The State Government will deliver an extra $12.5 million to subsidise kindergarten fees.

Premier Steve Bracks said the State Budget funding should ensure no parent paid extra fees as a result of last year's deal to deliver better pay and conditions for kindergarten teachers.

'Last year, the State Government provided an extra $26 million over three years to fund improved pay and career structures for Victorian kindergarten teachers as part of our on-going drive to encourage young graduates to join the profession.

'An extra $12.5 million, over four years, in the 2006–07 Budget will fully cover the cost of the wage increase for kindergarten teachers and means no parent should pay higher kindergarten fees as a result of the pay deal.'

Mr Bracks said kindergarten was crucial for a child's healthy development.

More than 59,000 children will attend kindergartens across Victoria this year.

'Thanks to this Government's strong investment in kindergartens, Victoria had achieved record participation rates.

'The figures show Victoria's kindergarten participation rate for funded four-year-olds last year was 96.4 per cent, well above the national average of 83.4 per cent.'

Mr Bracks said the State Government was also making kindergarten more affordable than ever and had increased annual subsidies for low-income families by 220 per cent since 1999 to $320 per child.

'This year, more than 17,000 four-year-olds will be eligible for a $320 fee subsidy.'