Now lawFamily & Community Introduced in the House of Representatives, 23 Jul 2025

Child care centres can now lose funding over safety

This law links child care money from the government to safety. Inspectors can now walk in with no warning. Bad providers can be named. Some fees must now go straight to the provider.

Official name: Early Childhood Education and Care (Strengthening Regulation of Early Education) Bill 2025

Who it affects

• Parents using child care: They can see more public facts about providers that break the rules.
• Child care providers: Their safety record now decides if they can get or keep the Child Care Subsidy.
• Family day care and in home care educators: They can no longer collect the family's share of the fee for the provider.
• Families using in home care: Inspectors can enter their home without a yes, but only when they cannot fairly get one.

A $16 billion subsidy

Most families who use child care get help from the Child Care Subsidy. This is government money that pays part of the fee. It goes straight to the child care business, called the provider. The family pays the rest. That part is called the gap fee.

The government spent over $16 billion on this subsidy in the last financial year. That figure comes from the government's notes on the bill.

Each state and territory has its own agency that checks child care safety. They use a national law called the Education and Care Services National Law. The federal Department of Education decides who can get the subsidy. The government says people in the community are worried about safety in parts of child care.

The Minister for Education, Jason Clare, brought in this bill. It links subsidy money to safety and quality. It changes the law that runs the subsidy. It has five parts.

Safety now decides funding

Before, providers mostly had to meet business and paperwork rules to get the subsidy. Now the head of the Education Department must also be happy with their safety record.

The Department can look at past ratings, including low ratings again and again. It can look at serious incidents. It can look at complaints about safety and how well children are watched. It can look at past rule breaking, and at whether things got better.

If the record is poor, the Department can say no to a new provider or a new centre. It can also pause or cancel a provider that is already approved.

This covers every provider from the day the law started. That includes those already approved. Say a chain has had many serious incidents at its centres. It could be blocked from opening another one. It could also lose the subsidy at the ones it runs.

Rule breakers named

The Department could already make public when it paused or cancelled a provider. Now it can also publish when it says no to a provider or a new centre. It can give the reasons too.

It can also publish limits put on a provider, and on-the-spot fines. An on-the-spot fine is one you can pay without going to court.

The government says this helps parents make good choices when they pick child care.

Surprise inspections

Before, Department inspectors could only enter a centre in two ways. The owner had to say yes, or a court had to give a warrant. A warrant is a court order that allows entry. Now they can walk in without a yes during opening hours. At a head office, they can enter during business hours.

A senior officer must first give the go-ahead in writing. The inspector must say who they are and show their ID. They must give people a chance to let them in.

The government says state safety agencies already have these powers. It says surprise visits stop providers hiding problems before a planned check.

In home care is care given in the child's own home. Inspectors can only enter a home without a yes if they cannot fairly get one. One example is when a child is in danger right now.

Providers must help inspectors do their job. If they refuse, a court can fine them. They can also face a criminal charge.

Faster warrants and audits

A monitoring warrant is a court order. It lets inspectors enter a place and check records. Before, only the Department's top official could ask for one. They had to go in person, often in another state.

Now trained middle managers can ask. These are officers at Executive Level 1 and above, a middle-manager pay grade in the public service. A judge or similar officer still decides every request.

The Department can also order an outside check of a large provider's books. It might do this if it fears the business could collapse. Before, only the top official could pick the person to do the check. Now senior managers can do it too. This means action can happen sooner.

Gap fees paid to providers

Family day care is care given by an educator in their own home. In home care happens in the child's home. In both, educators often took the family's gap fee for the provider.

The government's notes say there is a strong link between educators taking gap fees and fraud. From 1 January 2026, families must pay gap fees straight to the provider. They can pay by bank transfer into the provider's account. They can also use an approved online payment service.

Say you use a family day care educator down the street. You would now pay your share into the provider's account. You would no longer hand it to the educator.

The Department can allow other ways in special cases. The start date was pushed back from 1 July 2025. Child care groups asked for it to match the school-year cycle of new enrolments, which runs by calendar year.

Start date

The bill was brought into the House of Representatives, the lower house of Parliament, on 23 July 2025. The House passed it on 29 July 2025. The Senate, the upper house, passed it on 31 July 2025.

The Governor-General, who stands in for the King, signed it into law on 2 August 2025. It became Act No. 31 of 2025.

Most of it started the next day. The gap fee rule started on 1 January 2026.

How they voted

Its journey through Parliament

Official sources

• Bill page on aph.gov.au
• Text of the bill
• Explanatory memorandum

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