Commonwealth Support for Childcare

Current Issues

Commonwealth Support for Childcare

E-Brief: Online Only issued 26 April 2002; updated 6 July 2002

Greg McIntosh, Analysis and Policy
Janet Phillips, Information/E-links
Social Policy Group

Historical Overview Of Commonwealth Support/Policy

The Early Years

The Commonwealth Government first became financially involved with childcare in 1972. In that year the Child Care Act 1972 provided funding ($6.5 million for the first year) for non-profit organisations (including local government bodies) to operate centre-based day care facilities for children of working and sick parents. Funding was provided for capital grants, recurrent grants (to help pay qualified staff and provide for children in special need) and grants for research into matters relating to childcare. To be eligible for this funding the centre-based long day care centres had to operate for at least 48 weeks a year and be open for at least eight hours every working day.

A marked change in the philosophical underpinning of the provision of childcare occurred in 1974. In that year the Commonwealth decided that childcare support should go to all children and not just to children from families that were poor or needy. The Commonwealth, also in 1974, broadened its assistance for new childcare services to include pre-schools. The mid 1970s also saw funding being increasingly provided for other forms of childcare including family day care, outside school hours care and playgroups. From the mid 1970s to the early 1980s the main expansion in childcare places was the provision of family day care. This philosophical change and the expansion of childcare services is largely explained by a number of broad societal changes which were occurring at this time: a growing feminist movement accompanied by more women entering the workforce; better education levels and growing demands across the board for more government involvement, and funding in areas such as health, education and childcare.

Over the period 1983 85 the Commonwealth, in conjunction with the States and Territories, provided funding to allow an extra 6120 places, (5000 new centre-based long day care places and 1120 new outside school hours places), to be established in the system. Under these arrangements the Commonwealth and the States provided capital funding and the Commonwealth provided the recurrent funding for the new places.

In 1984 standardised fee relief for children in non-profit centre-based long day care centres was introduced. This fee relief, now called Childcare Assistance, was the main avenue through which the Commonwealth supported childcare. In the same year there was a move towards a needs-based planning approach to the provision of new childcare places. Prior to this time funds had been allocated on the basis of submissions from community groups to the Government, a practice that led to an inequitable distribution of childcare services. In some areas there was an oversupply of places and ,in others, an undersupply.

Further expansion of the system occurred between 1985 and 1987. During that time approximately 11 000 new centre-based long day care places, 2400 occasional care places, 5650 family day care places and the cash equivalent of 1000 places for outside-school-hours places and various other program support was provided. These places were funded with a mixture of Commonwealth and State/Territory funding. In the middle of this period (1986) the funding formula for long day non-profit care centres was changed so that funding was provided on a per child basis as opposed to paying operational funding linked to staff costs. As well, fee relief was extended and limits were put on the fees charged. These changes saw the emphasis in funding go from operational subsidies to income-based fee relief.

In 1988 the Commonwealth announced the National Childcare Strategy which aimed at providing an extra 30 000 childcare places through cost-sharing agreements with the States and Territories.

Overview of Recent Developments

In 1990, the National Childcare Strategy was expanded so as to allow for additional 50 000 places by the end of 1996 97. Another significant initiative in 1990 was the decision to extend fee relief (Childcare Assistance) to commercial childcare centres that had previously only been available to not for profit centres. This resulted in a major increase in the number of long day care places.

In 1994 the Commonwealth, via the New Growth Strategy, provided funds to local government and community organisations so as to increase the number of work-related childcare places. That year also saw two other significant developments: the introduction of a Quality Improvement and Accreditation system which was aimed at improving the quality and standard of approved childcare and the introduction of the Childcare Cash Rebate (CCR). The CCR was paid to families to help them with the cost of work related childcare expenses. After paying an initial amount ($19.50 per week) families were eligible for either a 30 per cent rebate or a 20 per cent rebate (depending on their income level) of the remaining cost of care, minus any Childcare Assistance received. Upper limits were placed on the maximum amount of CCR that could be paid.

The 1995 96 Budget saw the announcement of an expansion of family day care places and extra places for outside-school-hours care. Additional funding was also provided to the Supplementary Services Program.

Major changes were introduced into the childcare sector in the context of the 1996 97 Federal Budget. These changes included:

  • the removal of operational subsidies for community owned long day care centres. This measure took effect on 1 July 1997.
  • the limiting of Childcare Assistance to 50 hours per week per child as from 1 April 1997.
  • the freezing of the levels of Childcare Assistance and CCR Fee Ceilings for two years. This meant that planned indexations of the fee ceilings for these two payments, which were due on 1 April 1997 and 1 April 1998, did not proceed.
  • the reduction of the CCR from 30 per cent to 20 per cent for families whose incomes were above the Family Tax Initiative income cut off ($70 000 per annum for families with one child). This took effect from 1 April 1997.
  • the announcement that the Government would not proceed with uncommitted community based and employer sponsored centre based places that were part of the New Growth Strategy.

