Childcare Centres Reject Children with Complex Needs Amid Funding Crisis

Children with complex needs are increasingly being turned away from childcare centres due to significant funding shortages and staff burnout. Industry leaders highlight that federal government inclusion rules are inadvertently creating barriers rather than facilitating access.

The inclusion support program (ISP), designed to provide additional staffing for children with complex needs, is currently underfunded. According to industry sources, the government provides only half of the necessary financial support, forcing childcare centres to cover the remaining costs themselves. As the government pursues a universal childcare system, advocates argue that addressing the ISP’s shortcomings is essential before implementing other structural changes.

A formal diagnosis is a prerequisite for applying for funding through the ISP, a process that can take between two and five months. This lengthy wait contributes to the challenges faced by families. Nawaz, a parent from Sydney, shared his experience with his son, Zayne, who has a speech impediment and behavioural issues. Zayne was expelled from two childcare centres because they could not afford to wait for his National Disability Insurance Scheme (NDIS) funding.

“They were not ready to wait, because we almost got the approval,” Nawaz explained. “The NDIS person came to our place and did their interview with Zayne… so we said that to the daycare, and the centre manager still didn’t wait. They said, no, no, no, you have to find another one.”

Nawaz expressed the difficulty of relocating his son twice before he turned two years old. Fortunately, Zayne has now settled into a centre run by the not-for-profit organization Goodstart, which is advocating for urgent reforms to the ISP.

Industry Leaders Call for Immediate Action

Paul Mondo, president of the Australian Childcare Alliance, emphasized that children with complex needs face the most significant challenges when first entering daycare, particularly before receiving government funding. “If [children] are not supported adequately, that does put undue pressure on that workforce to be able to cope in a really complex environment at times,” he said. “Sometimes services do make those decisions [to turn away children], which is not an outcome any of us want to see at all.”

Introduced in 2016 under the Morrison government, the ISP provides funding of $23 per hour for up to 25 hours a week for additional workers. This funding has not been adjusted for inflation, while childcare costs have dramatically increased. Goodstart reports that it received $13 million in ISP funding across its 700 centres but had to contribute an additional $12.3 million to adequately support children with complex needs. The base rate for childcare workers at Goodstart centres is $39 per hour, nearly double the ISP funding.

Ros Baxter, Goodstart’s chief executive, stated that approximately 25% to 30% of Australian children begin school without the necessary support, which the education system struggles to rectify. “It’s seriously the biggest economic crisis that the country could imagine, and it’s building,” Baxter warned. She acknowledged the government’s strides towards universal childcare but identified inclusion funding as a critical gap.

A report published by the Productivity Commission in 2024 recommended an immediate increase in inclusion subsidies as part of the move towards universal childcare. Similarly, a 2023 report by Deloitte, commissioned by the government, noted that ISP payments have risen by an average of 11% per year since 2016 due to growing demand and awareness of disabilities.

Barriers to Access for Families

Caroline Croser-Barlow, chief executive of advocacy group The Front Project, highlighted a significant disparity in the funding available for children in childcare versus those in schools. “ISP funds up to 5% of children in childcare, but up to 20% of children in schools receive inclusion support,” she pointed out. The requirement for a formal diagnosis delays access to funding and excludes some children from necessary support.

Karen Thorpe, an Australian Research Council laureate at the University of Queensland, conducted research on the ISP’s impact on staff wellbeing. She found that inadequate support for children with additional needs is a critical factor leading to staff considering leaving the profession. “If you have a ratio of one to ten [staff to children], and seven or eight of those children have additional needs, and you can’t get enough support, that is the thing that makes staff feel unwell,” Thorpe explained.

In response to these challenges, Jess Walsh, the Minister for Early Childhood Education, reiterated the government’s commitment to ensuring that as many children as possible can access quality early learning in mainstream services. She noted that since taking office, the Albanese Labor government has significantly increased support in the ISP, with approximately 26,000 children expected to receive assistance in the 2024–25 period, compared to 15,800 in 2020-21.

The ongoing funding crisis in childcare, particularly for children with complex needs, raises urgent questions about the future of inclusive education in Australia. As advocates and industry leaders push for reform, many families continue to face significant hurdles in accessing essential services for their children.