Education Minister Simon Birmingham has warned childcare providers against hiking fees as a major overhaul of the sector comes into effect Monday, saying the government will keep an eye on those “rorting the system”.

Childcare subsidies are changing to a means-tested and activity-tested payment, meaning both parents must be working, studying, volunteering or searching for work at least eight hours a fortnight to be eligible.

Under the changes, households with a total annual income under $186,958 will no longer have a cap on their annual rebate.

For those earning more than this, the annual cap will lift from $7500 to just over $10,000 per child.

But the changes have sparked fears operators will hike fees, eating away at any savings for families.

Senator Birmingham, who hit the airwaves on Monday to sell the changes, said the government expected operators to pass on the childcare benefits to consumers.

“Ultimately, we will hold childcare providers to account and if they appear to be rorting the system or abusing the system, we’ll be watching and we will be calling them out because we want to make sure that these benefits through to the families who deserve it most,” Senator Birmingham told the ABC on Monday.

Labor claims one in four families will be worse off under the changes.

The opposition’s early childcare education spokeswoman, Amanda Rishworth, said families earning less than $65,710 who don’t meet the activity requirements will face an average cost of $5300 to replace care they will lose.

But the government said the majority of families will be better off.

“What we will see is a real benefit to the vast majority of families already in the system – around one million Australian families,” Senator Birmingham told Sky News.

“They’re going to be better off on average to the tune of $1300 per child per annum. That’s a lot of extra support for the family budget.”

The biggest winners would be families on lower incomes and those working the most, he said.

“Families earning more than $350,000 a year will find that they’re not eligible for the new childcare subsidy, or people who don’t meet the very light touch activity test, which is just four hours per week of working, studying, training, volunteering, parental leave, caring,” he told the ABC.

-AAP