For working families with young children, childcare is often the single largest household expense after the mortgage or rent. In many parts of Australia, a full-time long day care place can cost more than $130 per day before any government assistance. Across a year, that adds up to figures that rival private school fees or a second car.
Understanding how childcare pricing works, what subsidies are available, and how to navigate the system can save families thousands of dollars per year. This article breaks it all down with current data.
Average Daily Fees by Childcare Type
Childcare in Australia comes in several forms, each with its own cost structure. The fees below are based on data from the Australian Government’s Child Care Subsidy reports and the Productivity Commission, reflecting 2025-2026 averages.
Long Day Care (LDC)
Long day care centres are the most common form of formal childcare. They cater to children from birth to school age and typically operate from around 7:00 am to 6:00 pm on weekdays.
| State / Territory | Average Daily Fee |
|---|---|
| New South Wales | $130 - $170 |
| Victoria | $120 - $155 |
| Queensland | $115 - $145 |
| Western Australia | $110 - $140 |
| South Australia | $105 - $135 |
| Tasmania | $105 - $130 |
| Northern Territory | $110 - $140 |
| ACT | $135 - $175 |
Inner-city centres in Sydney and Canberra are the most expensive in the country, with some premium centres charging upwards of $200 per day. Outer suburban and regional centres tend to sit at the lower end of the ranges above.
Family Day Care (FDC)
Family day care is provided by registered educators in their own homes, typically caring for small groups of up to four children (or seven with an assistant). It offers a more home-like environment and can be more flexible with hours.
Average daily fees for family day care are generally 10 to 20 per cent lower than long day care, sitting around $90 to $130 per day in most states. The smaller group sizes and home-based setting appeal to families looking for a less institutional environment for babies and toddlers.
Outside School Hours Care (OSHC)
Outside school hours care covers before-school, after-school, and school holiday programs for primary school-aged children. Fees vary significantly between before-school and after-school sessions.
| Session Type | Average Fee |
|---|---|
| Before-school care | $15 - $30 per session |
| After-school care | $25 - $45 per session |
| Vacation care (full day) | $55 - $80 per day |
OSHC is considerably cheaper per session than full-day care, but costs can still add up for families using both before and after-school care five days per week. A typical weekly bill for combined before and after-school care is $200 to $375 before subsidies.
Occasional Care and In-Home Care
Occasional care (sessional, ad hoc care at a centre) and in-home care (a registered educator comes to your home) are less common but serve specific needs. In-home care is typically the most expensive option on a per-hour basis but can be cost-effective for families with multiple children, shift workers, or children with additional needs.
The Child Care Subsidy Explained
The Child Care Subsidy (CCS) is the Australian Government’s primary mechanism for making childcare more affordable. It is paid directly to childcare providers, reducing the gap fee that families need to pay out of pocket.
How It Works
The CCS covers a percentage of the daily fee, up to an hourly fee cap set by the government. The percentage you receive depends on your combined family income.
As of 2025-2026, the CCS rates are approximately:
| Combined Family Income | CCS Percentage |
|---|---|
| Up to $83,280 | 90% |
| $83,281 - $173,163 | 90%, tapering to 0% |
| $173,164 - $353,680 | Tapers from a base amount |
| $353,681 - $530,000 | Reduced rate, tapering further |
| Above $530,000 | 0% |
Note: These thresholds are indexed annually and may have changed. Always check the current rates on the Services Australia website.
The income test is based on your combined family adjusted taxable income from the most recent financial year, as assessed by the ATO.
Hourly Fee Caps
The government sets an hourly fee cap, which is the maximum hourly rate it will subsidise. If your childcare provider charges more than the cap, you pay the difference in full on top of your gap fee.
As of 2025-2026, the hourly fee caps are approximately:
| Care Type | Hourly Fee Cap |
|---|---|
| Centre-based day care | $13.73 |
| Family day care | $12.41 |
| Outside school hours care | $13.19 |
| In-home care | $33.47 (shared across children) |
These caps have been increasing, but in high-cost areas like inner Sydney and Canberra, many centres charge above the cap, meaning families bear a larger out-of-pocket burden.
