Knight Street Multi-Age Learning director Erin Tracey said while free childcare was great for families affected by COVID-19 restrictions, there was an "ugly side" to the scheme.
To keep centres operating, the government reimbursed providers half of their registered income up to the existing hourly rate cap, until July 13.
Centres also had the option to put eligible staff on JobKeeper payments, ending for childcare employees on July 20.
But Ms Tracey said this forced providers to operate on a fraction of their usual income, despite continuing overheads.
“Attendance was down by about half, but we had bills for running the centre, we had to pay workers who worked more than the JobKeeper payment, and had to pay for sanitisation supplies,” she said.
“It was a very stressful time for staff - we also had to reduce staff hours, and we had to work despite getting no guidance for making the centre (COVID-19) safe.”
Ms Tracey said the stress was partially alleviated with the help of “amazing” families.
“Families who were able to keep their children at home, while the families who had children attended provided lunches,” she said.
While attendance has bounced back and staff hours have been gradually increased, Ms Tracey was concerned about the impact of a future shutdown on the sector.
Inspirakids Early Learning Centre enquiries and marketing manager Melissa Penfold said her centre was viable again.
“(During free childcare) we were only receiving 50 per cent of the normal government stimulus and no gap fees . . . all while still providing our high standard of care to children who were able to remain at the service,” she said.
“But business for us has currently returned to the new normal.”
From April, the government made childcare free across Australia in a bid to keep them open for essential workers during COVID-19 shutdowns, threatened by newly unemployed parents withdrawing their children in mass numbers.
A federal departmental spokesperson said a review of the childcare package found it had succeeded, with 99.3 per cent of about 13,400 childcare services nationwide deemed operational from the beginning of July.
“The government has (also) put in place a $708 million Transition Payment to support the resumption of the Child Care Subsidy (CCS) from July 13, 2020,” the spokesperson said.
“To receive the payment, providers must cap childcare fees at February 17 to March 1 levels and guarantee employment levels to protect staff.
“The government will also ease the activity test until October 4 to support eligible families whose employment has been impacted as a result of COVID-19.“
Childcare centres in locked-down metropolitan Melbourne and Mitchell Shire are able to waive parent gap fees if children are not attending childcare due to COVID-19.
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