Nearly 120,000 parents aren't working because child care is too expensive or they can't find a spot.
The high price of child care was the top reason cited for Australians who weren't in the labour force because they were looking after children, government data released on Thursday shows.
One in three, or 95,700, said this was the case for them, while another 21,700 said there was either no childcare service nearby or no spots available.
That's more than those who said they were stay-at-home parents because they preferred to look after their children that way - a reason given by 77,600.
The federal government hopes its new childcare subsidy system, which starts in July, will let many of these parents be able to take up work.
Education Minister Simon Birmingham estimates the overhaul will help an extra 230,000 families get back to work or take on more hours.
The Productivity Commission report shows the most parents saying stiff fees were a barrier to returning to work were in the Northern Territory and Queensland.
However, Queensland had the lowest median cost of daycare in the country - at $400 a week or $80 a day - and the NT was the third lowest.
Parents in Queensland also had the lowest out-of-pocket costs after government subsidies, across all income brackets.
The ACT had the highest fees, with a median weekly cost of $545 for long day care.
Under the new childcare support system, taxpayers will only pay subsidies for fees up to a maximum of $11.55 an hour ($115.50 a day or $577 for a full week).
In 2017, none of the median fees charged in any state was higher than this; however, the data does not reveal what the most expensive services cost and how many there are above this maximum level.
The middle level of fees in the ACT was $10.90 an hour.
COST OF CHILDCARE IN 2017
* Queensland $400 a week ($80 a day)
* Tasmania $414 ($82.80)
* NT $439 ($87.80)
* South Australia $442 ($88.40)
* Western Australia $452 ($90.40)
* NSW $470 ($94)
* Victoria $470 ($94)
* ACT $545 ($109)