The following Budget (1997 98) also saw further childcare policy changes. The major changes included:

  • the provision of extra family day care places (500 in 1997 98 and 750 in 1999 00 and 750 in 2000 01), particularly in rural and remote areas.
  • tighter targeting of Childcare Assistance from 1 January 1998 a limit of 20 hours per week for each child utilising childcare for non-work purposes.
  • a limit, via the Planning System, on the number of new long day care places in the private sector. The limit was set at 7000 new places in 1998 and 7000 new places in 1999.
  • improved access and affordability for low income families with respect to school age care.

In March 1998 the Commonwealth Child Care Advisory Council was established. The Council advises the Minister on issues related to childcare and is also involved with research tasks. One of the first tasks of the new Council was to review childcare charging practices and the Quality Improvement and Accreditation System.

In December 1999 the Government announced two Family Crisis Child Care Pilot Projects aimed at assisting families in severe crisis (for example, families with drug addiction problems) to access childcare. Further pilots were announced in 2000 and 2001, including the Caravan Parks Family Crisis Pilot.

On 1 July 2000 a major reform was introduced to the childcare payments regime with the introduction of the new Childcare Benefit (CCB). The CCB replaced both Childcare Assistance and the Childcare Cash Rebate (CCR) and allows for varying levels of benefit, largely dependent on family income levels, for up to 50 hours of approved care per week see below for more details on the CCB.

As part of the Stronger Families and Communities Strategy (much of which was funded via the 2000 01 Federal Budget) a number of childcare initiatives were introduced, with an emphasis on more flexible services being provided and more services being made available in rural and remote areas. These included:

  • a new In-home Care initiative (commencing in January 2001) which provides for childcare in the family home for those who have difficulty accessing standard childcare services (for example, families in remote areas or for the children of shift workers) or whose needs are not able to be met by existing services.
  • the provision of family day care and outside school hours care in areas of need by the operators of long day care centres, including centres operated by the private for profit sector. This was also introduced in January 2001.
  • the provision of incentives to encourage private operators to establish childcare centres in rural areas where there is an unmet need. This initiative came into effect from 1 July 2001.

In early 2002 the Commonwealth Child Care Advisory Council released a major report on Child Care: Beyond 2001.

Summary of Current Commonwealth Assistance

The main types of Commonwealth assistance with respect to childcare are as follows:

  • direct financial assistance to families to help reduce the cost of care (Childcare Benefit CCB)
  • financial assistance to certain types of childcare in terms of establishment and operating costs
  • funding of quality assurance mechanisms
  • extra support in remote and rural areas
  • extra support for those with special needs
  • a National Planning System to help co-ordinate the growth of the system
  • funding of various information services

Some Key Resource Documents

Types of Childcare

There are a number of different types of childcare which are outlined below. The bulk of childcare provision is for children below school age but there is also provision of services to children in primary schools.

As well as the formal types of childcare listed below there is also an informal sector which caters for nearly twice as many children as does the formal sector. Informal care is non-regulated care that usually occurs in a private home. Informal care is typically provided by relatives and friends and may be paid or unpaid.

In December 2000 there were over 450 000 operational places in the various types of formal childcare across Australia and approximately 650 000 children utilising those places (Department of Family and Community Services Annual Report, 2000 01).

Long Day Care Centres

Long day care centres are generally open for at least 8 hours on each working day. They tend to be purpose-built facilities that provide childcare to children under school age. They are subject to relevant State/Territory legislation and must have a licence to operate. A variety of ownership/management models are found in this form of childcare including private operators, religious bodies, local councils, community organisations, employers, non-profit cooperatives and other non-profit services such as hospitals and TAFE institutions. As well as the requirements of being licensed and having to be open for at least 8 hours per day, to be eligible for the Childcare Benefit (CCB) these centres must also be registered with the National Childcare Accreditation Council and be involved in the Quality Improvement and Accreditation System. The care provided in these centres can be on a full-time, a part-time or on a casual basis.

Family Day Care

Family day care is care given in a home environment with the providers being part of a scheme that is supported and managed by a central non-profit coordinating unit. Family day care is mainly designed to cater for children under school age but it also does cater for school age children. A key advantage of this type of care is its flexibility and it can include long day care, occasional care, part-time care, before and after school care, emergency care and vacation care. The extent of licensing and regulation of family day care schemes varies from State to State. Families using Commonwealth approved family day care services are able, if eligible, to access the CCB.

