Albanese signs up to $1.3b childcare fix economists have recommended for years

It found that it limited care for lower-income families and their children without a substantial boost to the number of people available to enter the workforce.

“The childcare subsidy activity test should be removed. Children’s participation in early childhood education and care should not depend on their parents’ activity,” it found.

Families without access to subsidised hours, often on low incomes, were more likely to accrue “substantial” childcare bills and in some cases, debts to childcare providers.

Separate research for the Thrive By Five organisation found at least 126,000 families, including many from Indigenous backgrounds, missed out on early childhood education because of the activity test.

It found the test stopped 40,000 people, mostly women and more than half of them single parents, from entering the workforce and costing the national economy about $4.5 billion. Casual workers with uncertain hours found it particularly difficult to qualify under the existing test.

Abolishing the test would cost the economy about $1.3 billion a year, it found, but this would be offset by higher income tax receipts and lower government welfare payments.

Albanese, who last month used an election campaign-like rally in Adelaide to promise 100,000 fee-free TAFE positions, will deliver the speech in the electorate of Chandler-Mather, who has had an antagonistic relationship with the prime minister since he took Griffith from Labor in 2022.

The prime minister will also use the speech to distinguish between the government’s approach to public assistance programs such as childcare and the Coalition’s.

“I know this for certain: parents do not need to work a certain number of hours a week to want the best possible education for their child. The aspiration to give your children the best chance in life drives every parent – whoever you are and wherever you live,” he will say.

“The Liberals might treat early education like a luxury parents have to prove they need. We know early education is an opportunity every child deserves.”

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The government’s focus on childcare has attracted criticism from some parts of the Coalition for not focusing on those people who want to stay at home with their young children.

But Albanese will argue the three-day childcare guarantee was a choice for parents.

“Let me be clear: universal and accessible doesn’t mean compulsory or mandatory. The choice will be up to parents, as always, as it should be,” he will say.