In an era of skyrocketing childcare costs, chronic centre waitlists and an ageing population eager for purpose, one bold idea is gaining traction: redirect part of the $16 billion annual Child Care Subsidy (CCS) directly to grandparents who step in as primary or regular carers.
Currently, the CCS, worth billions in federal support, flows almost exclusively to approved centre-based, family day care or outside-school-hours services. Informal grandparent care, despite saving families an estimated $4.4 billion a year in replacement costs, receives no direct subsidy.
The question is simple but profound: should the government allow families to direct their existing CCS entitlement to grandparents or other family carers for the hours they provide, subject to basic safeguards?
This article lays out the facts, fiscal modelling and multifaceted benefits, from stronger child–grandparent bonds to reduced pressure on the formal system, while acknowledging the challenges.
As of the December 2025 quarter, the Australian Government spent $3.98 billion on CCS and Additional Child Care Subsidy (ACCS) in just three months, an annualised figure exceeding $15 to $16 billion.
Around 1.5 million children from 1.07 million families used approved services, averaging 27.6 hours per week. Centre-based day care dominates, with an average hourly fee of $14.40 (gross) and the government subsidising the majority via income-tested rates, up to 90% for low-income families, tapering to zero above approximately $535,000 combined income.
Demand outstrips supply in many areas. Waitlists stretch for months, regional shortages are acute and centres face staffing pressures and occasional closures.
The new 3 Day Guarantee, from January 2026, ensures at least 72 hours per fortnight, approximately 36 hours per week, for eligible families regardless of work hours, but it still funnels support into formal providers.
Meanwhile, two in five grandparents with a grandchild under 13 already provide some care, and one in four do so at least weekly, often 10 or more hours, yet receive zero CCS for it.
There is a narrow exception: the ACCS grandparent payment. Grandparents who are principal carers, defined as providing 65% or more of ongoing daily care, and who are on income support can access extra top-up subsidy for formal approved care and up to 100 hours per fortnight without activity tests.
But everyday grandparent minding at home receives zero subsidy. Parents cannot claim CCS to pay Nan or Pop.
Australian grandparents already deliver the equivalent of hundreds of millions of unpaid hours annually. ABS modelling from comparable data pegs the replacement value at $4.4 billion per year, roughly one quarter of current CCS spending.
This Bank of Nan and Pop enables parents, especially mothers, to work, reduces family stress and fills gaps that centres cannot, including irregular shifts, sick days, school holidays and last-minute needs.
Yet it comes at a personal cost. Many grandmothers reduce their own paid work or forgo superannuation to help.
Surveys show 97% of grandparents enjoy the role, citing deeper family connections, with 94% strongly agreeing it strengthens bonds, and a sense of purpose. However, burnout is rising as expectations grow.
A targeted extension could work like this:
Eligibility
Parents remain the CCS claimants. They nominate a grandparent or relative carer who meets light criteria such as a National Police Check, Working with Children Check, current First Aid and CPR, and a simple annual declaration of hours and activities. There is no need for full centre-level regulation.
Payment structure
CCS would be paid directly to the grandparent or reimbursed to the family at 70 to 80% of the standard hourly cap, currently $14.63 nationally for centre-based under-fives in 2025 to 2026. This is lower than formal rates to reflect no overheads, no commercial profit and existing family trust. Payments would be capped at the family’s existing entitlement.
Activity and means testing
The same income test applies. The activity test could be relaxed for grandparents, mirroring the ACCS grandparent exemption and recognising retirement realities.
Safeguards
Annual reporting of hours, optional quality resources such as free online early learning modules and random audits. Fraud safeguards would operate through existing Services Australia systems.
Pilot first
A two-year voluntary pilot in high-waitlist postcodes or for shift-working families, followed by potential national expansion.
This is not radical. The federal Opposition has already floated vouchers for grandparents and nannies. Polling shows over half of Australians support directing subsidies to family carers.
Scenario modelling based on 2025 to 2026 data suggests:
If 20% of current formal care hours, roughly 8 to 10 million hours per quarter, shifted to subsidised grandparent care, the new cost would be approximately $2.2 to $2.7 billion annually.
Offset
Reduced demand on centres could lower total CCS outlays by a similar or greater amount, as fewer places would be needed. Grandparent care often replaces full commercial fees that would otherwise attract 70 to 90% CCS.
Net fiscal effect
Likely cost neutral to modestly positive in the first three to five years, particularly if it slows the need for centre expansion.
There may also be long-term savings through improved family resilience and reduced pressure on health and social systems.
Compared to the $426 million allocated for the 3 Day Guarantee alone, this represents fiscally responsible innovation.
For children, intergenerational care builds emotional security, cultural knowledge and resilience. Studies link regular grandparent time to improved cognitive and social outcomes.
For seniors, caring for grandchildren is associated with improved memory, lower social isolation, increased physical activity and a stronger sense of purpose.
For families, the benefits include immediate cost relief, greater flexibility for non-standard hours and stronger three-generation bonds.
For the system, it eases centre waitlists and staffing shortages, particularly in regional Australia, and frees up places for families without access to grandparents.
Stronger families overall benefit society by reinforcing existing support networks.
Critics raise valid concerns about quality standards, equity for families without grandparents and the risk of coercion.
These can be addressed through light regulation, opt-in participation and maintaining full CCS access for formal care.
Not every grandparent wants or is able to provide care. This policy expands choice rather than replacing existing options.
Australia’s childcare system was designed around centre-based delivery in the early 2000s. Family structures, work patterns and demographics have evolved.
Grandparents are already doing significant unpaid work. Allowing families to direct part of their subsidy to them is not a radical handout but a practical, evidence-based reform.
The question is no longer whether grandparents provide childcare. They do, at scale. The real question is whether that contribution should be recognised and supported.
The data, the economics and the human stories all point in the same direction. It may be time.
A Grandparent Care Subsidy could strengthen families, support older Australians, ease pressure on centres and improve outcomes for children, while remaining fiscally responsible.
What do you think? The conversation is open.
