The purpose of this paper is to provide an overview of potential funding types, levers and models available to the Australian early childhood education and care (ECEC) system.

Funding models and levers play an important role in supporting systems to achieve their objectives. In the case of the ECEC system, these objectives include:

• Accessibility: supporting appropriate access to early education and care, including for children likely to be experiencing vulnerability, and supporting workforce participation for parents.
• Affordability: ensuring that financial barriers to accessing services are minimised to ensure the participation of children and families from all socioeconomic backgrounds.
• Quality: supporting provision of a sufficient standard of quality.

These objectives should be supported by a sufficiently sized and capable workforce. In addition to supporting the realisation of policy objectives, well designed funding arrangements support the sustainability, responsiveness, transparency, efficiency and accountability of the system by influencing the way in which funders, service providers and system participants interact with each other.

Importantly, funding models cannot achieve these objectives in isolation but must work with all components of the broader system architecture (including policy, regulation, sharing of evidence, monitoring and evaluation, and governance structures) to produce an environment which enables – and ideally drives – the desired outcomes.

This paper provides an overview of the most common funding types employed in human service delivery systems. Each is presented in turn, providing a description of how the funding is designed, how it is estimated, in what circumstances is it likely to be more or less effective, and general advantages and disadvantages associated with its use.