Activity Test
To receive the maximum hours of subsidised care, at least one parent must meet an activity test. This measures the number of hours per fortnight you spend in recognised activities such as paid work, study, training, volunteering, or looking for work.
| Activity Hours per Fortnight | Maximum Subsidised Hours |
|---|---|
| 8 - 16 hours | 36 hours per fortnight |
| 16 - 48 hours | 72 hours per fortnight |
| More than 48 hours | 100 hours per fortnight |
Families earning under approximately $83,280 are exempt from the activity test and can access up to 36 subsidised hours per fortnight regardless of activity.
Out-of-Pocket Costs After Subsidy
The amount families actually pay depends on their income, the daily fee, and whether the centre charges above the hourly fee cap. Here are some worked examples to illustrate:
Example 1: Middle-Income Family, Moderate Fee
- Combined income: $120,000
- CCS rate: Approximately 72%
- Daily fee: $130 (centre-based, within fee cap)
- Subsidised amount: $93.60
- Out-of-pocket per day: $36.40
- Annual cost (5 days/week, 48 weeks): Approximately $8,736
Example 2: Higher-Income Family, High-Fee Centre
- Combined income: $200,000
- CCS rate: Approximately 42%
- Daily fee: $165 (inner-city centre, above fee cap)
- Subsidised amount: $57.50 (calculated on fee cap, not actual fee)
- Out-of-pocket per day: $107.50
- Annual cost (5 days/week, 48 weeks): Approximately $25,800
Example 3: Lower-Income Family
- Combined income: $75,000
- CCS rate: 90%
- Daily fee: $120 (suburban centre)
- Subsidised amount: $108
- Out-of-pocket per day: $12
- Annual cost (5 days/week, 48 weeks): Approximately $2,880
These examples show how dramatically the out-of-pocket cost varies. For families in the middle-income bracket, childcare for one child can easily consume $8,000 to $15,000 per year after subsidies. For two children in full-time care, the annual cost can exceed the national median mortgage payment.
State-by-State Comparison
Childcare costs vary meaningfully between states and territories, driven by property costs, wage levels, regulatory requirements, and local demand.
Most Expensive
ACT and inner Sydney (NSW) consistently have the highest average daily fees. The ACT’s high average household income and concentration of professional workers creates strong demand, pushing prices up. Inner Sydney faces similar dynamics compounded by extremely high commercial rents.
Mid-Range
Melbourne (VIC), Brisbane (QLD), and Perth (WA) sit in the middle tier. Outer suburban areas in these cities tend to be more affordable, while inner-city and affluent suburbs push toward the higher end.
Most Affordable
South Australia, Tasmania, and regional areas across all states tend to have the lowest average fees. However, availability can be more limited, with longer waitlists and fewer centres to choose from.
The Regional Paradox
Regional and rural families often face a frustrating paradox: fees may be lower in headline terms, but there are fewer centres, longer waitlists, and less flexibility. Some regional areas have such limited childcare supply that families drive 30 minutes or more to access a place, negating any cost savings through time and fuel costs.
The Australian Government has introduced additional subsidies and incentives for childcare providers in regional and remote areas, but supply constraints remain a significant issue.
Tips for Reducing Childcare Costs
While you cannot control the CCS rates or the market price of childcare, there are practical strategies to manage the cost.
Choose the Right Number of Days
Carefully assess how many days of care you actually need. The difference between four and five days per week can save $5,000 to $8,000 per year after subsidies. If one parent can adjust their work schedule to cover a day at home, the savings are substantial.
Consider Family Day Care
Family day care is often 10 to 20 per cent cheaper than centre-based long day care and is still eligible for the CCS. The smaller group sizes can also suit younger children. Check the My Child Care website for registered family day care providers in your area.
Use Grandparents or Informal Care Strategically
If grandparents or other family members can cover one or two days per week, this directly reduces the number of paid care days. This is the most common cost-reduction strategy used by Australian families, according to the Household, Income and Labour Dynamics in Australia (HILDA) Survey.
