Govt does deal on welfare cuts, child care

Katina Curtis
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Turnbull pressures Senate over child care

The Turnbull government appears to have struck a deal with the Senate crossbench to pass an overhaul of childcare subsidies and some welfare cuts.

Just six weeks after combining a $1.6 billion boost to childcare and $5.6 billion in welfare cuts in a single omnibus savings bill, the government has split the package.

The government re-started debate on Wednesday on a bill first put to parliament in September - but never dealt with - to legislate the new childcare package only.

The government also flagged introducing a new bill for some of the welfare cuts, plus new measures to freeze indexation on family payments.

Prime Minister Malcolm Turnbull used a visit to a childcare centre in suburban Canberra to up the pressure on senators.

"The important thing is, for the sake of these little kids and their parents and many others like them, that these reforms are passed," he told reporters.

Under the changes, existing childcare payments will be rolled into a single means- and activity-tested subsidy.

Families earning less than $65,710 where both parents work or study for at least eight hours a fortnight would have 85 per cent of their childcare fees covered.

This tapers off to 20 per cent for families earning more than $340,000 a year.

The existing $7500 annual cap on subsidies will be scrapped for families earning less than $185,710 and lifted to $10,000 for high earners.

But Liberal Democrat David Leyonhjelm and independent senator Derryn Hinch say that's too generous for wealthy families, and have secured a promise from the government to scrap childcare subsidies for families earning more than $350,000.

Senator Leyonhjelm said the budget needed fixing and middle-class welfare was an obvious place to start.

"I'm just helping the government to do its job properly," he said.

Labor opposes many of the welfare cuts but is more supportive of the childcare measures, subject to protection for disadvantaged and indigenous children.

"We want to see a better deal but not at the price of doing over families and pensioners," Opposition Leader Bill Shorten told reporters outside Parliament House.

But splitting the legislation has done little to impress key crossbench senator Jacqui Lambie, who says the childcare changes don't go far enough.

One Nation leader Pauline Hanson believes the family payments cuts are too deep and wants the government to turn its attention to tax-dodging multinational corporations.

The Senate will sit longer than usual on Wednesday and Thursday in an attempt to pass the new legislation before MPs leave Canberra for five weeks ahead of the May 9 budget.