NSW ECEC sector grows as monitoring activity rises and new service applications decline

New regulatory data for Quarter 3 (January–March) of the 2025–26 financial year shows the NSW early childhood education and care (ECEC) sector continues to expand, while regulatory oversight and compliance activity increases across the state.

As at 31 March 2026, there were 6,223 approved ECEC services operating in New South Wales, representing a 0.8 per cent increase compared with the same quarter last year.

The number of services approved under the National Quality Framework (NQF) also continued to grow, reaching 6,150 services, up 0.9 per cent year-on-year.

The latest figures provide an insight into a sector balancing growth in service capacity with increasing regulatory expectations, workforce challenges and changing market conditions.

Centre-based places continue to grow

NSW now has 381,478 approved centre-based places for children, an increase of 2.6 per cent compared with the same quarter in 2024–25.

The growth reflects continued expansion in long day care and preschool services, helping meet demand from families seeking access to early childhood education and care.

Long day care remains the largest service type in the state, with 3,698 approved services, an increase of 3 per cent compared with the same period last year.

Preschool services increased by 1 per cent to 774 services, while family day care services rose by 2 per cent to 126 services.

Outside school hours care (OSHC) was the only service type to record a decline, falling from 1,598 services to 1,552 services, a decrease of 3 per cent.

The decline in OSHC services may reflect broader workforce and operational challenges being experienced across parts of the sector.

Monitoring activity increases

Regulatory monitoring activity also increased significantly during the quarter.

The NSW Early Childhood Education and Care Regulatory Authority conducted 2,471 monitoring visits between January and March 2026, representing a 10 per cent increase compared with the same quarter last year.

Monitoring visits may be announced or unannounced and focus on key areas including:

• supervision
• child safety and risk management
• staffing and ratios
• governance and leadership
• compliance with the National Law and Regulations.

Where non-compliance is identified, regulatory action may be taken, with the immediate priority being the safety and wellbeing of children.

The increase in monitoring activity aligns with the Authority's growing focus on continuous improvement, everyday quality practice and strengthened regulatory oversight.

Fewer applications to operate services

While service numbers continue to rise, the number of new service and provider approval applications declined during the quarter.

The Regulatory Authority received 140 service and provider approval applications, a decrease of 21 per cent compared with the same quarter last year.

Provider approval applications fell by 19 per cent, while service approval applications declined by 25 per cent.

The reduction may reflect a combination of factors, including rising operating costs, workforce shortages, changing market conditions and increased regulatory requirements.

Internal reviews and service transfers rise

Although overall application volumes were relatively stable, several regulatory application categories recorded notable increases.

Applications for internal reviews of reviewable decisions increased by 183 per cent compared with the same quarter last year, while applications for reassessment and re-rating increased from one application to eight.

Notifications relating to transfers of service approval increased by 141 per cent, rising from 29 to 70.

These movements may indicate increasing provider engagement with regulatory processes, ownership changes within the sector and a continued focus on service ratings and quality outcomes.

At the same time, applications for temporary waiver extensions declined by 41 per cent, while both provider and service suspension applications decreased compared with the previous year.

A sector growing under increasing scrutiny

The latest data paints a picture of a sector that continues to expand, but is also experiencing heightened regulatory oversight and evolving market conditions.

While approved places and service numbers continue to increase, the decline in new provider and service applications suggests some operators may be taking a more cautious approach to expansion amid workforce shortages, rising operating costs and increasing compliance expectations.

At the same time, the growth in monitoring visits, internal reviews and service transfers points to a sector becoming more active, more regulated and increasingly focused on quality assurance.

With major changes to Assessment and Rating processes due to commence from July 2026, followed by the removal of inactive Assessment and Rating periods from January 2027, providers are likely to see continued emphasis on continuous improvement, governance and everyday quality practice.

For service leaders, the data provides an important snapshot of where the sector is heading: continued growth, stronger regulatory oversight and increasing expectations around quality and compliance.

Source: NSW Early Childhood Education and Care Regulatory Authority, Quarterly Regulatory Data Report – Quarter 3 (January–March) 2025–26 Financial Year.