Prime Minister unveils radical change to how childcare centres are built

Under the plan, to be rolled out from July next year with funding to be provided in this month's mid-year economic update, childcare centres would be publicly owned and new centres located where possible within the grounds of primary schools.

"Centres on school grounds build a link between early education and primary education," Mr Albanese told at a campaign event in Brisbane on Wednesday.

"It makes sense. They give children a sense of confidence and connection with their local school, and they make life easier for parents doing drop off or pickup."

He said the government would work with state and local governments, philanthropic organisations and communities to bring related services under one roof, including childcare, maternal and child health and early learning.

"We want to support high-quality, not-for-profit providers," Mr Albanese said.

The funding will be provided in the mid-year economic and fiscal outlook and be used to build or expand more than 160 early education and care centres "where they are needed most", with a mix of grants to existing providers and new publicly-owned and leased centres.

Mr Albanese also unveiled an election pledge to abolish the activity test that determines eligibility for childcare rebates, so this will no longer be based on whether both parents work or study in families earning up to $530,000 a year, at a cost of $426.7 million.

The Australian Competition and Consumer Commission (ACCC) recommended in the final report of its inquiry into the childcare sector that the government consider directly funding or delivering childcare services in areas where none are available.

In Australia, childcare centres have mostly been privately built and run, with services funded through Commonwealth rebates.

The Victorian government announced plans in September to establish 50 new state-run childcare centres by 2032 and the federal government owns the buildings that house 25 services in the Northern Territory.

Research has shown about a quarter of Australian children, many of them from rural and regional areas, live in so-called childcare deserts where services do not exist.

The prime minister said achieving universal access to childcare could only be done "with a real change in the role government plays building more centres, backing more choice, stepping up when the market fails."

"There are simply not enough childcare centres in the regions or in outer suburbs that are growing fast," he said.

"Too often, that's because large corporate providers don't see an opportunity for profit in these places. This means children in these communities are left behind and families are left without an option ... We're ready to invest in owning these centres to keep the doors of opportunity open for children in these communities."

He said childcare was an "essential service for modern families" and not a luxury, and that fixing the system required long-term commitment and investment.

Education Minister Jason Clare said building more centres to expand access would "help more Aussie kids benefit from early education."

Early Childhood Education Minister Anne Aly said the fund would help make sure that children could access the benefits of early education and care "no matter their background or where they live".