Occasional Care

Occasional care is centre-based and is provided on a sessional or hourly basis to allow parents and carers access to care for short periods of time. Unlike other forms of Commonwealth sponsored care, occasional services are not subject to 'priority of access' guidelines (which essentially gives priority to children of working parents and to children with special needs) since it is not the intention that such services are primarily for working parents. The CCB is available to eligible families using Commonwealth approved centres. These centres must be licensed by the relevant State or Territory.


Pre-schools are also referred to as kindergartens in some States. They essentially provide services to children in the year prior to attending primary school and involve structured, sessional programs for two or three days a week. The primary responsibility for establishing and providing ongoing funding for pre-schools rests with the States but Commonwealth approved pre-school users are able, if eligible, to access the CCB. A distinguishing feature of pre-schools that differentiates them from other forms of childcare is that they usually only operate during the school term. As well, most pre-schools are required to have a qualified teacher on the staff.

Multi-functional Services

The Commonwealth has established a number (600 operational places as at June 2000) of multi-functional services in rural or regional areas that provide a range of different childcare services (for example, long day care, family day care, outside school hours care and vacation care) for children aged 0 to 12 years in the one facility. These facilities must be registered with the relevant State or Territory authority and because of their rural 'disadvantage' obtain additional operational support from the Commonwealth. Users, if eligible, are able to access the CCB.

Multi-functional Aboriginal Children's Centres

These services are similar to those provided by the rural multi-functional centres described above, but also include various cultural programs appropriate to the needs of Aboriginal and Torres Strait Islander children. As at June 2000 there were 1200 operational places in Multi-functional Aboriginal Children's centres. Users, if eligible, have access to the CCB.

Childcare for School Aged Children

Childcare for school aged children takes several forms, the main ones being family day care (see above) and outside-school-hours and vacation care. These latter forms of care are generally located close to primary schools and provide a range of activities as well as time for rest and homework. The service can be provided on regular or casual basis and some school aged care is provided in long day centres. The CCB is available to eligible parents.

Registered Care

This is care provided by a registered carer, for example, relative or friend. Families using registered care are eligible for the minimum rate of CCB.

In-Home Care

In-home care is a flexible form of care provided in the child's home. It is available to children who do not have access to a standard childcare service. It is mainly used by families in remote areas or where disability or illness prevents normal access.

Flexible and Innovative Services

This is essentially care provided for families in remote/rural areas who experience difficulty in obtaining standard care services. It can involve a combination of different childcare types.

Operational Places by Type of Childcare

The following table indicates the number of operational places by childcare type as at June 2000. (The latest 2000-01 Annual Report does not have an updated breakdown)

Table 1: Number of Operational Places, by Main Type, June 2000

Community Long Day Care

50 400


128 400

Employer and Non Profit

12 100

Family Day Care

66 300

Occasional Care

4 700



Multifunctional Aboriginal

1 200

Outside School Hours Care

179 700


443 400

Source: Department of Family and Community Services, Annual Report 1999 2000.

Government Assistance and Funding

The size and importance of the childcare sector can be judged from the fact that in 2000 01 the Commonwealth outlaid approximately $1.35 billion on childcare support (FACS, Annual Report 2000 01). The vast majority of current Commonwealth support is in the form of the Child Care Benefit which accounts for just over $1 billion of total government funding.

In summary form, the elements of Commonwealth childcare expenditure are (FACS Annual Report 2000 01 figures):

Table 2: Commonwealth Childcare Expenditure


2000 01 (Actual) $m

Childcare Benefit

1 037

Childcare for Eligible Parents


Support for Childcare


Administration etc.


Source: Department of Family and Community Services, Annual Report 2000 2001.

Table 3: Commonwealth Expenditure on Childcare 1992 93 to 1999 00










Childcare Assistance









Childcare Rebate









Subsidy to Services(a)























1 065



1 123

a Subsidy to Services includes Operational Subsidies for Community Based Long Day Care; Family Day Care; Outside School Hours Care; Year Round Care; Occasional Day Care and capital.
b Other includes Supplementary Services; Special Services; Program Support; Accreditation; Innovative Service Strategy; Special Needs Scheme; Reform of School Age etc.
c Projected expenditure for 1999 2000 includes additional estimates.
d The allocation for Childcare Rebate for 1999 2000 is to be revised by $12 million to $135 million, which will also reduce the total by $12 million.

