The Early Childhood Council wants a radical overhaul of early learning regulations, including scrapping rules for pay parity and minimum teacher numbers.
It made a 100-page submission to the Ministry for Regulation calling for review or replacement of rules related to early childhood centre health and safety, governance and employment.
The submission pitched the creation of a new "assistant teacher" title for unqualified staff and suggested the government's rules and regulations should only cover the six hours a day the government subsidised.
It also called for clearer warnings to services before the Ministry of Education imposed sanctions, and a review of the mechanism that allowed anonymous complaints to the ministry.
The council said it had 900 members, most of whom owned one early learning centre.
The submission recommended removing kindergartens from the state sector and paying student teachers while they were on placement in centres as part of their teacher education course.
It said minimum teacher to child ratios were "ineffective" and it was impossible for the Ministry of Education to monitor whether centres were complying.
The submission said services had to ensure staffing ratios were kept at all times, including during teachers' breaks, which was hugely inefficient.
Council chief executive Simon Laube said the council did not want to get rid of teacher to child ratios, but the rules were too complicated.
Pay parity was "the single most vexatious challenge" facing services and teacher pay should be deregulated, the submission said.
Government funding to help services pay qualified staff at pay parity was insufficient and the compliance costs were high, it said.
"That intrusion of pay parity into the workforce relations space is very, very unwelcome. So that's what needs to be moved out, but how you continue things forward without teachers losing the valuable gains they've made already, that needs to be achieved too," Laube told RNZ.
"It's completely unsustainable and as time rolls on it will just completely fail because the funding is not going in to keep up with it."
Laube said the government put conditions on its funding to early learning services, but those conditions applied even to the hours the government did not subsidise.
"Do we really need all of the hours that parents want, to be at that premium level. Surely six hours per day is enough educational content to deliver to a child in one sitting and so then for the hours over and above six hours a day can we not have flexibility and move the quality of the service down a grade?"
Laube said services could provide fewer qualified teachers outside the six-hour period, which would be cheaper for services and for families.
"It would be more like a childcare option rather than a heavy education option."