Labor's subsidized childcare policy explained: A three-day guarantee

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Parents will have access to three days of guaranteed subsidised childcare next year after Labor was pressured to bring the new laws forward ahead of the federal election.

In what might be the final parliamentary sitting day before the election — due by 17 May — the Albanese government’s signature policy passed the Senate on Thursday after the Greens brought on a vote.

The Opposition did not back the legislation.

What do the changes mean?

The ‘three-day guarantee’, first , will remove the current activity test to guarantee subsidies for families earning up to $530,000, in a bid by Labor to lay down the foundations for a universal early education system.

It comes after a recommended the test be scrapped.

Activity levels are used to determine how many hours of subsidised childcare people are entitled to each fortnight.

The test requires parents to be in paid work or other approved activities to access a childcare subsidy and determines the level of government support based on the number of hours spent doing those activities.

Families that earn more than $533,280 will remain ineligible for subsidised childcare.

Why has the activity test faced criticism?

The activity test has been criticised by child advocates for imposing a “barrier” on access to childcare for families.

Early Childhood Education Minister Anne Aly says the test locks out the children who can most benefit from access and has not increased workforce participation from parents.

Anthony Albanese is sitting in a chair reading a book to children who are on the floor. Another man in a dark suit is sitting next to him.

Prime Minister Anthony Albanese announced Labor’s childcare subsidy plan last year. Source: AAP / Diego Fedele

Georgie Dent, chief executive of parent and carer advocacy organisation The Parenthood, said the activity test was “completely misaligned” with reality.

“At least 126,000 children, many from low-income, First Nations or single-parent families, are excluded from receiving early childhood education during their most formative years, entrenching inequality and costing the government more,” she said.

Catherine Liddle is the chief executive of the Secretariat of National Aboriginal and Islander Child Care, the peak body for Aboriginal and Torres Strait Islander children.

She said when First Nations children and families are “supported through access to wrap-around services in Aboriginal community-controlled centres, studies show we get better outcomes for those children not only in the early years but throughout their life”.

What does the Opposition say?

The Coalition is opposed to the change, having previously argued that subsidies should go towards working parents.

Last year, after Albanese proposed the legislation, deputy Opposition leader Sussan Ley said the activity test was necessary to keep access “sustainable” because there were “very few places” available in childcare centres.

“We have to have that priority for working families because that’s got to be central to the actual provision of childcare.”