The Foster Care Association of Victoria welcomes the Victorian Government announcement of a $15 million investment over four years to increase the foster, kinship and permanent care allowance indexation, set to rise by 3.5% for 2026/27. This outcome follows sustained engagement with the Care Allowance petition and broader advocacy campaign, which contributed to elevating the issue of under-indexation and supporting greater recognition of the financial pressures facing carers.
For carers, this announcement means a direct increase to fortnightly reimbursement payments on 1 July 2026 to help offset rising day-to-day costs associated with caring for children and young people. In practical terms, this equates to approximately:
$400 extra per year for a child on a Level 1 allowance (ages 0–7)
Up to $1,700 extra per year for placements receiving the highest level of care allowance
The FCAV recognises this measure is an acknowledgement by government that the cost of caring has risen significantly and that carers require greater financial support to sustain placements. Importantly, this announcement is recognition that existing indexation increases to the care allowance have not kept pace with real-world cost pressures facing carers.
In recent years, under-indexation in Victoria has contributed to a growing gap between the rising costs of living and the carer reimbursement provided by government. However, while this measure slows further erosion of the allowance in the short term, it does not correct the cumulative shortfall that has developed since 2021 due to care allowance indexation falling below inflation and rising household costs.
We welcome this measure as a sign that government is listening to the financial pressures carer households are under and recognising that foster, kinship and permanent carers cannot continue absorbing rising costs indefinitely.
The FCAV will continue advocating for more substantial and sustained reform to Victorian care allowances, so they are more consistent with the rest of Australia’s jurisdictions, while properly reflecting both the real cost of raising children and the critical role carers play in Victoria’s child protection system.
