Australia’s aged care sector faces a critical challenge: a rapidly ageing population coupled with a severe shortage of workers. With the proportion of Australians aged over 65 expected to rise from around 16% to nearly 20% by 2031, the demand for aged care services is escalating at an unprecedented rate.
The Committee for Economic Development of Australia (CEDA) estimates a shortfall of at least 110000 direct aged care workers within the next decade, potentially ballooning to over 400000 by 2050 if urgent action is not taken. To address this crisis, Australia should implement free or heavily discounted childcare services for aged care workers.
This policy would serve as a powerful incentive to attract and retain workers in a sector struggling to meet the needs of an ageing population, while also aligning with the diverse childcare regulations across Australian states and territories.
Childcare as a workforce magnet
Childcare costs in Australia are among the highest in the world. OECD data from 2020 to 2021 indicate that families with two children under three in full-time daycare spend approximately 67% of their average gross income on childcare.
For aged care workers, who often earn modest wages, these costs can be prohibitive, discouraging entry into or retention within the sector. Providing free or discounted childcare would alleviate financial burdens, making aged care roles more attractive, particularly to parents, who form a significant portion of the workforce.
This policy would also address gender disparities in the sector. Women dominate aged care roles, with many juggling caregiving responsibilities for both children and elderly relatives. The 2018 ABS Survey of Disability, Ageing and Carers estimated 2.65 million Australians provide informal care, often alongside paid work.
Offering childcare support would enable more women to enter or remain in the workforce, boosting participation rates, which for people with disabilities (a relevant comparison due to care demands) rose from 53.4% in 2018 to 60.5% in 2022.
Moreover, childcare support aligns with broader economic benefits. The Productivity Commission’s 2025 report on the care economy, which includes aged care and childcare, notes that the sector contributes 8% to Australia’s GDP and employs 12% of the workforce.
Enhancing worker retention through childcare subsidies could improve service quality, reducing the economic drag of unmet care needs.
Navigating state childcare rules
Childcare in Australia is regulated primarily at the state and territory level, with some services falling under the National Quality Framework (NQF) and others under state-specific laws. Understanding these regulations is crucial for designing a targeted childcare subsidy program for aged care workers.
Global lessons for local solutions
The United Kingdom offers a compelling model with its Free Childcare for Working Parents scheme, providing up to 30 hours of free childcare weekly for children aged 9 months to 4 years.
Eligibility requires parents to have a National Insurance number and use registered providers, ensuring quality and accountability. Australia could adopt a similar approach, tailoring subsidies to aged care workers and aligning with state regulations to ensure accessibility.
The UK’s Tax-Free Childcare scheme, which supports wraparound care, could also inspire flexible options for aged care workers with non-standard hours.
Crafting a sustainable plan
To implement free or discounted childcare, Australia could:
Tackling potential pushback
Critics may argue that childcare subsidies are costly and divert funds from direct aged care services.
However, the economic cost of inaction, projected at over 400000 worker shortages by 2050, far outweighs initial investments. Improved worker retention and recruitment would enhance care quality, reducing long-term costs associated with unmet needs. Others may claim that subsidies risk overburdening childcare providers.
This can be mitigated by aligning with existing CCS frameworks and investing in childcare infrastructure, particularly in underserved regions.
A call for urgent action
Australia’s rapidly ageing population demands a robust aged care workforce, yet the sector faces a critical shortage of workers. Providing free or discounted childcare for aged care workers would alleviate financial pressures, attract new talent, and retain existing staff, particularly women and parents.
By aligning with state-specific childcare regulations and drawing on international models like the UK’s, Australia can implement a targeted, effective policy.
With the Aged Care Act 2024 set to commence in November 2025, now is the time to invest in innovative solutions to ensure dignified, high-quality care for older Australians.