Optimise Your CCS Entitlement
Ensure your activity test hours are accurately reported to Centrelink. If you are studying, volunteering, or looking for work, these hours count toward your activity test and can unlock additional subsidised hours.
If your family income changes during the year (for example, if one parent takes unpaid leave), update your income estimate with Centrelink to ensure you receive the correct subsidy rate. An outdated income estimate can mean you are under-subsidised during the year (and receive a lump sum at tax time) or over-subsidised (and face a debt).
Check for Employer Salary Packaging
Some employers offer salary packaging or novated arrangements for childcare expenses. While this is not widespread, it is worth checking with your HR department, as it can provide a pre-tax benefit that reduces your effective cost.
Compare Centres on Value, Not Just Price
A slightly more expensive centre with better educator-to-child ratios, included meals, and no extra charges for nappies or sunscreen can work out cheaper than a lower-fee centre with multiple add-ons. When comparing, ask about:
- Whether meals and snacks are included or charged separately
- Whether the centre provides nappies, wipes, and sunscreen or requires you to supply them
- Late pick-up fees (typically $1 to $2 per minute after closing time)
- Booking flexibility: can you swap days, or are you locked into a fixed schedule?
The Waitlist Reality
In many parts of Australia, securing a childcare place is a challenge in itself. Waitlists of 6 to 12 months are common in high-demand suburbs, and some families report waiting up to 18 months for a place at their preferred centre.
When to Start Looking
The general advice is to put your name on waitlists as early as possible, ideally during pregnancy. Some centres accept waitlist registrations from the first trimester. Waitlist fees of $20 to $50 are common and are usually non-refundable.
Waitlist Strategies
- Register at multiple centres: Do not put all your eggs in one basket. Register at three to five centres to improve your chances.
- Be flexible on start dates: Centres often have places available mid-term that they cannot fill because families want a specific start date.
- Consider less popular days: Monday and Friday are the most in-demand days. Tuesday, Wednesday, and Thursday places are often easier to secure.
- Ask about siblings priority: Many centres give priority to families who already have a child enrolled. If you are planning a second child, staying with the same centre can help.
What If You Cannot Get a Place?
If your preferred centres are full, consider family day care, which often has shorter waitlists. In-home care is another option, particularly for families with multiple children or non-standard work hours. As a last resort, nanny sharing (splitting a private nanny with another family) can be cost-effective, though it does not attract CCS unless the nanny is registered under an approved in-home care service.
The Bigger Picture: Is Childcare Worth It Financially?
This is a question many families wrestle with, particularly when one parent’s entire take-home pay (or close to it) goes toward childcare fees. The short-term arithmetic can make it look like a break-even proposition at best.
However, research from the Grattan Institute and others consistently shows that staying in the workforce, even at a short-term financial break-even, has significant long-term benefits. These include:
- Career progression: Breaks from the workforce can set back career development and earning potential by years.
- Superannuation: Continued employment means continued super contributions, which compound significantly over a working lifetime.
- Earnings trajectory: Re-entering the workforce after a long break often means returning at a lower level, with lower pay.
This is a deeply personal decision that goes beyond the numbers, but it is worth considering the long-term picture alongside the immediate cost.
Childcare Tax Deductions and Financial Planning
While childcare fees are not directly tax-deductible in Australia, there are several financial planning strategies that can reduce the effective cost.
Salary Packaging for Childcare
Some employers, particularly in the not-for-profit, healthcare, and government sectors, offer salary packaging arrangements that allow employees to pay for childcare with pre-tax dollars. This can reduce the effective cost by your marginal tax rate. For a family paying $15,000 per year in out-of-pocket childcare costs and the earning parent’s marginal rate is 32.5 per cent, salary packaging could save approximately $4,875 per year. Check with your employer’s HR department or salary packaging administrator to see if this option is available.
