Preschool Reform Funding Agreement

A new $2 billion, four-year national reform commitment will be established to strengthen the delivery of preschool and better prepare children to start school, through to the end of the 2025 calendar year.

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$2 billion additional funding for states and territories

Under the new $2 billion agreement, the Australian Government will continue to provide a per child contribution to states and territories. In 2022, this will be around $1340.

This commitment locks in ongoing Australian Government funding beyond 2025, with reforms to be agreed with all states and territories to lift preschool attendance and outcomes.

The funding supports 15 hours of preschool a week – 600 hours a year – for all children in the year before they start school.

Who will benefit under the agreement?

Maximising preschool attendance will provide educational benefit to children and support the workforce needs of parents.

Children who engage in quality play-based early childhood education are generally better prepared to start primary school and enjoy better educational outcomes.

Data from the Australian Early Development Census (AEDC) indicates that preschool reduces the number of children who are not ready to start school by about 10%.

Universal Access National Partnership (UANP) funding benefits around 350,000 children each year and supports around 12,000 preschool services nationally.

Since the UANP was introduced in 2009, AEDC data has shown significant improvements in school readiness.

Universal Access funding benefits around 350,000 children each year and supports around 12,000 preschool services nationally.

Enrolment in preschool for 600 hours per year, per child, increased from 12% in 2008 to 96% in 2019.

However, enrolment rates do not always translate into full participation – or maximum use of the full preschool hours that all children are entitled to in the year before school.

In 2019, only 72% of the families of children in preschools made full use of the 15 hours preschool available per child, while attendance rates for Aboriginal and Torres Strait Islander children (60%) and vulnerable and disadvantaged children (66%) were even lower.

Preschool particularly benefits Aboriginal and Torres Strait Islander children, and children from disadvantaged families and communities, lowering overall rates of developmental vulnerability and improving academic performance.

How will the agreement work?

The new $2 billion Preschool Reform Funding Agreement will deliver the first four years of funding, from 2022 to 2025.

This funding will be contingent on states and territories agreeing to an ambitious reform agenda.

From 2023, every child enrolled in an approved preschool program, regardless of the preschool setting, will see the full benefit of Commonwealth funding. This amounts to around $1,340 per child in 2022. From 2024, the Commonwealth will seek state agreement to establish attendance performance targets.

The Commonwealth also wants to work with states to develop and trial a preschool outcomes measure.

To support this reform, the Commonwealth will spend an additional $28.7 million to:

  • improve the quality and transparency of preschool data that is available nationally, and
  • develop a new Preschool Performance Framework.

The commitment locks in ongoing Australian Government funding beyond 2025, with arrangements for this funding to be determined later.

The Commonwealth stands ready to work with states and territories to have the Preschool Reform Funding Agreement in place by the end of 2021.

Why else is this agreement important?

To date, states and territories have been able to use Commonwealth preschool funding as they see fit, resulting in different costs for families in each jurisdiction.

Under new arrangements, states will be required to demonstrate that the Commonwealth’s per-child contribution is passed on equally, so that every child receives the full benefit of Commonwealth funding regardless of the setting they attend.