Centrelink is set to implement a major overhaul of Australia’s childcare subsidy system, bringing significant changes for families across the country. Starting on January 5, 2026, parents will no longer be required to meet strict work or study criteria to qualify for subsidised childcare. Instead, a new “three-day guarantee” will provide a guaranteed amount of childcare assistance.
This change aims to make early childhood education and care (ECEC) more accessible to all families, regardless of their employment status. According to Finance Yahoo, these updates will affect a large portion of Australian families, leading to greater financial relief and more flexible options for childcare.
The End of the Activity Test
The biggest change coming to the childcare subsidy is the elimination of the activity test. Introduced in 2018, the activity test was a requirement that parents had to meet in order to qualify for the subsidy. Parents needed to be working, studying, or volunteering a certain number of hours each fortnight to access subsidised childcare.
The system often left low-income families struggling to qualify, creating barriers for those who didn’t have enough work hours but still needed affordable care.
Under the new rules, families will automatically receive at least 72 hours of subsidised childcare every fortnight. This guaranteed amount will be available to all eligible families, no matter how many hours parents work, study, or volunteer.
The government estimates that more than 100,000 families will benefit from these changes, with around 66,700 families expected to start taking advantage of the new rules in the first full year of implementation.
Services Australia explained,
From 5 January 2026, all eligible families can get at least 72 hours of subsidised child care each fortnight. These changes are known as the 3 Day Guarantee.
This marks a significant shift towards making childcare more accessible, regardless of a parent’s work status.
Financial Relief for Families
The revised childcare subsidy will significantly reduce out-of-pocket costs for many families. Families earning between $50,000 and $100,000 annually are expected to save an average of $1,460 per year under the new system. This is a substantial boost, especially for families with young children who are already managing various expenses.
Before this change, parents had to work between 16 and 48 hours each fortnight to qualify for 72 hours of subsidised care. Now, regardless of work hours, families will be entitled to this level of support. The government hopes this will offer much-needed financial relief to parents who were previously excluded due to strict work requirements.
However, it’s important to note that families will still need to pay gap fees or any out-of-pocket costs charged by their childcare provider. These costs are set by the individual providers, but the subsidy will cover a larger portion of the expenses. This is an important point to keep in mind for those budgeting for future childcare costs.
Who Will Benefit Most from the Changes?
The biggest winners from these changes will be families with lower incomes, as well as those who previously struggled to meet the activity test. The new system does not penalise families who may be in non-traditional work arrangements, such as part-time or casual employment, or those who aren’t working but are still in need of childcare.
Additionally, Aboriginal and Torres Strait Islander children will be eligible for up to 100 hours of subsidised childcare per fortnight, ensuring that these communities also benefit from the expanded access to education and care.
Services Australia noted,
Aboriginal and Torres Strait Islander children can get 100 hours of subsidised child care per fortnight.
This change was made to support greater educational opportunities for children in these communities, an initiative not always available under the old system.
For families already receiving the childcare subsidy, there’s no action required on their part. Services Australia will automatically apply the changes, so parents can expect a seamless transition as the new rules come into effect. Families earning more than $535,279 in the 2025-2026 financial year will not be eligible for subsidised childcare, consistent with current eligibility requirements.
