How does the 2015 budget impacts families? That was, in a nutshell, my brief for an appearance on ABC’s Lateline last night. Luckily for me the majority of the measures impacting families had been announced prior to the Budget lock up so I had a head-start on the issues. This is the case I wanted to mount.
Why do we need to pay anything for day orphanages?
(I have paraphrased Fred Nile & Senator David Leyonhjelm)
The case for investing in childcare and paid parental leave is not well understood in Australia. To say the very least. This is why every second day, or daily in a bad week, you are likely to read/see/hear a variation of the following:
Day Orphanages ruin children
Millionaire mums rort the system
Back in our day we lived on one income
If you can’t afford children don’t have them
Why don’t these greedy, lazy women just look after their own children and not expect a cent in return?
(NB for another day perhaps we should dissect why mums are referred to so disparagingly?)
Having children is legitimate and desirable in Australia.
Parents (mums and dads) working is also legitimate and desirable. It increases the tax base, boosts productivity and it provides families with greater economic security. It’s also the most effective way that women can have a shot at accumulating wealth as opposed to accumulating poverty over the course of their lives.
Supporting these two legitimate and desirable objectives requires an array of policy settings.
Previously two parents working was less common than it is now but Australia’s infrastructure has not caught up. Our tax system, community attitudes, corporate behaviour and the short supply of childcare are a few of the barriers which currently limit the engagement of women in paid work.
The impact of this is borne out in Australia’s female workforce participation rate which sits at 68% and hasn’t moved much in the past decade. We rank 52nd in the world for our workforce participation which is particularly curious given we rank first in the world for educating women.
The gap between male and female workforce participation matters but don’t take my word for it. Why would the world’s economic and finance leaders resolve at the last G20 meeting to tackle this gap if it weren’t a pressing economic concern? Hint: It is.
Inequality is expensive as well as contributing to a raft of undesirable outcomes.
In Australia the Intergenerational Report underscores the relevance of this point again. We need as many women working as possible.
The oft-quoted fact is that if we boosted our female workforce participation rate 4 percentage points to Canada’s level we would add $25 billion to our GDP each year.
How did Canada get so much further ahead? It wasn’t an accident. From 1997, various Canadian governments introduced a range of reforms that reduced the disincentives for women to work. This included tax cuts for low and middle-income families which increased the take home pay of second income earners. Critically, Canada committed to improving the accessibility, and subsidising the cost, of childcare.
They determined that removing disincentives for women to work would pay off in the long term.
Australia is yet to make the same decisive commitment. Worse still, is the fact this case hasn’t been effectively presented. Whilst other countries are busily narrowing the gap between men and women at work, we are still floating about in a place where women have to justify or explain working.
It’s not just about workforce participation
Improving access to childcare will have a positive impact on women’s workforce participation. That is not, however, the only compelling reason for investing in high quality early learning and care.
A PWC report from last year shows that the long term social and economic benefits gained from the provision of high quality early education exceed the potential productivity gains. Quality education and care programs deliver.
“This study estimates a cumulative benefit to GDP by 2050 of $13.3 billion if children whose parents are in the lowest income bracket — and are unlikely to attend an early childhood program — attend a program.” PwC partner Tony Peak says. “The study finds a cumulative positive impact on GDP of up to $29.6 billion by 2050 and an estimated net fiscal benefit of between $1.6 and $1.9 billion in the same period.”
Australia spends 0.2% of its national GDP on pre-primary education. This is 3 times less than the OECD average of 0.6% which means out of 33 countries we rank last.
Double dippers: The great hoax & a great shame
Need proof that Australia’s community attitudes around women and work are stuck back in the 1950s? Take a look at the comments thread on any story or social media post from the past few days arguing for “double-dippers”.
I will reiterate the earlier point that having children and working is legitimate and desirable from a national perspective. It does, however, require certain policies and structures.
Paid parental leave is one such policy that is critical in this regard. Why do 32 out of 33 OECD countries provide paid parental leave? The purpose is not simply to generate that warm feeling that a Huggies ad tends to generate. Paid parental leave promotes long term health and economic benefits.
The optimal period of time for a mother to be with a baby to achieve these benefits is 26 weeks; this is recognised by the World Health Organisation and the NHMRC.
Anything that moves Australian mothers closer to being able to spend 26 weeks with their baby, moves us towards those health and economic benefits. That is why reducing the paid leave offered to 79,000 Australian women is an anathema.
This is the framework by which Australia’s policy settings need to be judged. As it stands we’re doing badly.