The federal government's new childcare package won't become a reality unless the Senate agrees to pass cuts to family tax benefits.
Prime Minister Tony Abbott is hailing the changes as an economic measure to help get parents back into the workplace, but says the $3.5 billion package doesn't come free.
"In order to have this important childcare reform, we do need to fund it and that means sufficient savings from the savings that are already there before the Senate," he told reporters in Sydney.
The package, a centrepiece of Tuesday's budget and announced by Mr Abbott and Social Services Minister Scott Morrison on Sunday, includes creating a new means tested subsidy system.
Families on incomes of between $65,000 and $170,000 are set to be about $30 a week better off. Those earning less than $65,000 a year, who don't meet a new activity test, will continue to receive 12 hours of early childhood learning a week.
But those over that threshold, with a parent not working or studying for at least eight hours a fortnight, won't receive government help.
The federal government estimates 240,000 families will get into work, or work more, as a result of the package, which is scheduled to be introduced mid-2017.
Mr Abbott noted many families felt working to pay for child care was "hardly worth it".
"We are changing the economics of going back to work," he told reporters in Sydney.
Labor welcomed the reforms in principle, but wants them funded differently.
"Children don't get cheaper when they turn six," shadow treasurer Chris Bowen told ABC TV.
"We didn't support it then, we won't be supporting it now, we won't be supporting these cuts in the future."
Family First Senator Bob Day told AAP he was open to compromising on changes to family tax benefits in the past when they were touted as necessary for budget repair, but now that they were being connected to childcare reforms it was a "different ball game".
"I'm not very happy that single income families are being asked to pay for dual-income families," he said.
The union representing childcare workers, United Voice, said it would be distressing to have families used as "political footballs in a Senate game".
Early Childhood Australia praised the government's proposed investment, but was concerned about the impact on children whose parents weren't working.
But Mr Morrison made no apologies for the measure.
"The something-for-nothing bus for those above $65,000 on child care, where there's no activity test, that will stop running on the first of July 2017," Mr Morrison said.
