The passing of the Early Childhood Education and Care (Three-Day Guarantee) Bill 2025 marks a major shift in Australia’s early childhood education and care system. For the first time, tens of thousands of children who were previously excluded from early learning will have access to at least three days of subsidised care each week (72 hours per fortnight), regardless of their parents’ work or study status.

This reform will have a tangible impact on families across the country, particularly for children in lower-income households, where barriers to early learning are highest. By guaranteeing three days of subsidised care, more children will benefit from the social, cognitive, and emotional benefits of early education – benefits that are well documented and carry lasting effects on development, school readiness, and future employment.

Prime Minister Anthony Albanese has made it clear that improving access, affordability, and quality in early learning is a top priority for his government, with several meaningful — though modest — steps already underway. Asked recently about his long-term vision for a truly universal, flat-fee ECEC system, he said: “The big vision is certainly there as well, that everyone would pay no more than a limited amount that was affordable, but we need to get there in stages.”

We know that bigger reforms are on the horizon, though their future may depend on the outcome of the next election. In the meantime, what difference will the Three-Day Guarantee make for families now, and where should we go from here?

For families, the removal of the Activity Test for up to 72 hours per fortnight will finally provide much-needed certainty. Until now, many parents faced constant disruption to their childcare arrangements due to fluctuating work hours. For those in casual, part-time, or unpredictable jobs, the risk of losing subsidised care made it nearly impossible to plan ahead or maintain steady employment. With this reform, families can organise their work, study, or job searching with confidence, knowing their children have reliable access to early learning.

Children, of course, also stand to benefit. Tens of thousands who were previously locked out of early education will now have the chance to participate. Research consistently shows that high-quality early learning improves school readiness, cognitive development, and social skills – with long-term benefits for education, employment, and health. A 2022 Impact Economics and Policy report found that at least 126,000 children from the poorest households are missing out on early learning due to the Activity Test. The Three-Day Guarantee is a direct response to that gap, giving more children the best possible start.

The economic benefits are significant, particularly for women. While the Activity Test was originally designed to encourage workforce participation, in practice it created instability – particularly for parents in insecure work. Losing access to subsidised care due to unpredictable hours made it harder for parents to stay in or return to the workforce. Removing this barrier is not only good for families, it’s good for productivity and the economy.

This reform will also help sustain and grow the ECEC sector. With guaranteed subsidised care, more families are likely to enrol their children, supporting stronger and more viable early learning services – particularly in communities where enrolments have been too low to keep centres open. Increased demand will strengthen the sector, supporting workforce growth, investment, and expansion into areas that need it most.

But while the Three-Day Guarantee is a landmark achievement, retaining the Activity Test for families who need more than three days of care continues to create unnecessary barriers. If the government is serious about delivering on its “big vision” for early learning, the next step is clear.

In its final report, the Productivity Commission inquiry into ECEC explicitly called for the full abolition of the activity test – ensuring all children, regardless of their parent’s workforce participation, can access at least 100 hours of subsidised early learning per fortnight.

Removing the Activity Test entirely would unlock the full potential of early education for families who continue to face barriers. It would give parents greater certainty and flexibility, allowing them to plan work, study, or job-seeking activities without the constant fear of losing care.

It would also deliver lasting economic benefits. Impact Economics and Policy estimate that abolishing the Activity Test could lift workforce participation among mothers with young children by 39,620, adding up to $4.5 billion to GDP annually.

The sector, too, would receive a major boost. The Productivity Commission found that fully removing the Activity Test and improving affordability for lower-income families would drive continued growth in demand, encourage new investment, and help close persistent access gaps across the country. It would provide the strong, sustainable foundation the sector needs – ensuring every child, in every community, can benefit from early education.

The Three-Day Guarantee is a major step forward. But to realise the full potential of a truly universal early learning system, we can’t stop here. Removing the Activity Test entirely is the logical next move. It would end the complexity and uncertainty that families face, remove arbitrary barriers to participation, and ensure no child misses out on the proven benefits of early education.

By continuing to invest in a more accessible early learning system, Australia can build a simpler, fairer, and more effective early learning system – one that prioritises children’s development, supports families, and delivers lasting benefits for the economy and society.