Labor's childcare wages plan to cost at least $1.6 billion a year

The opposition's election-eve wage intervention - which took economists, the business community and childcare operators by surprise - has been ridiculed by the government as it seeks to turn the multi-billion dollar price tag into a major issue ahead of polling day on May 18.

Opposition Leader Bill Shorten has vowed to deliver up to 100,000 early childcare workers a pay rise of 20 per cent over the next eight years in a bid to lift the industry's low hourly rate and attract more staff.

Coalition frontbencher Simon Birmingham told The Sydney Morning Herald and The Age that "siphoning off" public money to top up the wages of some private-sector workers was "highly irregular" economic policy.

"What this staggering intervention into the labor market boils down to is higher taxes for all Australians," he said.

Labor has vowed to consult should it win government but has so far refused to detail how soon workers would see an increase and what the annual cost to the federal budget would be once the pay rise is fully implemented.

Labor has previously said the plan will cost $9.9 billion over the next decade and will be phased in over the next eight years.

But new modelling by the government suggests the cost to the budget will exceed $1.6 billion a year once the phase-in period has passed and the full 20 per cent pay rise has taken effect.

Based on one scenario that involves a dramatic ramp up in later years, the annual cost would reach a peak of $3.8 billion in 2026-27 before eventually falling back to $1.6 billion.

Labor has not said whether subsidy would exist in perpetuity and the Coalition has not revealed whether it would axe it should it lose this election but be returned to office in the future.

The Coalition's modelling accounts for four scenarios of how the pay rise could be phased in over eight years. The scenarios vary from even increases over each of the years, to an increase of between 10 per cent in the first year and 40 per cent in the final.

Labor has said early childhood educators would be better off by an average of $11,300 a year should the party win the election.

The modelling takes into account a 2 per cent growth rate in the early child care labour force over the next decade and inflation.

A Labor spokeswoman declined to comment on the figures: "Just as the government does not release Treasury costings, we do not release our costings."

Labor plans to generate up to $8 billion in revenue a year through changes to franking credit refundability and negative gearing and will spend the money boosting services in other areas of the economy.

"My view is that investing in child care is a better investment than giving a tax reward to someone who is buying multiple investment properties," Mr Shorten said.

In an interview on ABC's 7.30 on Wednesday night, the Labor leader said continuing to pay childcare workers "bugger all" was not an option, and asking childcare operators to pay staff more would lead to fee increases.

"The alternative is the government recognises this is an important sector and recognises that we shouldn't be asking parents to pay more."

But Prime Minister Scott Morrison accused him of irresponsible spending and "making up policies, with billions of dollars of taxpayer expenditure, every single day".

A senior source said the Coalition will spend the rest of the week planning to "sharpen its claws" by attacking Labor over the market intervention.

Labor has also not revealed how it would decide which of the sector's 194,000 workers would get a pay rise. Its policy is costed for 100,000 workers, and would be available to those who work in long day care settings but not in preschools.

The main childcare workers union, United Voice, said the taxpayer subsidy for wages was the only way to stop providers from jacking up their fees and passing them onto parents.

Mr Shorten had left the door open to extending Labor's wage subsidy to other low-paid, female-dominated professions such as aged care but moved to quell business fears by saying the childcare industry was "unique" and that he would not extend the model to other sectors.

Childcare workers are some of the lowest paid in Australia and have been campaigning for better conditions for years. A junior childcare worker is paid $22 an hour, according to the award set by the Fair Work Ombudsman.