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$3.6 Billion Extension Locks in 15% Pay Rise for Childcare Workers Until 2028
The Australian federal government has committed an additional $3.6 billion to extend a 15% pay rise for early childhood education and care workers until the end of 2028. The funding, originally set to expire in late 2025, will cover approximately 200,000 workers and aims to prevent a drop in wages while broader industry pay reforms are implemented.
"Early educators do incredibly important work and they deserve to be fairly paid for it." – Prime Minister Anthony Albanese
Funding and Eligibility
The wage subsidy applies to around 11,500 employers, representing an estimated 80% of childcare services in Australia. The 15% increase will also be extended to family day care and in-home care workers starting in July 2026.
To receive the funding, childcare centres must agree to limit fee increases and are prohibited from passing the additional costs on to families. From July 2027, services must also meet the National Quality Standard to remain eligible, with non-compliant centres potentially facing funding cuts or suspension.
Impact on Wages and Workforce
According to government figures, the average full-time childcare worker now receives an additional $196 per week compared to pre-increase wages. With the recent minimum wage adjustment, this amount rises to $255 per week. Early childhood teachers are receiving an increase of $410 per week.
The government has reported a workforce increase of approximately 20,000 childcare workers since the wage increase began in 2024, alongside a 31% decrease in job vacancies. Fees at centres that opted into the program grew at approximately half the rate of non-participating centres.
Education Minister Jason Clare stated that the funding "locks their pay rise in" and that the government would consider extending the subsidy beyond 2029.
Background and Timeline
The initial wage subsidy was announced in 2024 and was due to expire. The United Workers Union, which represents childcare workers, had planned a strike for July following the May federal budget, which did not specify the scheme's future.
The government had anticipated that the Fair Work Commission's pay increases for female-dominated industries would replace the subsidy. However, the commission spread the increases until June 2029, creating a funding gap.
The extension will cover the period until the Fair Work Commission's gender-based undervaluation pay rise is fully implemented. Workers were awarded increases of 15-23% depending on classification, with final implementation by June 2029. The government's funding will run out in November 2028, but the government stated that workers will not face a sudden pay reduction, as standard wages will have increased by that point.
United Workers Union national president Jo Schofield said the announcement makes the pay rise essentially permanent by bridging the gap until the Fair Work Commission enforces the full increase in 2029.
Sector Context
- Childcare costs rose 9% in the year to April 2026, above general inflation.
- The Australian Childcare Alliance had warned that daycare fees would rise without government subsidy extension.
- A 2024 union survey estimated that over 60% of early childhood educators planned to leave the sector within three years.