Women are being shut out of the workforce, largely because of Government policy.
This week the Australian Bureau of Statistics published figures showing that about 265,000 women want to work or want more hours but cannot mainly because they cannot get acceptable child care.
Also this week an informal backbench group will take up the childcare issue.
Why are we wasting this huge, willing, untapped resource? Why are we denying up to 265,000 women the benefits of employment – money, social interaction, training and fulfillment? Ideology, I suspect. Plus a vicious combination of other factors.
Perhaps the most vicious is that governments – state and federal – have quite rightly imposed costly accreditation and approval requirements on child care, but have by and large left the mothers to pick up the cost. Gone are the days when children could be left cheaply at a carer’s home. Fair enough. There were all sorts of risks in that system.
But in its place we have a system that discourages women entering or going back to the workforce after having children.
The combination of high taxes, loss of child benefits, high child-care costs and the difficulty of finding places close to home, work or schools is deadly.
Look at the choice, for example, of a mother in a major capital with one school-age and one before-school-age child. A young woman might command a salary of $40,000, or $800 a week.
If she stays at home and has no work she would get about $13,500 in Family Benefits (A and B). Benefit B is the old sole-parent allowance which is now paid to families where one parent earns the bulk of the family income.
If the woman is married her $40,000 when added to her husband’s income would typically wipe out both Benefit A and B, both of which are income tested. So her $40,000 becomes $26,500.
Then she would cop $8000 in tax. So her $40,000 becomes $18,500.
Then she has to find childcare. In Sydney they charge $75 a day for full-time care and $20 a day for after-school care – about $5000 a year in our example. The net earning is now $13,500. But if the children go to an accredited child-care centre the mother gets a 30 per cent rebate, totally $1500.
Her net income is now $15,000 for a full-time job with all the stress of organising the children and the cost of transport to child-care and work and the cost of work clothing and not having time to shop and prepare food more economically — leave alone the hideous cost of late fees at child-care centres if you get held up by work or traffic.
In short, forget it. It is just not worth it. Who in their right mind would work for $15,000 a year?
The trouble is, the system is run mostly by blokes. Australia has never had a female Treasurer and only two or three serving Federal Members of Parliament have had babies.
The Government says that it is spending more than ever before on child care. True – more than $2 billion a year. The same is true of social welfare in general. But, and it is a big but, the Federal Government is taking more tax than ever before. It likes to be Father Christmas handing out Family Benefit A and B and expecting votes in return, but it took the money in tax in the first place. So we have huge disincentives for women with children going to work – sometimes a marginal effective tax rate of 70 cents in the dollar. That is, 20 cents in the dollar for each of Benefit A and B and 30 cents for ordinary tax.
Before the big government foray into taking money in tax and handing it back in welfare, there was no disincentive. People just got a tax deduction for each child. True, the welfare method at least put money directly into mothers’ hands to spend on children rather than in fathers’ hands in the form of a tax deduction which might be spent at the pub, but the consequences have been worse than the original evil. (Pardon the stereotypes, but they are still largely true.)
The surprising thing is that despite the system being hopelessly stacked against them, women still want to work after a reasonable period staying at home with a baby. There is now a waiting list of 175,000 child-care places in Australia. We should be acting on this desire to work, not working against it.
But a lot of the work showing the benefits of getting mothers into the workforce seems to get ignored. Submissions to the parliamentary inquiry into Balancing Work and Family suggest that each $1 put in to child care reaps more than $1.80 in tax.
However, instead of tapping into this resource to alleviate skills and labour shortages, the Government goes for the easy option – more immigration.
And guess what? The Productivity Commission has found that increased immigration does precious little for the economy when you take out the costs. And that is not counting the environmental costs. Nor, more importantly, does it account for the huge social costs that higher immigration causes through pushing up housing prices.
To take the thing the full circle, paying for housing is probably one of the reasons that so many families need two incomes in the first place.
In any event, Governments should not be able to get away with imposing high child care accreditation standards and rearranging the tax and welfare systems while at the same time leaving mothers to pay for the consequences.
The very least the Government should do is allow unlimited tax deductibility for all child care expenses; abolish the fringe-benefits tax on employer-provided child care; underwrite more child-care places; and change the tax-welfare system to remove the huge disincentives for women going into the workforce.