Source: Figures provided by the Department of Family and Community Services

Childcare Payments

(1) Childcare Benefit

The Childcare Benefit (CCB) was introduced in July 2000 and replaced Childcare Assistance and the Childcare Cash Rebate. Families can claim up to 50 hours of Childcare Benefit for approved childcare if they are either working; are looking for work; are involved with volunteer work; are studying or training; if they have a disability or if they are caring for a child that has a disability.

In the December quarter of 2000, 444 400 families had claimed the CCB as a fee reduction and 26 500 families had used childcare but did not claim the CCB as a fee reduction.

Families who earn less than $29 857 a year are eligible for the maximum rate of CCB which is $129 per week for one child rising to $140 per week per child for families with three or more children. Part rates of CCB are paid for families with incomes higher than $29 857 per year and there is a minimum rate of CCB ($21.70 per child per week) for families who have incomes in excess of $85 653 (with one child). Higher income rates apply for families with more than one child.

For more details on CCB rates see this Centrelink information page.

For background on the introduction of the CCB in July 2000 see The New Childcare Benefit, Research Note no. 28, 1999 2000.

(2) Childcare for Eligible Parents Undergoing Training

This benefit goes to those participating in the Jobs, Education and Training Program (JET) or the Work for the Dole initiative. JET helps sole parents, low income parents or carers to re-enter the workforce and eligible participants can have their childcare costs paid for. A similar arrangement applies to those involved with Work for the Dole see below for further details.

Other Types of Commonwealth Support

The following detailed description of other types of Commonwealth assistance for childcare comes directly from Planning to Succeed in Child Care (November 2001), a document published by the Department of Family and Community Services for childcare providers.

Other Commonwealth Assistance

Children with special needs

The Commonwealth Government funds two complementary programs to help the families of children with additional needs gain access to childcare services. These programs, the Supplementary Services Program and the Special Needs Subsidy Scheme, are available in approved services, for:

  • children from diverse cultural and linguistic backgrounds
  • children with a disability
  • Aboriginal and Torres Strait Islander children, and
  • Australian South Sea Islander children

Supplementary Services Program

The Supplementary Services Program (SUPS) funds the engagement of specialised workers to provide support and training to childcare staff to provide suitable care and involve children with additional needs in the service's programs.

Depending on the need(s) of the childcare service, SUPS workers may provide:

  • training for childcare workers about the care of children with additional needs;
  • assistance with programming and planning for these children
  • short-term relief to a service to enable a childcare worker to work with children with additional needs
  • tapes, books, information sheets and advice on particular cultures or developmental needs
  • specialised resources such as toys, videos and equipment, and
  • information to parents so they can make informed choices about childcare.

Special Needs Subsidy Scheme

The Special Needs Subsidy Scheme (SNSS) aims to help families of children with ongoing high support needs, particularly children with a disability, to have the opportunity to work, study or participate in the community. Children with ongoing high support needs may include:

  • children with disabilities
  • children undergoing continuing assessment for such disabilities or developmental delay, and
  • refugee children who have been subjected to torture or trauma

The type of support offered under the scheme will vary depending on the needs of the child and the service. The support available through SNSS may include funding for ongoing additional staffing, SUPS advice, training and specialised resources and/or equipment essential for including the child.

Jobs, Education and Training (Child Care)

The Jobs, Education and Training (JET) (Child Care) program aims to help Centrelink JET clients, primarily recipients of Parenting Payment, to enter or re-enter the work force by providing an integrated program of advice, childcare, training and employment opportunities. JET advisers in Centrelink are the primary customer contacts. JET ChildCare Resource Workers contracted by the Commonwealth Department of Family and Community Services locate childcare places and arrange funding for temporary additional places if necessary and agreed.

Work for the Dole

This is a Federal Government initiative that aims to give young unemployed people a chance to foster appropriate work habits through participation in projects that are supported by the community and of value to the community. WFD participants requiring childcare during the period of their project will be referred by Centrelink to JET ChildCare Resource Workers, who will contact services to arrange care. Childcare arranged by these workers and approved by the Commonwealth Department of Family and Community Services will be fully funded by the WFD program.

Program support

The Commonwealth provides funding to childcare organisations in each State and Territory for training, advice and resources for Commonwealth-funded childcare services. The funding is provided to support good quality care for children and effective management of services.

Grants to childcare services

Childcare providers may have access to a range of Commonwealth grants to help establish or operate their services.

Establishment grants

Establishment grants are one-off grants available for new family day care services to employ a director or coordinator to perform necessary tasks prior to opening. Tasks might include such things as advertising the service, taking enrolments and purchasing toys and equipment.

