New Child Care Subsidy: I fear efforts to close the gender pay gap could suffer

New Child Care Subsidy: I fear efforts to close the gender pay gap could suffer

As new child care arrangements kick in for parents this week, Labor MP Susan Templeman fears some women will be worse off, especially if making a post-baby move from part time to full time work. 

There is some trepidation among parents as the start date for the new Child Care Subsidy kicks in.

We know there are benefits for a number of two-parent working families.

But we already know that many families won’t qualify for the subsidy because parents won’t meet the new work, study or volunteer test. And we already know that many families have found the process of registering complex and, in fact, for some, just too damn hard.

All these are serious concerns that could lead to parents not qualifying for support, which will punish their children by denying them access to early learning.

But there are also real dangers that the new system will undermine the ability of professional women to continue their careers and will further entrench the gender pay gap.

The new subsidy arrangements create a disincentive for professional women to take a post-baby career step from part-time to full-time.

This is about the woman I was 25 years ago, with young children, trying to continue a career.

I had worked full time as a journalist and then media relations advisor until my first child was born. A few years of being self-employed part-time led to, before my children were at school, a full-time venture. But would that be viable under the latest childcare subsidy system?

According to KPMG modelling, a mum who is professionally qualified, and works three days a week with two children in long day care, ends up only a little bit better off financially if she increases her weekly workload from three to four days.

Using a salary of $100,000 a year on a full-time equivalent basis, and assuming her spouse earns the same full-time salary and that childcare is $120 a day, the extra day’s work results in the professionally trained woman effectively working for less than the minimum wage.

But going from four days a week to full time is worse. After tax and extra childcare costs, the family’s disposable income is actually reduced – the family is going backwards financially.

Now, I am the first to argue that working is not simply about the money. Being able to keep working in your profession as a mother of young children is both a blessing and a curse.

You feel the guilt and struggle with sleep deprivation, yet at the same time have these wonderful moments when you aren’t defined by whatever food remnant remains on your blouse. In fact, for me it meant I got to wear work clothes and feel like I wasn’t only defined by my ability to get a child fed, bathed and in bed.

And I got the satisfaction of improving my professional standing and laying the groundwork in my business so that as my children grew, I was well placed to expand and grow.

But how much harder would that have been had I known that not only was I costing the family in terms of stress, but that my decision to work full time was also going to send the family financially backwards for those years of childcare? It’s a pretty strong disincentive.

While you’d like to think families would try and look at the incomes both parents bring in as a single combined amount, it’s hard to escape the cold hard fact that less money to spend is purely the consequence of one parent’s extra days’ work.

These work disincentives not only reduce the earnings for a woman in the short term, but flow through our finances for the rest of our lives.

This sort of policy makes it harder for professional women to close the gender pay gap.

What does the disincentive lead to in terms of professional standing and promotion prospects of a woman? And what are the financial consequences for women’s superannuation balances?

At the very least, it risks putting some of us back behind the starting line, and means there’s an even bigger gap to make up when we do return to work full time, presumably when we no longer have the heavy costs of full-time childcare.

And that’s the rub. Given the cost of childcare – and the fact that some centres have already increased costs in response to this new subsidy – and given the importance of quality early education, the Child Care Subsidy is crucial for women and families of all salary brackets, in making decisions about whether it’s “worth it” to go back to work, and for how many days.

And while the scheme (that starts on July 2) may suit many families, I fear some women will be worse off because of it.

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