The average cost of preschool for a NSW family is to fall by nearly 30 per cent after the state government announced plans for a cash injection, which experts had warned was overdue.
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A recent review by the Auditor-General found NSW preschools were the least attended and most costly in the nation.
But Premier Mike Baird on Wednesday will announce funding increases of about $115 million spread over 18 months aimed at offering families a discount.
"This will enable preschools to reduce fees by an average of 30 per cent per child," said early childhood education minister Lesley Williams.
The average daily cost of preschool in NSW hovers between $30 in regional and $40 in urban NSW, according to government statistics.
The government said that with the new funding, the overall average will drop to $22 a day.
Preschools will be obliged to pass on at least 75 per cent of the increased subsidy to parents, Ms Williams said.
Just over 80 per cent of NSW children are enrolled for 600 hours' preschool in the year before kindergarten. Enrolments are 10 percentage points lower for children from poor families.
Federal government funding to the state is tied to meeting a benchmark for 95 per cent of children to reach the 600 hour minimum.
The NSW government will now offer extra money, up to a maximum possible $6600 per child, to all preschools that enrol children for more than 600 hours a year.
The state government said an extra 15,000 children will meet the 600-hour benchmark after the new funding is released.
The Auditor-General recently found the state government had been stockpiling early childhood educational funds to the value of about $350 million over the four years to 2015. This included holding back hundreds of millions of dollars in federal funds.
But the state government said that holding back on the spending was necessary as it worked through uncertainty about the timing and size of federal government funding.
"This new funding makes use of the National Partnership funding from the Commonwealth," a spokeswoman said.
The department said future federal funding would be allocated to daycare services.
NSW early childhood funding was also lower than any other state, the Auditor-General found.
Opposition Leader Luke Foley made access to childcare a centrepiece policy earlier this year at his first party conference as NSW Labor leader.