Timing Income Changes
Because the CCS is based on your combined family adjusted taxable income, certain income-reducing strategies can increase your subsidy rate. Salary sacrificing into superannuation reduces your adjusted taxable income and can push you into a higher CCS bracket. For families near an income threshold, even a modest increase in super contributions can result in a meaningful increase in subsidy.
For example, a family with a combined income of $180,000 who salary sacrifice an additional $10,000 into super could see their CCS rate increase by several percentage points, potentially saving $1,500 to $3,000 per year in childcare costs. Consult a qualified financial adviser before implementing this strategy, as it has implications for retirement savings and cash flow.
Splitting Care Between Providers
Some families reduce costs by splitting care between a more expensive centre-based provider (for days where structured learning and socialisation are priorities) and a cheaper family day care provider (for other days). This can lower the average daily cost while maintaining variety in the child’s care experience.
The Second Child Subsidy Boost
Families with more than one child aged five or under in approved care receive a higher CCS rate for their second and subsequent children. Specifically, the CCS rate is increased by 30 percentage points (up to a maximum of 95 per cent) for the second child and any additional children. This significant boost means that the marginal cost of care for a second child is much lower than the first, which is an important consideration for families planning their childcare arrangements.
Nanny Care and Au Pairs: Alternatives to Formal Childcare
For families with non-standard work hours, multiple children, or specific care needs, private nannies and au pairs offer flexibility that centre-based care cannot match.
Private Nannies
A qualified private nanny in a capital city typically costs $25 to $35 per hour, or $250 to $350 per day for a full-time engagement. This is significantly more expensive than centre-based care for one child, but the economics improve with multiple children. For a family with three children who would otherwise need two centre-based places and one OSHC place, a private nanny can be comparable in cost while offering door-to-door convenience.
Private nanny arrangements do not attract the CCS unless the nanny is engaged through an approved In-Home Care service, which is limited in availability and subject to strict eligibility criteria (such as having three or more children under school age, or living in a rural area without access to other care).
Au Pairs
Au pairs are young people (typically from overseas on a working holiday visa) who live with the family and provide childcare in exchange for accommodation, meals, and a weekly stipend of roughly $200 to $350 per week. Including the cost of accommodation and food, the total cost is approximately $300 to $500 per week, which can be competitive with formal childcare for families with multiple children.
The trade-offs include less formal training than qualified educators, the need to provide accommodation, and the variable quality and reliability of au pair arrangements. Au pair care does not attract the CCS.
Nanny Sharing
Nanny sharing, where two families split the cost of a single nanny, is growing in popularity in Australian cities. Each family typically pays 60 to 70 per cent of the solo nanny rate, making it significantly cheaper than a private nanny while still more flexible than centre-based care. The children benefit from social interaction in a small-group home setting.
The Impact of Childcare Costs on Workforce Participation
The connection between childcare costs and workforce participation, particularly for mothers, is well-documented and has significant policy implications.
The Effective Marginal Tax Rate Problem
When a second earner in a family returns to work, the combined effect of income tax, loss of CCS, reduction in Family Tax Benefit, and childcare fees can create an effective marginal tax rate of 80 to 100 per cent or more. This means that for each additional dollar earned, the family keeps only 0 to 20 cents after tax and lost benefits. This creates a strong disincentive for the second earner (most commonly the mother) to work additional days.
Research by the Grattan Institute has shown that a mother returning to work for four or five days per week can face a higher effective tax rate than someone earning $200,000 or more. This structural problem discourages female workforce participation and has broader economic consequences.
Recent Policy Changes
The Australian Government has made several changes to address this issue, including increasing the CCS rates, removing the annual CCS cap for higher-income families, and introducing the second child subsidy boost. These changes have improved the economics of working additional days, but the interaction between the tax and transfer system and childcare costs remains complex.
The Productivity Commission’s 2024 review of childcare recommended further reforms, including moving toward a system where out-of-pocket costs are capped as a proportion of family income, which would make childcare more affordable for middle-income families.
