Crossbench senators hostile to the government’s paid parental leave scheme are rejecting an alternative to raise childcare funding.

• Government loses $5 billion after budget block

The Abbott government is considering diverting some of the scheme’s $9.6 billion cost towards a broader childcare policy in a bid to overcome a Senate defeat of its signature policy.

But Liberal Democratic Party senator David Leyonhjelm, Family First senator Bob Day and Democratic Labour Party senator John Madigan have failed to warm to the idea, The Australian reports on Thursday.

Senators Leyonhjelm and Day both believe removing restrictions and red-tape for the childcare industry would be more effective than boosting childcare funding.

Senator Madigan says children are ideally best cared for by their parents.