The Turnbull government has been accused of holding parents "hostage" by surprisingly combining its childcare reforms with $8 billion in payment cuts to unemployed young people, welfare recipients and families whose employers provide paid parental leave.
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The government had previously flagged it would combine its childcare changes with cuts to family tax benefits, but went further on Wednesday by rolling several previously rejected welfare cuts into the same bill.
The bill now includes measures such as:
Increasing the age of eligibility for unemployment benefits from 22 to 25, a move that would cut payments to young jobseekers by $45 a week. People aged under 25 without a job will be receive Youth Allowance worth $438 a fortnight rather than the $528 Newstart Allowance.
Jobseekers under 25 will have to wait four weeks before accessing income support.
Abolishing the Energy Supplement, worth up to $14 a fortnight, for new welfare recipients.
Capping government-funded and employer-paid parental leave at 20 weeks a year.
Stopping pension payments to Australians who travel for more than six weeks overseas.
Jo Briskey, executive director of parent advocacy group The Parenthood, said the plan was akin to "holding families to ransom".
"Parents are desperate for childcare cost relief - they just don't want it paid for out of the pockets of other families, especially those doing it toughest," she said.
Australian Council of Social Service chief executive Cassandra Goldie said: "The so-called concessions the government has made will be wiped out by other changes in the bill, leaving many low-income people worse off.
"Of course we all want greater support for families to get better-quality childcare but it cannot be funded on the backs of some of the most disadvantaged people in our country."
The council has strongly opposed the abolition of the Energy Supplement payment, which is distributed to welfare recipients including pensioners, carers and the disabled. The government says it is no longer needed because it was introduced to soften the blow of the carbon tax, which has been abolished.
In a bid to win the support of the Senate crossbench for its package, the government announced significant concessions to its cuts to family tax benefits.
The government is pushing ahead with plans to abolish family tax benefit supplements worth up to $726 a year per child, but will increase fortnightly payments for those on Family Tax Benefit Part A by up to a $20 a fortnight per child.
It is also ditching plans to remove Family Tax Benefit B payments for families when their youngest child turns 13.
The taxpayer-funded parental leave scheme would be extended from 18 weeks to 20 weeks, expected to provide an extra two weeks leave to around 100,000 families.
But parents who can currently access both the 18-week government scheme and their employer's own scheme would be worse off.
The government's childcare changes - which would leave most parents better off and are broadly supported by the sector - will create one new means-tested payment and abolish the annual $7500 rebate cap for most families.
Prime Minister Malcolm Turnbull said the childcare changes were a "very big social reform".
"What we're proposing - and we're seeking the support of the Senate - is reforms that will make childcare more affordable and more available, especially for families on lower incomes," he said.
The government on Wednesday produced examples showing a family with a combined income of $80,000 would be $2964 a year better off under the combined childcare and family tax benefit cut changes.
Key crossbench senator Nick Xenophon said the government was "moving in the right direction" by softening its family payment cuts.
"I think the government has improved the package, improved the childcare package and in terms of Indigenous and remote communities there are some real improvements there as well, so that's welcomed," he said.
But he said he was not yet convinced by the paid parent leave changes given around 40 per cent of parents would be worse off and some "appreciably" worse off.
The Nick Xenophon Team has previously rejected the one-month wait for unemployment benefits, saying it was unfair and would not help young people find jobs.
Labor families spokeswoman Jenny Macklin said the opposition was opposed to the package, but One Nation leader Pauline Hanson said welfare payments need to be "reined in".
