In a significant shift for Australian families, the Federal Government has announced a major overhaul of the Child Care Subsidy (CCS) system.1 Starting from 5 January 2026, the existing “activity test”—which has long linked child care subsidies to a parent’s hours of work, study, or volunteering—will be replaced by a more accessible model known as the 3-Day Guarantee.2 This reform is designed to dismantle the barriers that have historically prevented low-income and vulnerable families from accessing early childhood education and care (ECEC).3
Understanding the New “3-Day Guarantee”
The core of this shake-up is the introduction of a baseline entitlement for all eligible families.4 Under the new rules, every family eligible for the Child Care Subsidy will be guaranteed at least 72 hours of subsidised care per fortnight, regardless of their activity level.5 This is roughly equivalent to three days of care per week.6 Previously, families who did not meet specific activity thresholds (less than 8 hours of work or study per fortnight) were often capped at 24 hours of care or, in many cases, received no subsidy at all if their income exceeded certain limits.7
Summary of CCS Entitlement Changes (Effective Jan 2026)
| Family Category | Current Activity Requirement | New Fortnightly Subsidised Hours |
| All Eligible Families | Varies (0 to 100 hours) | 72 Hours (Minimum) |
| First Nations Children | At least 36 hours | 100 Hours |
| High Activity Families | > 48 hours participation | 100 Hours |
| Families with Exemptions | Specific criteria | 100 Hours |
Scrapping the Activity Test Barrier
For years, advocacy groups and the Productivity Commission have argued that the activity test unfairly penalised the children of parents with irregular work hours, such as casual employees or those in the “gig economy.”8 By decoupling the subsidy from a parent’s clock-in hours, the government aims to ensure that a child’s early education is not dependent on their parent’s employment status.9 This move is expected to help over 100,000 families gain access to more subsidised hours, with tens of thousands of low-income households set to be significantly better off financially.10
Boosting Support for First Nations Families
A major pillar of this reform is the enhanced support for Aboriginal and Torres Strait Islander children.11 Recognizing the vital role of early education in closing the gap, the government has mandated that these families will be entitled to 100 hours of subsidised care per fortnight.12 This entitlement applies regardless of the parents’ activity levels, ensuring that First Nations children have the highest level of support to attend early learning centers.13 This is a substantial increase from the current minimum of 36 hours.
Impact on Workforce Participation and Cost of Living
While the primary focus is on child development, the economic implications are equally notable. By providing a 3-day guarantee, the government is making it easier for stay-at-home parents or those looking for work to re-enter the labor market without the immediate “cliff edge” of high child care costs. For a family earning between $50,000 and $100,000, these changes could lead to an average annual saving of approximately $1,370 to $1,460.14 This direct cost-of-living relief is a welcome change as households navigate rising inflation and service fees.15
Implementation: What Parents Need to Do
The transition to the new system is designed to be seamless for those already receiving the subsidy. Families currently enrolled in the CCS system do not need to take any manual action; Services Australia will automatically update entitlements based on the information already on file.16 However, families who were previously ineligible due to low activity levels are encouraged to lodge a new claim before the January 2026 start date to ensure they benefit from the 72-hour baseline as soon as it takes effect.
Looking Toward a Universal System
This reform is viewed as a stepping stone toward a truly universal early childhood education system.17 By shifting the focus from “parental activity” to “child entitlement,” the policy aligns Australia more closely with international standards where early education is treated as a fundamental right rather than a workplace benefit. The government is also coupling these changes with a $1 billion Building Early Education Fund to create more child care places in areas where demand is expected to surge following these updates.18
Important Financial Considerations
It is essential to note that while the number of subsidised hours is changing, the CCS percentage (how much of the hourly fee the government covers) still depends on your family’s annual income.19 Additionally, the “3-Day Guarantee” does not guarantee a physical spot at a center; families must still find a provider with available vacancies.20 Parents will also continue to be responsible for paying the “gap fee”—the difference between the provider’s fee and the government subsidy.
FAQs
Q1. When exactly do these changes take effect?
The new 3-Day Guarantee and the replacement of the activity test are scheduled to begin on 5 January 2026.22
Q2. Can I still get 100 hours of subsidy per fortnight?
Yes. Families where both parents (or a single parent) engage in more than 48 hours of recognised participation per fortnight, or those with valid exemptions, remain eligible for the maximum 100 hours.23
Q3. Do I need to contact Centrelink to get the extra hours?
If you already receive CCS, you generally do not need to do anything. The system will automatically adjust your hours. If you are not currently receiving CCS, you should apply via MyGov.
Disclaimer
The content is intended for informational purposes only. you can check the officially sources our aim is to provide accurate information to all users.
