This proposal has three components.
Component 1 has two elements that relate to the National Partnership Agreement on Universal Access to Early Childhood Education which determines Commonwealth and state funding for preschool attendance. The current agreement concludes at the end of the 2020 calendar year.
- Element 1 would make preschool funding for four-year-old children ongoing and would provide free access for up to 24 hours per child per week across all preschool settings. The current state-to-Commonwealth funding ratio would remain unchanged.
- Element 2 would provide ongoing preschool funding to allow free access to preschool for three-year-old children for up to 24 hours per child per week across all preschool settings. The current state-to-Commonwealth preschool funding ratio would also apply to three-year-old children.
Component 2 would expand access to Commonwealth child care funding by removing the child care subsidy activity test entirely and amending the child care subsidy rates as per the table below.
| Current annual family income thresholds | Current child care subsidy rate (per cent) | Proposed child care subsidy rate (per cent) |
|---|---|---|
| Up to $66,958 | 85 | 100 |
| $66,959 to $171,958 | Tapered reduction to 50 | 100 |
| $171,959 to $251,248 | 50 | Stepped reduction from 100 to 50 |
| $251,249 to $341,248 | Tapered reduction from 50 to 20 | Stepped reduction from 50 to 10 |
| $341,249 to $351,248 | 20 | |
| $351,249 or more | 0 | 0 |
* Subsidy rates would step down by equal reductions for each $3,000 increase in family income.
Under the baseline policy setting Commonwealth preschool funding reduces Commonwealth child care funding. Necessary arrangements would be made under this proposal to ensure that child care funding would be calculated net of preschool funding.
Component 3 would provide $200 million of grant funding in 2019-20 to reduce waiting lists for community and non-profit (including local government-run) child care centres by increasing the number of spaces they offer. Grants would assist with capital works or increased workforce, depending on the specific needs of individual centres. This funding would be targeted towards high-need areas, where the gap in availability is greatest.
Component 1 of the proposal would have effect from 1 January 2021. Components 2 and 3 would have effect from 1 July 2019.