This paper examines issues raised in an earlier paper prepared by the Australian government, viewed from the perspective of the children's services field. The government paper discussed fee relief and operational subsidies, and suggested five possible funding packages. Part 1 of the paper considers operational subsidies in child care. This part outlines the history of the use of operational subsidies, and of funding provisions of the Child Care Act and within the Services for Families with Children Program (SFCP); reviews proposed changes to child care funding policies; and examines likely consequences of the proposed changes. Parts 2 through 7 discuss: (1) funding of services for children with special needs; (2) fee relief; (3) child care not related to parents' work situation; (4) tax issues; (5) reforming SFCP; and (6) recommendations on child care by the National Association of Community Based Children's Services and the Australian Early Childhood Association. Descriptions of available operational subsidies and fee relief are attached. (MM)