The Albanese government has announced an inquiry into the price of child care after costs jumped 41 per cent in eight years.

The skyrocketing costs have caused parents to remove their children from services.

One parent told The New Daily that even with the current subsidy, she had been forced to take her three-year-old daughter out of child care due to the cost.

“I’m working 18 hours a week as an integration aide for children with disabilities while studying to become a teacher,” she said.

“Even with our combined income and the subsidy, my husband and I are struggling to foot the child care bill.

“I would work and study more, but we just can’t afford it.”

An educator from a child care service in Melbourne said that staff were overworked and underpaid, despite the rising costs.

“Our service is on skeleton staff every single day,” she said.

“There’s a lot of agency cover staff coming in, who don’t know the room and don’t know the children. They’re just bodies there to fill a ratio.’’

She identified the casualisation of the workforce and the proliferation of not-for-profits in the sector as drivers of spiralling costs.

“Casuals need to be paid more than permanent staff,” she said.

“Meanwhile, the people who work there five days a week seem to get peanuts … All the educators at our service are talking about getting jobs at Bunnings or Woolworths to supplement their income or change careers entirely.

“Our not-for-profit has become a chain of not-for-profits,” she said.

“It’s a really top-heavy organisation. And the people who are the managers, directors, and assistant managers all seem to be earning a decent living wage, while the rest of us are lucky to get a bonus at the end of the year.”

The Australian Competition and Consumer Commission will conduct a year-long inquiry into the sector to investigate what is driving high prices and out-of-pocket expenses, as the government increases subsidies.

The ACCC will begin the review in January and will recommend ways to ease financial pressures for families.

The government said the review will cost $11 million and will be included in the upcoming budget.

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

“For many families, the cost of child care is an incredible burden,” Dr Chalmers said on Wednesday.

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

From July 1, 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 will introduce legislation to Parliament next week to lift the maximum subsidy.

The changes are expected to cut out-of-pocket costs for 96 per cent of families with children in care.

Asked whether the $5 billion investment itself could drive up prices, Finance Minister Katy Gallagher said it was a “hypothetical situation”.

“I don’t envisage a scenario that says that money isn’t worthwhile – we think it is,” she told the ABC on Wednesday.

But she said it was important to get a greater understanding of the reasons behind price increases in order to make future policy decisions.

The ACTU and Australian Council of Social Service have argued for a progressive shift to free, universal child care.

The Melbourne educator warned that free child care needed to be coupled with a better deal for childcare workers.

“Although I do want parents to have free child care, I also think that educators and teachers need to be raised with that because otherwise, it’s just going to be a disaster.”