Academic Deborah Brennan has been appointed to lead a Productivity Commission inquiry into the early childhood and care system, to give more families access to better and more affordable childcare options amid the cost of living crisis.
Prime Minister Anthony Albanese said the comprehensive inquiry would improve quality of early education and boost participation for women in the workplace.
"Early learning is good for young ones, it's also good for families, it's also good for our economy," Mr Albanese told reporters.
"If we support women to be able to participate fully in the workforce there will be productivity benefits. It benefits them and their family budgets, but it also benefits businesses who employ women, because they're able to have greater continuity in their career."
Labor went to the election pledging increased childcare subsidies for families, which will start in July with about 1.2 million families expected to benefit.
Professor Brennan said the comprehensive inquiry would seek to address staffing shortages, working conditions and quality of care.
"We've got the foundations of a fantastic early childhood learning and care system in Australia," she said.
"But everybody knows there's work to do. We've got challenges around affordability, access, workforce - many areas - so we're going to have a really good look at the sector and come up with some suggestions for advancing the system."
Early Childhood Education Minister Anne Aly said the inquiry would also address issues often faced by disadvantaged children.
"Every single child has the capacity to grow and develop if we focus, if we get it right in those first five years," Dr Aly said.
Prof Brennan is an emeritus professor at the Social Policy Research Centre, University of New South Wales and an international expert in early education.
The inquiry will start on March 1 and provide a final report to government by June 30, 2024.
United Workers Union early education director Helen Gibbons welcomed news of the inquiry.
"Everyone agrees that high quality early learning environments are essential, and that those environments need well paid and valued educators," Ms Gibbons said.
"Yet early education is wracked by workforce shortages, escalating profit and poor quality standards ... This inquiry will expose the real issues faced by early education and help shape a better future."
It follows recent calls from frustrated childcare workers who are demanding a 25 per cent wage increase in the upcoming federal budget.
Experts say low pay, sub-par working conditions and inadequate government funding have led to staffing shortages across the industry as childcare centres struggle to keep up with growing demand.
An estimated 30 to 48 per cent of educators leave the sector each year, a rate that is double the national turnover average according to a budget submission by the union.
When asked about the likelihood of a wage increase, Mr Albanese said childcare workers deserve to be paid fairly.
"The government doesn't determine the level of wages for everybody in the sector ... What I support is people being paid fairly, and I won't comment on specifics because that's the job of the Fair Work Commission," he said.
The Fair Work Commission increased the minimum wage by 5.2 per cent or $40 per week last year.
Aged care workers received a 15 per cent pay increase by the commission last year.
