Federal Opposition Leader Anthony Albanese said the government's $1.7 billion childcare package, aimed at getting more parents into full-time work, was a missed opportunity.
The pre-budget announcement from Treasurer Josh Frydenberg will increase subsidies given to families with more than one child in childcare and remove to subsidy cap for high income earners.
Mr Frydenberg said the changes were targeted and low and middle income families who earn $130,000 or less a year.
The childcare subsidy for families with two or more children aged five and under will increase to a maximum of 95 per cent, up from 85 per cent. The government says it will benefit about 250,000 families.
But Mr Albanese said this did not go far enough and questioned the incentives for families with only one child in daycare.
"This Government is trying to deal with issues without dealing with it comprehensively... the circumstance whereby the policy will support families who have a second or a third child, but what about families who have just one child in childcare," he said.
Labor has promised to introduce universal childcare through a more than $6 billion package.
"This does nothing to move towards a more universal, affordable childcare system," Mr Albanese said.
The government expects that a family earning $110,000 a year would be $95 a week better off for four days of childcare, with the subsidy for their second child to increase from 72 to 95 per cent,
For a family with three children on $80,000, it is expected they would be $108 a week better off for four days of care after a subsidy increase from 82 to 95 per cent for their third child.
Speaking at a Narrabundah child care centre on Sunday, Mr Frydenberg said the government's investment would boost women's participation in the workforce.
"It's designed to give families choice and to make our economy stronger, and to make childcare more affordable," he said.
Mr Frydenberg said the package was targeted at families with two or more children as they effectively pay a higher marginal rate of tax.
He said treasury estimated the measures would increase gross domestic product by about $1.5 billion a year, and that it would create an extra 300,000 hours a week in work - equivalent to 40,000 people working an extra day a week.
Education Minister Alan Tudge said the package would make it easier for women with one or more children to go back to the workforce.
"There are some barriers, we acknowledge that for women going back into the workforce, but the single biggest barrier is when you have two or more children, because basically, you'll hit certain points in time, whereby it makes no economic sense to work that fourth or fifth day," he said
"And so this package removes those disincentives."
A federal election is due in the next year.
- With AAP
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