> If you're going to pay that amount, why not just give the parents the money?

They did, for many years. It was a flagship policy of the Christian Democratic party. Labour and the left didn't like it because it was seen as keeping women dependent and out of the labour force (I think something like 90% of the time, it was the woman who took advantage of the subsidy). The far right didn't like it, because it was very often the wrong kind of woman who chose to stay at home with their 2 year old. So it was steadily reduced until I think it was removed entirely.

It should also be said that a lot of parents who took the stay at home subsidy didn't actually stay at home, but hired a nanny instead of sending their children to kindergarten. That got disapproval even from the traditionalists.