Federal Budget 2025 - $5 Billion Investment In Universal ECEC, Permanent Free Tafe and Cutting Student Debt

The Federal Government's 2025 Budget outlines several initiatives aimed at supporting early childhood education and care (ECEC). The following provides information on measures that aim to enhance accessibility, affordability, and quality in the ECEC sector while supporting families and educators. 

The Federal Government has announced its commitment to creating a universal early childhood education and care system. This initiative ensures that every child is entitled to at least three days per week of subsidized early education and care, making child care more simple, affordable, and accessible for families nationwide.

The Federal Government's $5 billion investment in a universal early childhood education and care (ECEC) system includes the following key initiatives:

1. Worker Retention Payment: Allocating $3.6 billion to boost the wages of early educators, benefiting up to 200,000 early childhood educators and teachers.

2. Building Early Education Fund: A $1 billion fund to establish or expand 160 early childhood education and care services in areas with unmet demand, such as outer suburbs and regional Australia, prioritizing locations on school sites.

3. 3 Day Guarantee: Investing $426.6 million to replace the Child Care Subsidy Activity Test. This ensures families are eligible for at least 3 days per week of subsidized ECEC, benefiting 100,000 families in the first full financial year.

Permanent Free TAFE

Over the next decade, nine out of ten new jobs will require post-secondary qualifications, and almost half will come through vocational education and training (VET) pathways.

The government is delivering Free TAFE to drive better access to vocational training opportunities and to help deliver on Australia’s skills needs. Between its commencement in January 2023 to September 2024, there were close to 600,000 Free TAFE enrolments in courses linked to priority areas across the economy.

The government is investing to make permanent 100,000 Free TAFE places every year from 1 January 2027, subject to the passage of legislation. Ongoing Free TAFE will ease cost-of-living pressures for students while supporting them to train in priority sectors and obtain secure and rewarding employment.

Cutting Student Debt

The government is making changes that will cut a combined $19 billion in student loan debt for 3 million Australians and will make the student loan repayment system fairer.

The government will reduce all outstanding Higher Education Loan Program (HELP) and other student debts by 20 percent, subject to the passage of legislation. This will remove $16 billion from the student loan accounts of 3 million Australians. The 20 percent reduction is in addition to the recent reform to make indexation arrangements fairer, limiting future indexation and retrospectively reducing the indexation applied in 2023 and 2024, which has already decreased student loan debt by $3 billion.

The government is reforming the student loan repayment system from 1 July this year, subject to the passage of legislation. The government will also increase the amount that people can earn before they are required to start paying back their loans from $54,435 in 2024–25 to $67,000 in 2025–26. No one will pay more under the new system, and compulsory repayments will be lower for people earning under around $180,000 and above the current minimum threshold.

These changes will deliver immediate cost-of-living relief for millions of Australians with student loan debts.

For more information: Federal Budget 2025 - 2026