Affordable childcare the key to boosting women's retirement savings

Affordable childcare the key to boosting women’s retirement savings

More affordable early childhood education and care could help boost the superannuation of Australian women, who are currently retiring with one third less super than men.

According to a new report from Industry Super Australia, increasing the child care subsidy for low- and middle-income families to 95 per cent and flattening taper rates, could see a woman on the median wage, if she moved from part-time to full-time work, retire with an extra $118,000.

Industry Super Australia says improving women’s workforce participation is the key to reducing the gender superannuation gap.

Making these changes to the federal government’s childcare subsidy, as modelled by Deloitte, would also help Australia’s economy grow by over $20 billion by 2050.

“ISA’s research shows that by increasing the CCS rate and flattening the taper rate, particularly for low-income women and families, the Federal Government would signficantly improve women’s workforce participation and, in turn, their retirement outcomes,” the report states.

“And once the full fiscal impacts are taken into account, the benefits from the boost to GDP, extra income and super tax revenue and reduced federal budget outlays in Age Pension and working-age social security payments would substantially reduce the net cost of increasing the CCS.

“If we do not act, women will continue to retire with less than men for more than four decades to come.

“This is an unacceptable outcome for our retirement income system which must be urgently addressed by the Federal Government.”

Industry Super Australia’s research comes as peak bodies in the early education and care sector have released a “blueprint” for government to guarantee high quality education and care for Australian children.

The 6 point plan, developed by the Community Child Care Association (CCC), Community Early Learning Australia (CELA) and Early Learning Association Australia (ELAA), proposes:

1. two days a week of funded early education and care for all children from birth to school

2. a commitment to the inclusion of all children

3. mandatory National Quality Standard assessments and ratings at least every three years

4. the creation of a national industrial instrument for the education and care sector to provide educators with fairer levels of pay

5. a National Children’s Education & Care Workforce Strategy

6. properly funded infrastructure and sector support

“Our plan delivers the most important and consequential reforms ever seen in the Australian education and care sector. It means every child has the same opportunities, regardless of what their family earns or where they live,” Executive Director of CCC, Julie Price, said.

“That’s why our 6 Point Plan’s cornerstones are two fully funded days of care and education from birth to school, and the reshaping of pay, conditions and quality standards to secure a higher quality workforce.”

Michele Carnegie, the CEO of CELA said the government’s under-investment in childcare has created a “double-whammy” of poorer outcomes for children’s learning and higher cost of living pressures.

“Children from rural areas, and from disadvantaged households are more likely to start school behind their more advantaged city counterparts. Greater government investment is needed to level the playing field and ensure all children get the same opportunities,” Carnegie said.

“It also harms parents, particularly women. High childcare costs mean the financial benefits of working are marginal. As a result, they drop out of the paid workforce, making it harder to return later and producing much lower lifetime earnings.”

“We also know the sector is facing a major workforce crisis. Low pay, high staff turnover and uneven access to quality training mean services struggle to find the quality staff needed by children and families,” David Worland CEO of ELAA said.

“The combination of these factors results in immediate and generational missed opportunities.”

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