The competition watchdog will probe spiralling prices in the childcare sector as family budgets are slugged with soaring living costs.

The government will put aside almost $11 million in the budget for a 12-month Australian Competition and Consumer Commission inquiry into the sector after childcare costs jumped 41 per cent in eight years.

The investigation, to begin in January, will examine factors driving rising childcare costs and out-of-pocket expenses and recommend ways to ease financial pressures for families.

Treasurer Jim Chalmers said it shouldn’t cost families more than their earnings to put children in childcare, but that was the reality faced by many.

“For many families, the cost of childcare is an incredible burden,” he said in a statement on Tuesday.

“This inquiry is an important part of our plan to help families cope with rising cost-of-living pressures.”

The government has been urged to fast-track its plan to increase childcare subsidies for parents from July 1, 2023.

Labor will lift the maximum childcare subsidy rate to 90 per cent for the first child in care for families earning less than $530,000.

Education Minister Jason Clare said legislation would be introduced next week to implement the changes, expected to cut out-of-pocket costs for 96 per cent of families with children in care.

– AAP