New outside school hours care services also receive establishment funding, paid at a rate per approved place, for the first two years of operation.

Set-up grants

Set-up grants are one-off payments available to newly approved family day care and outside school hours care services to help with costs such as telephone and insurance.

Equipment grants

Equipment grants are one-off payments for the purchase of toys and equipment for family day care and outside school hours care services. Grants are available for establishing toy and equipment libraries and for buying office furniture and equipment.

Capital assistance

Commonwealth assistance is available on a competitive basis to eligible community-based centres:

  • minor capital upgrades for urgent capital works related to health, safety or licensing issues, and
  • capital assistance to maintain old centres, available to enable major refurbishment or relocation of old but nevertheless viable centres.

Disadvantaged area subsidy

The Disadvantaged Area Subsidy is available to some community-based centres and outside school hours care services. The aim of the subsidy is to ensure that families in disadvantaged areas, particularly rural and remote locations, maintain access to work-related childcare.

Private Provider Initiative for Long Day Care

Incentives are available to encourage private operators to set up long day care centres in rural and remote communities of Australia where a need for such care exists and no other care is currently available.

These incentives provide funding for two years to approved private operators to assist in setting up a long day care centre in a rural or remote community.

Operational subsidy for family day care

Operational subsidy is paid to family day care schemes to help with the general costs of operating a service. It recognises the important role of central coordination units in supporting quality care, efficient operations of schemes and flexible care arrangements.

Regional travel assistance grants for family day care

Regional Travel Assistance Grants help family day care schemes located in rural and remote areas or schemes that have a majority of carers located in rural or remote areas. These grants are provided in recognition of additional travel costs incurred by coordination unit staff in adequately monitoring, supporting and training carers in these areas.

Disabled Supplementary Service payment for family day care

Disabled Supplementary Service (D-SUPS) payments are paid to carers in family day care schemes who care for children with a disability. To be eligible for D-SUPS, the child in care must have a disability resulting in a need for extra care and attention.

D-SUPS funds are payments in recognition that caring for a child with a disability may:

  • require the carer to have special skills
  • involve the carer in more detailed training and supervision of the child
  • limit the number of children a carer can care for and therefore limit the carer's income, and
  • involve the supervision of medication

Levels of payment to the carer relate to the level of disability assessment reflecting the extra care and attention that the child requires, compared to other children, as determined/assessed by the coordinator of the scheme.

(Department of Family and Community Services, Planning To Succeed in Child Care, November 2001.)

State/Local Government Support

State/Territory Funding/Other Support

The States and Territories spent approximately $600 million on childcare services in Australia in 2000 01. This compares to total outlays from the Commonwealth in the same year of approximately $1.3 billion. As well as directly delivering some childcare services, especially with regard to pre-school provision, the States and Territories also allocate some operational and capital funding to non-government service providers and are involved with various licensing/standards setting for childcare services. They also provide a range of information and support services for providers, give advice and information to parents and provide dispute resolution and complaints mechanisms for users of childcare services.

Local Government Support

Most local governments are involved with setting up and running childcare services including centre-based long day care centres, family day care services, occasional care services and outside-school-hours services. They also help offset the costs of providing childcare primarily through the contribution of land and administrative support.

Childcare Legislation

The main legislation that underpins the childcare system includes the Child Care Act 1972; Family Assistance Act 1999; Family Assistance (Administration) Act 1999 and Schedules 5 and 6 of the A New Tax System (Family Assistance and Related Measures) Act 2000.

For full details on childcare legislation see the Commonwealth Department of Family and Community Services (FACS), page on Child Care Legislation and Consolidated Disallowable Instruments.


National Peak Childcare Bodies

For details on the main childcare peak bodies see the FACS page National Child Care Peaks.

State Childcare Peak Bodies

For details on the main State Peak Bodies see the FACS page State Child Care Peak Bodies.

Department Of Family and Community Services (FACS)

For Departmental childcare contacts see Contact Details.

Other useful pages:

Child Care Support - FACS output group

Child Care Program page

Census of Child Care Services 1999


Australian Bureau of Statistics, Child Care Australia 1999

Centrelink, Child Care Information

Commonwealth Child Care Advisory Council

Productivity Commission, Report on Government Services 2002, Chapter 14: Children's services


Canadian Childcare Resource and Research Unit

New Zealand Childcare Association

UK ChildcareLink

UK Daycare Trust

UK National Childcare Strategy

US Department of Health Child Care Bureau

US National Child Care Information Center

US National Institute on Early Childhood Development and Education

US National Network for Child Care


For copyright reasons some linked items are only available to Members of Parliament.

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