Nannies and grandparents could be paid by the government to look after children if they get TAFE qualifications under a proposal to overhaul the nation’s convoluted childcare system.
The bewildering array of childcare subsidies should be replaced with a single, means-tested payment that would go directly to the parents' choice of provider, according to a draft report by the Productivity Commission.
Those on a family income of $60,000 or less would get 90 per cent of the cost of childcare covered and the payment would taper so that families on $300,000 or more would get 30 per cent.
Nannies, grandparents and anyone else willing could join workers at childcare centres and family day care in being eligible for government payments if they had at least a Certificate III in early childhood education, the report says.
The quality of care being offered would be scrutinised by the national auditor, with providers subject to targeted and random checks.
The report found that the current auditing regime was cumbersome and costly and should be rationalised.
But commissioner Wendy Craik said "there would need to to be a credible chance that someone would come round unannounced to the house to check the care being provided" for the system to be successful.
She said the proposal would see the childcare workforce increase by about 15 per cent.
The commission found many families were struggling to find flexible childcare that met their needs and that there were long waiting lists in some areas.
Parents currently have access to two main forms of government support - the childcare benefit, a means-tested payment for low-to-middle income families, and the childcare rebate, a non-means tested payment that covers up to 50 per cent of out-of-pocket costs.
The new payment would be available for children whose parents spend at least 24 hours a fortnight working, looking for work or studying. It would cover all approved services for up to 100 hours per fortnight.
Children deemed at risk of abuse or neglect and those with disabilities would have access to “top-up” payments.
Assistant Education Minister Sussan Ley welcomed the release of the report, saying the current child care system was "at breaking point after child care fees skyrocketed 53 per cent during Labor's six years in office".
"We cannot continue with the Labor approach of blindly topping up child care payments on the nation's credit card combined with ineffective band-aid solutions."
But Ms Ley cautioned that Tuesday's report was only a draft
"There is still much work to be done between now and the final report being handed to government in October," she said.
Ms Ley said the government would not pre-empt the final report and would consider it later in the year.
Labor's education spokeswoman Kate Ellis said that "the only thing that is certain about this review is that Tony Abbott has promised there will be no more money for child care".
"Any new support for families – like nannies and au pairs – will mean cuts to the existing child care services families rely on every day," Ms Ellis said.
"The government has already announced more than $1 billion of child care cuts. If Tony Abbott was serious about improving child care he would stop these continued attacks."
The commission found the federal government should also maintain the current funding arrangement for pre-school for four-year-olds that provides 15 hours a week. The federal government is waiting on a review before deciding the future of the current state-federal funding model to give each child 15 hours.
The number of women who work has increased in the past two decades - from 57 to 66 per cent - and the bill for childcare costs has also grown. The average out-of-pocket cost of childcare is 27 per cent of the average wage - less than in Britain, the US, New Zealand or Canada, but more than the OECD average of 17 per cent.
Other commission recommendations include that school principals be responsible for ensuring schools provide before and after school care, and removing restrictions on the number of child care places for occasional care.