The design of the child care subsidy and its interaction with family tax benefit and the personal income tax system constitutes institutional discrimination against working women by creating major financial penalties for increasing workforce participation.
As a consequence, many women who would like to work longer hours end up choosing to cut back. Not only is this a cost to family budgets, it is a drag on the economy and leads to long term economic insecurity.
Australia’s female workforce participation rate falls in the prime parenting years, and women are much more likely to work part-time (12 per cent above the OECD average). The typical Australian woman with children of early childhood education and care age works 2.3 days a week.
These high workforce disincentives are a major driver of the gender pay gap, the gender income gap and the superannuation payout gap. We can’t begin to fix the gap in retirement incomes unless we tackle the gender income gap, and that means fixing our broken childcare system.
Australian families are paying higher out of pocket costs than ever before under the Morrison Government. Child care fees have soared by 35.9 per cent since the Liberals took power. Costs have continued to climb since the introduction of the new Scott Morrison-designed system in 2018.
Over the past twelve months, child care costs soared by more than three times the rate of inflation.
The latest ABS data confirms Scott Morrison’s child care system has completely failed in less than three years. The cost of child care is now higher than it was under the previous child care system and is the highest it has ever been.
Analysis from the Productivity Commission confirms child care costs are locking Australian parents out of the workforce. There are almost 92,000 families (up 23 per cent in a year) who are now locked out of the work because child care is unaffordable.
Increasing female workforce participation is one of the biggest economic opportunities available for governments looking to kickstart economies after the COVID-19 recession, but the Morrison Government refuses to take serious action.
The Government also abandoned child care workers, 97 per cent of whom are women, by kicking them off JobKeeper months before other workers.
Unfortunately, the child care package in this Budget is a missed opportunity – hundreds of thousands of families will miss out on relief compared to Labor’s Cheaper Child Care Plan.
The Government’s child care proposal will only lift the child care subsidy rate for families who have a second or subsequent child under five years old in the system at the same time. It makes the already complicated system even more complicated.
In comparison, Labor’s Cheaper Child Care Plan lifts the subsidy and smooths the taper rate across the board, regardless of how many children the family has or how old they are, leaving 97 per cent of families – more than one million families - better off.
Three quarters of the families benefiting from Labor’s Cheaper Child Care Plan will miss out on any increase in their child care subsidy under the Liberals’ plan, and those who do benefit will have to wait more than a year to see any relief.
There’s a lot missing from the Liberals’ announcement compared to Labor’s policy: