Mothers are penalised for working more days under the flawed childcare subsidy and reforming it would generate 30,000 extra work days a week and boost the economy by $700 million, a new KPMG report has found.

KPMG chairman Alison Kitchen and Chief Executive Women president Sue Morphett will team up on Wednesday to launch a report that finds more than 125,000 working mothers are being penalised for choosing to work more days.