On 31 July 2025, the Federal Parliament passed a new bill that will reshape how early childhood education and care is regulated across Australia. These changes are aimed at strengthening child safety and ensuring high-quality early learning services across Australia.

The Early Childhood Education and Care (Strengthening Regulation of Early Education) Bill 2025 introduces some of the most significant changes we’ve seen in years. Once the bill becomes law, these changes will begin rolling out nationally. For full details, you can visit the official bill page on the Parliament of Australia website.

Here’s what’s changing and what you need to know.

1. Funding is now more closely linked to compliance

Under the Act, early childhood education and care (ECEC) services that fail to meet the National Quality Standards (NQS) may have their Child Care Subsidy (CCS) approvals suspended or cancelled. This means CCS funding is no longer guaranteed if safety or quality repeatedly falls short. The Government now has the authority to:

• Carry out unannounced spot checks,
• Suspend or cancel CCS approvals,
• Publish the outcomes of those actions online.

This means staying compliant isn’t just about avoiding penalties, it’s tied directly to your funding.

2. Additional checks before getting approved or renewed

When providers apply for CCS approval or renewal, the Government will now look at:

• Their compliance history under the NQS,
• Any serious complaints or incidents,
• Previous quality ratings or imposed conditions.

These additional checks aim to ensure only services that meet the highest standards can operate, protecting children’s safety and learning from the very beginning.

3. Changes to how gap fees are collected

If the bill is passed, from 1 January 2026, educators in Family Day Care (FDC) and In Home Care (IHC) will no longer be collecting gap fees directly. Instead, families will pay the provider directly, most often via electronic transfer. This change is intended to:

• Simplify fee collection processes,
• Reduce the administrative burden on educators,
• Increase transparency around payments.

This will require providers to set up systems and processes to enable collection of fees previously handled by educators.

What this means for early childhood services

The Government has a clear focus on transparency, compliance and child safety in the early childhood sector. We believe there are more changes coming including a National Workforce Register, mandatory child safety training and exploration of CCTV cameras in centres.

As an early childhood provider it is crucial you stay across these changes. As a Board, compliance with legislative requirements should be high risk on your Risk Register. As manager, you need to understand how the changes apply to your organisation and what you need to do to stay compliant.

How Saward Dawson can help

Our team works closely with early childhood education providers to help make sense of regulatory updates, strengthen internal financial processes and prepare organisations for what’s ahead.

Contact us to find out how we can support you during this transition. To discuss your specific needs, please reach out to our Education Sector Expert, Mathew Crouch.