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Regardless of what improvements can be made to daycare regulations, "childcare subsidies but only if you pay for someone else to do it" is distortionary and produces economic inefficiency. Even if you hypothetically fixed regulations so hard that paying for daycare was always cheaper than even the worst-paying jobs, it would still be paying people trading off between "more money so we can save up for a cruise" and "getting to spend time with my kids instead of in an Amazon warehouse" to take the non-utility-maximizing option.
Making the childcare subsidies less distortionary is not "more government" in any meaningful sense, especially since it's coming out of the same fund so it is literally the same number of tax dollars being distributed. And of course until such hypothetical improvements are made we get the current situation where daycare for a couple children often costs more than the entire take-home pay for one of the parents, but the government will pay people to use it.
I think you are underestimating the overhead inherent in things like property costs, having a formal organization where people can sign up their kids, and compensating for the lower trustworthiness of multiple for-pay non-parent carers. Regarding the last I'm reminded of the statistic that non-relatives in the home are massively over-represented in abuse, while obviously some parents are abusive or neglectful it's less common. Not to mention the simple fact that more carers means a higher chance that at least one is bad. So if you're having strangers take care of your children there's an incentive to pursue overhead-increasing safety measures and expensive signaling like "all carers have a college degree in Early Childhood Education" or "daycare seems very well-maintained and high-class" to reduce risk, regardless of regulatory requirements. In any case, whether it can be made dramatically cheaper or not, subsidizing it over unpaid childcare is fundamentally paying people on the margin to choose it even if it would otherwise be the worse choice.
There is also a presumption that taking care of kids is the only output. A SAHM can help build a community especially if there is a critical mass
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