Australia's in-home childcare sector receives $11 million federal rescue package amid equity concerns

Australia's in-home childcare sector has welcomed an $11 million federal government rescue package, but there is criticism some operators will gain more generous support than others.

In-home care is designed to support families who cannot access mainstream childcare, because they live in remote areas, work nights or care for children with complex medical needs, serious disability or child protection concerns.

Earlier this year, the ABC revealed anger from vulnerable families, as services came close to shutting down.

In an interview with ABC News, Minister for Early Childhood Education Jess Walsh said in-home care was "an absolutely vital service".

Senator Walsh recently met one-year-old Cece, and her mum, Jennifer, who live south of Sydney.

Cece was diagnosed with a rare medical condition and doctors recommended she avoid mainstream childcare.

"Initially, it was like, 'My God, what are we going to do?'" Jennifer said.

Jennifer described the program as "game-changing", allowing her to return to work while Cece is cared for by a qualified educator at home.

However, the sector has shrunk significantly in recent years, due to higher costs and unique challenges of delivering early learning in family homes, making the program out of reach for many.

The sector was excluded from a government subsidy scheme introduced in 2024 to cover a historic 15 per cent pay rise for long day care workers.

That meant families had to pay more for in-home care to cover the wage increase themselves.

More than 70 per cent of families in the scheme reduced their hours or withdrew because they could not afford to absorb the rising costs.

The federal government has come under pressure in Senate estimates from the Liberals, Greens and crossbenchers who warned children could be put at risk if the in-home care sector collapsed.

Senator Walsh announced the $11 million support package after hearing from many families including Cece and Jennifer's.

The package includes $5 million for Sustainability Support Grants, $3.4 million to deliver a 15 per cent pay rise to in-home care employees and $2.7 million in further grants for operational support for the sector.

"The in-home care sector is quite unique," Senator Walsh said.

"We wanted to make sure that we knew that the pay rise would be able to be passed on and when we were confident about that we extended the pay rise to the in-home care sector."

Relief package 'monumental' but some workers will miss out

Nicole Morgan, president of the Australian Home Childcare Association (AHCA), has been an in-home care provider for 19 years and described the announcement of the sustainability grants as "monumental".

She said she was on the cusp of closing in June as it was no longer financially viable to continue operating.

While all have welcomed the sustainability funding, some operators are angry the worker retention payment, to cover pay rises for carers, is not available to contractors who make up 70 per cent of the in-home care sector.

That means just five of the 21 agencies qualify for the worker retention payment, which has been available to long day care operators since 2024.

Ms Morgan warned the impact could be "catastrophic".

"We feel the inequity has created a division within the sector that is really unfair," she said.

"What we might find is that those educators will leave those providers. Those families will not be able to afford the cost of care and those providers, therefore, will close," she said.

Senator Walsh said providers employing staff as contractors were still being supported.

"Our In-Home Care Sustainability Support Grants provide tailored support to this specialised sector, and can be used, in line with the grant guidelines, to help providers retain contractors.

"The Worker Retention Payment is also available where providers and educators choose to move from a contractor to an employee model."

Long-term future for home care still to be resolved

Ms Morgan said the in-home care program was "massively underutilised", operating at about 35 per cent occupancy due to the extra costs associated with delivering care in the family home.

She said there were currently 1,370 children accessing the program, with the potential for the program to help 3,200, under the government cap.

Over the past decade, the sector has shrunk from about 70 providers to 21.

Three separate reviews from the federal government, Productivity Commission and consumer watchdog have identified affordability as a barrier to access.

Another wider ranging federal government review is underway, which the sector hopes will ensure it is 'sustainable' and 'viable' into the future.

"The childcare subsidy needs to reflect the cost of care for in-home care and the differences that we have," Ms Morgan said.

Senator Walsh foreshadowed the sector receiving further support after the review was completed.

"The Service Delivery Price Project is due later this year and will provide important input into our plans for universal early education and care, including future support for the In-Home Care sector," she said.