours of financial support each family get every fortnight; the more hours spent working, studying, or looking for work, the more hours will be subsidised.
By scrapping the test, the Federal Government expects the new guarantee will see around 100,000 low-income families becoming eligible for additional hours of subsidised early childhood education and care in the first financial year.
If Labor wins the next election, the government plans to allocate $426.6 million over five years to fund the initiative.
Childcare subsidy to help more families in need of support
The changes to the childcare subsidy passed the Senate without debate, with both Labor and the Greens expected to campaign on the policy in the upcoming federal election.
The Coalition had previously raised concerns about removing the activity test, arguing it ensures financial assistance is directed to parents who are rendering hours working or studying.
However, a 2024 Productivity Commission review recommended abolishing the test, concluding that it disproportionately disadvantaged the families most in need, without increasing workforce participation.
The changes to the CCS could provide some households with between $50,000 and $100,000 in financial assistance, depending on their circumstances.
More early education centres to be built
In addition to the CCS changes, Dr Chalmers announced a $1 billion investment to establish the Building Early Education Fund.
The funding will support the construction and expansion of 160 childcare education and care services across Australia, including suburbs and regional areas.
This is expected to give parents better access to services and reduce waiting lists.
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