MRC Report: Childcare and family policy

childcare and family policy: challenges and opportunities

Published: October 2026

Author: Hon Alan Tudge

Childcare policy matters to all Australians, not only those with young families. It now costs $15.6 billion a year, rising to $21.1 billion by the end of the decade and directly impacts economic growth: in the short term through workforce participation, and in the long term through its impact on the birth rate.

Almost 85 per cent of childcare spending goes to one model of care: childcare centres (known as long day care centres). One million families use approved childcare, and the gap between male and female workforce participation has narrowed from 36 percentage points in 1978 to about eight today.

But this paper argues that more money for the same model will now deliver less and less. What families lack is not subsidy but choice.

The paper tests current policy against three goals: supporting parents, lifting workforce participation and helping children develop. It also considers the policy’s bearing on the birth rate.

The paper proposes four main reforms:

• Target existing subsidies

• Allow subsidised care in the home

• Introduce a Grandparents Allowance

• Give young families more financial support to help reverse the declining birth rate

These suggested reforms are geared towards addressing fundamental issues around choice in childcare and those parents who want to work more but believe their child is too young for a formal institutional setting.