Childcare Quality: Understanding National Quality Standards
Understanding Australia’s childcare quality framework can help families make informed choices that balance cost with quality.
The National Quality Framework (NQF)
All approved childcare services in Australia are assessed under the National Quality Framework, which rates services across seven quality areas. The rating scale ranges from “Working Towards” to “Exceeding” the National Quality Standard. Ratings are published on the Australian Children’s Education and Care Quality Authority (ACECQA) website and the Starting Blocks website.
What the Ratings Mean for Families
- Exceeding NQS: The highest commonly awarded rating. These centres go beyond the minimum requirements in multiple areas. They tend to charge premium fees but offer superior educator-to-child ratios, learning programmes, and facilities.
- Meeting NQS: The centre meets all minimum requirements. This represents a good standard of care and is the most common rating.
- Working Towards NQS: The centre has areas that need improvement. This does not necessarily mean the centre is unsafe, but it may indicate staffing issues, documentation gaps, or environmental factors that need attention.
Cost vs Quality
Higher-rated centres tend to charge slightly higher fees, but the correlation is not as strong as many parents assume. Some excellent services in outer suburban and regional areas achieve “Exceeding” ratings while charging moderate fees. Conversely, some high-fee inner-city centres may only be “Meeting” the standard. Checking ratings on the ACECQA website before enrolling is a free and valuable step in the decision-making process.
Frequently Asked Questions
Can both parents claim the Child Care Subsidy?
The CCS is assessed and paid per family, not per parent. It is based on the combined family income and the activity test hours of both parents (or the parent with the lower activity hours). The subsidy is paid directly to the childcare provider, reducing the gap fee the family pays.
What happens if my income changes during the year?
You should update your family income estimate with Centrelink as soon as your income changes significantly. If you do not, you may be over-subsidised (resulting in a debt at the end of the financial year) or under-subsidised (resulting in a top-up payment). Income reconciliation occurs after you lodge your tax return, and any discrepancy is adjusted through Centrelink.
Is childcare tax-deductible in Australia?
No, childcare fees are not directly tax-deductible for individuals. The Child Care Subsidy is the primary mechanism for government assistance. However, salary packaging childcare through an employer (where available) can provide a similar pre-tax benefit.
How do I find the cheapest childcare near me?
The Starting Blocks website (startingblocks.gov.au) allows you to search for approved services by location and compare fees, quality ratings, and vacancy information. You can also compare fees by contacting centres directly, as many do not publish their full fee schedules online. Family day care services, which are listed on the same website, are typically 10 to 20 per cent cheaper than centre-based care.
What is vacation care and how much does it cost?
Vacation care (also called school holiday care) is provided by OSHC services during school holiday periods. Full-day vacation care typically costs $55 to $80 per day and is eligible for the CCS. Many services offer activity-based programmes during holidays, with excursions and special activities sometimes attracting additional fees of $5 to $20.
Can grandparents receive the Child Care Subsidy?
Grandparents who are the primary carers (with legal responsibility) for grandchildren can access the CCS. Informal grandparent care, where the grandparent looks after the child casually, does not attract any government subsidy.
Key Takeaways
- Long day care costs between $105 and $175 per day on average, depending on your state and suburb. Inner-city and ACT centres are the most expensive.
- The Child Care Subsidy covers 0 to 90 per cent of fees depending on family income, paid directly to your provider.
- Out-of-pocket costs for a middle-income family using full-time care for one child typically range from $7,000 to $15,000 per year.
- Family day care is generally cheaper than centre-based care and still attracts the CCS.
- Waitlists are a reality in most urban areas. Register early, at multiple centres, and be flexible on days.
- Reducing from five days to four days of care is one of the most impactful cost-saving moves a family can make.
Disclaimer: This article is for general informational purposes only and does not constitute financial, tax, or professional advice. Childcare fees, Child Care Subsidy rates, income thresholds, and hourly fee caps are subject to change. Always verify current rates with Services Australia and your childcare provider. Your individual circumstances may differ from the examples provided. Consult a qualified financial adviser for advice specific to your situation.