Childcare fees alert: find funds to lift pay

Monday, June 15, 2026

Australian childcare providers warn that fees could rise by about 10 percent before year-end as government funding for the Worker Retention Payment to sustain early childhood educator wages expires on November 30. Without a permanent funding commitment, centres face either cutting staff pay or passing higher costs to families, with unions threatening strikes and closures if the government fails to act by mid-July.

Families across Australia could face a roughly 10 percent increase in childcare fees before the end of the year as funding for the government’s wage subsidy program for early childhood educators is set to expire. The Australian Childcare Alliance (ACA), representing approximately 2,500 providers serving 360,000 families, has warned that fees will rise unless permanent government support is secured.

The wage subsidy, known as the Worker Retention Payment, was introduced to help childcare centres cover a 15 percent pay increase to staff, a boost aimed at addressing workforce retention challenges. The federal government has invested $3.6 billion since 2024 to fund the pay rise, which has lifted educators’ earnings by about $200 per week. However, this funding is guaranteed only until November 30, and without further support, centres face a choice between cutting wages or passing the costs on to families.

Paul Mondo, president of the ACA, noted that centres must also absorb a 4.75 percent increase to the minimum wage set to take effect on July 1. He urged the government to allow childcare operators to raise fees beyond the current 4.2 percent annual cap after it expires in August, warning that ongoing subsidies are essential to maintaining staff and minimizing impacts on families already under financial pressure.

The United Workers Union (UWU), which represents early childhood educators, has set a “hard deadline” of July 15 for the Albanese government to confirm permanent funding for the pay rise. Carolyn Smith, the union’s early education director, stressed the urgency of the matter, indicating that failure to secure funding could lead to a nationwide strike and centre closures. “We want a funding commitment that is absolutely guaranteed,” she said, underscoring concerns that pay increases should not come at the expense of families facing rising living costs.

The government’s May budget included $1 billion earmarked to sustain the pay rise until late November, tied to the fee cap arrangement. Once the subsidy ends, childcare services could either increase fees by up to 10 percent to cover wage expenses or reduce workers’ pay by as much as 15 percent.

Federal Treasurer Jim Chalmers, Education Minister Jason Clare, and Early Childhood Education Minister Jess Walsh have acknowledged the funding challenge and indicated ongoing work to find a solution. Senator Walsh, a former UWU state secretary who advocated for the pay rise, emphasized the importance of the wage boost for building a stable workforce to support quality childcare services.

Despite these assurances, neither unions nor childcare providers have been formally consulted about the government’s plans to address the forthcoming funding gap, fueling uncertainty and mounting tensions within the sector as the deadline approaches.