Albanese set to make bold announcement on universal childcare policy to kick off Labor’s re-election campaign

Anthony Albanese is poised to make a bold announcement on childcare policy to kick off Labor’s re-election campaign built around universal access and enabling more parents to work.

Calls for a fixed fee model where parents pay no more than $10 or $20 a day for childcare have been growing, despite the Productivity Commission writing it off as the most expensive option for change.

However, some quarters of the sector warn bringing in a flat fee before tackling childcare shortages will only make it harder for parents to find care.

The Prime Minister made cheaper childcare a central plank of his election agenda in 2022 and Labor hopes it can win over voters again with a promised universal system.

He is tipped to announce the new plan in the near future.

It comes as research shows expenses for families with young children are more than 27 per cent higher than in 2021 and childcare is a primary driver of this cost of living pressure.

Childcare fees were only third to insurance and tobacco for price increases over the past year, Impact Economics modelling released on Tuesday finds.

Jay Weatherill, who leads the Minderoo Foundation’s Thrive by Five campaign, said it was “yet more evidence of the ineffectiveness of Australia’s current childcare model”.

Childcare subsidies increased last year and educators have just started receiving the first stage of a 15 per cent pay rise in a bid to keep workers in the sector.

The government tasked the Productivity Commission with examining the system and coming up with a way to offer universal childcare as the second step after it increased subsidies last year.

While many advocates have been coalescing around a flat $10 or $20-a-day fee to parents, the commission instead recommended tweaking the existing scaled subsidy, which it designed in its last review of childcare a decade ago.

Its recommendations would cost the budget an extra $4.7 billion a year, but this was the most cost-effective option.

A flat-fee model would cost $8.3 billion a year more – while offering the largest increase of children in early education – while an across-the-board 90 per cent subsidy would cost $6 billion annually.

There are fears shifting to a fixed fee immediately might make a good election campaign but it will not work unless there is also funding to set up childcare in areas where the market has failed, such as regional towns.

“A staged approach to implementation will be needed – this isn’t something that can be achieved overnight,” Centre for Policy Development chief executive Andrew Hudson said.

“But there are some first steps we should take now like ensuring rural and poor communities have access to early learning; abolishing the unfair activity test and making early learning free for low- and middle-income families.”

The flat fee or flat subsidy options would also disproportionately benefit richer families – who pay the most under means-tested arrangements – but meet the policy aim of treating childcare access like school or healthcare.

A middle road could involve making care free for low-income families and charging a flat fee for those more well-off.

Cabinet minister Murray Watt said on the weekend the government was “working through those policies at the moment around expanding access to childcare within Australia”.

Early Childhood Australia chief executive Samantha Page said the advocacy organisation was optimistic about the chance to build a “truly universal system” for all children.

“It’s really important that government engages with the sector to make sure their policy objectives can and will be met and to recognise there’s a lot of good in the current system,” she said.

“Whatever model we’re going with, let’s keep building on those strengths.”

Mr Albanese played tennis in Perth on Saturday with Mr Weatherill, one of the most vocal advocates of a $10 fixed fee.