Families earning under $530,000 a year will now be guaranteed three days of taxpayer-subsidised childcare per week, free from the previous “activity test,” after the legislation passed Parliament on Feb. 13.
Introduced by Minister for Early Childhood Ann Aly last week, the policy ensures a minimum of 72 taxpayer-subsidised hours of childcare per fortnight for lower-middle income families
Previously, parents needed to meet specific work, study, or volunteering requirements under the activity test to qualify for subsidies. The new law removes this condition, broadening access to more people.
The bill passed the Senate with support from the Greens and most crossbenchers. As it was approved, Aly raised her hands in celebration.
“Labor wants to build a universal childcare system—one that’s simple, affordable, and accessible for every family. This legislation is the next step,” Prime Minister Anthony Albanese told Parliament.
“Universal and accessible doesn’t mean compulsory or mandatory. The choice always belongs to parents. But we want parents to have a real choice, not one limited by where they live or what they earn.”
Later, speaking to reporters, Greens leader Adam Bandt said the policy would make a “huge difference to millions of working parents.”
“It may well be that the Greens have shamed the government into acting, after they voted against bringing their own childcare legislation on for a vote yesterday. We kept the pressure up over the last fortnight,” he said.
Under the new law, Aboriginal and Torres Strait Islander children will be entitled to 100 hours of subsidised early education per fortnight—28 more than previously allowed.
Activity Test Failed to Boost Workforce Participation: Minister
The activity test, introduced by the Coalition in 2018 to encourage workforce participation and to make sure the subsidy was spent correctly, failed to meet its objective, Aly argued.“The Australian Institute of Family Studies found no evidence that it boosted workforce participation, while the Productivity Commission called its effects ambiguous,” she said.
She added that the test disproportionately excluded disadvantaged children from early learning.
In 2021, only 54 percent of children in the most disadvantaged areas were enrolled in early education, compared to 76 percent in the highest socio-economic areas.
These children are also more likely to be developmentally vulnerable, with just 42.7 percent on track when starting school, compared to 54.8 percent of all children.
