The May budget will include a $1.7 billion childcare package aimed at getting more parents into full-time work.
After a week of business, welfare and early education groups calling for a more generous and less complex childcare system, Treasurer Josh Frydenberg has returned serve with a package that is particularly aimed at low and middle income families earning $130,000 or less.
The package will also increase the subsidies given to families with more than one child in child care.
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.
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However, the package is less generous than Labor's promise of universal child care.
"The big problem here is this childcare announcement is about getting the Liberals through the election, it's not about getting women back to work," shadow treasurer Jim Chalmers told Sky News's Sunday Agenda program.
"It makes it more complex and misses the chance to do a key economic reform."
He said there will be hundreds of thousands of families that will be better off under Labor's plan.
But Mr Frydenberg believes the changes will strengthen the economy.
"And at the same time provide greater choice to parents who want to work an extra day or two a week," he told Nine newspapers.
A federal election is due in the next year.
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