Preschool Funding and CCS in NSW (2026 Guide)
Is Preschool Actually Cheaper in NSW?
NSW does not have a "free preschool" scheme. Instead, the NSW Government provides fee relief through the Start Strong program at participating services — which reduces but does not eliminate fees.
For families in long day care, Start Strong funding typically reduces a portion of the weekly invoice. CCS then applies under normal Commonwealth rules. Most Sydney and regional NSW families continue to pay a meaningful weekly gap, especially at centres with fees above the CCS hourly cap.
Understanding how these two systems interact is essential before making any changes for preschool year.
What Is the NSW Start Strong Program?
Start Strong is the NSW Government's preschool funding program, providing fee relief to eligible 4-year-olds (and some 3-year-olds) at participating services.
Key facts for 2026:
- 600 hours per year of funded preschool education
- Funding is paid directly to participating services
- Covers the year before school (children turning 4 by 31 July in the year they attend)
- Services determine how fee relief is passed on to families
Official source: NSW Government – Start Strong
Important: Not all early childhood services participate in Start Strong. Not all participating services are CCS-approved child care services. You need to check both for any service you're considering.
How Start Strong and CCS Work Together
Start Strong and Child Care Subsidy operate under entirely separate frameworks:
- Start Strong is funded by the NSW Government (state)
- CCS is funded and administered by Services Australia (Commonwealth)
Both can apply in a CCS-approved long day care service that participates in Start Strong.
Typical order of application:
- Provider charges the standard weekly fee
- Start Strong funding reduces the invoiced amount for eligible preschool-program hours
- CCS is calculated on the remaining eligible fee, up to the hourly cap
CCS source: Services Australia – Child Care Subsidy
Start Strong does not:
- Increase your CCS percentage (set by household ATI only)
- Change your CCS hours entitlement (set by the activity test / 3-Day Guarantee)
- Affect how CCS balancing works at year-end
Does Preschool Funding Reduce CCS Hours?
No.
Your CCS hours entitlement is based on the activity test. From January 2026, the 3-Day Guarantee provides a minimum of 72 subsidised hours per fortnight for most families. Enrolling in a preschool program does not change this.
Long Day Care vs Community Preschool in NSW
Long Day Care Delivering a Start Strong Program
LDC services participating in Start Strong receive state funding and typically apply it as a fee reduction for preschool-age children.
What changes:
- A portion of your weekly invoice is reduced during the preschool program weeks
- CCS continues to apply under normal rules on the reduced fee
- Same days, same hours — the structure of your care doesn't change
What doesn't change:
- CCS rate, hours entitlement, or balancing rules
Net result: Moderate savings during school-term weeks, partially offset by CCS already covering much of the fee. Many Sydney families save $30–$80/week in school terms, with holiday weeks reverting to standard fees.
Community Preschool
Community (standalone) preschools typically offer shorter sessions (15 hours/week) and lower base fees.
Critical CCS consideration: Many community preschools are not CCS-approved child care services. If the service is not CCS-approved, CCS cannot apply at all — regardless of Start Strong funding.
Some community preschools are CCS-approved. Confirm directly with the service before enrolling.
For families who work full-time, community preschool typically requires additional before/after care and full holiday care, which can offset the fee saving significantly.
Worked Example: What a Sydney Family Pays
The following uses realistic but illustrative figures for Sydney families.
Family details:
- Combined ATI: $125,000 → CCS rate: approximately 70%
- Child attending 4 days/week at a Sydney long day care
- Centre daily fee: $170 per day (10 hours) = $17/hr — above the CBDC hourly cap of $14.63
Without Start Strong (pre-preschool year):
| Item | Calculation | Amount |
|---|---|---|
| Weekly LDC fee | $170 × 4 days | $680 |
| CCS per day | $14.63 (cap) × 70% × 10 hrs | $102.41 |
| Weekly CCS | $102.41 × 4 | $409.64 |
| Weekly out-of-pocket | $680 − $409.64 | $270.36 |
With Start Strong (provider reduces invoice for preschool hours):
Assuming the provider passes through approximately $50/week as a fee reduction during school-term weeks:
| Item | Calculation | Amount |
|---|---|---|
| Weekly fee (after Start Strong) | $680 − $50 | $630 |
| CCS per day (cap still $14.63) | ~$102.41 × 4 | ~$409.64 |
| Weekly out-of-pocket | $630 − $409.64 | $220.36 |
This family saves approximately $50/week during school-term weeks (~40 weeks). Annual saving: approximately $2,000 during term time. Holiday weeks revert to the standard $270.36/week.
Note: At $17/hr (above the CCS cap), the gap fee is significant regardless of Start Strong. A centre charging $14.63/hr or below would have a different calculation — CCS would cover a higher percentage of the fee.
Why the Start Strong Amount Varies So Much
Unlike Queensland's QKFS (which has a defined per-hour rate), Start Strong funding rates in NSW vary by:
- Service type (LDC vs community preschool)
- Number of preschool-eligible children enrolled
- Staffing and program qualifications
- Whether the service is approved for additional loading
The amount of fee relief families receive depends on how each individual service applies the funding. Two centres in the same suburb can apply it very differently. Always ask your centre specifically what reduction appears on your invoice and during which weeks.
Preschool Eligibility in NSW
Children are generally eligible for Start Strong-funded preschool in NSW if they turn 4 years old on or before 31 July in the year they attend. Individual services confirm enrolment eligibility.
Turning 6 During Preschool Year
If your child turns 6 during the financial year:
- Their CCS age band may change
- The higher second-child CCS rate may be affected if you have a younger child in simultaneous care
- Earlier CCS payments in the year are not retroactively adjusted
More detail: Services Australia – Second and subsequent children
Questions to Ask Your Centre
- Does your centre participate in Start Strong? (Not all LDCs do)
- Is your centre a CCS-approved child care service? (Separate from Start Strong participation)
- How is Start Strong funding applied to your invoice? (Weekly reduction? Per-session? During which weeks?)
- What happens during school holidays? (Start Strong typically applies term weeks only)
- Will any care-pattern changes affect your activity test?
Before Changing Care Arrangements
Preschool year is often when NSW families:
- Switch from LDC to community preschool
- Reduce days or change work patterns
- Update income estimates
Before making changes, model the total annual cost — not just the term-time weekly cost:
- Total care hours including holidays
- CCS approval status of all services
- Before/after preschool care costs
- Activity test implications of any day reductions
Summary
In NSW in 2026:
- Preschool funding is delivered through the Start Strong program at participating services
- Funding goes to the provider — it typically reduces part of the weekly invoice, not all of it
- CCS applies alongside Start Strong in CCS-approved LDC services
- The amount of fee relief varies by service — confirm directly with your centre
- Community preschool may not be CCS-approved, making wrap-around care more expensive
- Start Strong does not affect CCS rates, hours entitlement, or balancing
Compare the full-year cost of all options — including holidays — before committing to preschool year changes.