How changing childcare subsidies could reduce the gender gap

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August 10 2020
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Despite women and younger Australians being most impacted by the COVID-19 pandemic, they are still being left behind from a policy perspective, according to new research.

How changing childcare subsidies could reduce the gender gap

During an Industry Super Australia webinar, former prime minister Paul Keating pointed out the gender bias in the economy and the superannuation system.

“I think the bias in the system is women’s incomes are relatively low compared to male workers and they are required for domestic and family reasons to not be in the jobs market,” Mr Keating said.

“There is a natural bias in there. The only way to improve that is further and deeper female participation in the workplace and, of course, better rates of pay.”

Changing childcare subsidies

The Grattan Institute said it could help solve this problem by creating cheaper childcare, which would help mothers increase their lifetime earnings by $150,000 as well as help boost the nation’s economy by $11 billion.

Increasing the childcare subsidy for low-income families from 85 per cent to 95 per cent and then tapering for households earning above $68,000 could be a key policy measure in recovering from the COVID-19 economic shock, according to the Grattan Institute’s Cheaper childcare: A practical plan to boost female workforce participation.

Under such a scheme, 60 per cent of Australian families would pay less than $20 a day for childcare, with no family worse off.

And while it would cost the government $5 billion a year, the economic payoff of increased female workforce participation would more than eclipse that, boosting Australian GDP by $11 billion.

“Cheaper childcare is a win-win – it would boost the economy and give Australian women enhanced life choices,” said lead author Danielle Wood.

“It should be central to the government’s plans for lifting Australia out of recession.”

Australia’s female workforce participation rate is above the OECD average, but Australian women are much more likely to work part-time. Before the COVID crisis, a typical Australian woman with pre-teenage children worked 2.5 days a week.

Women in Australia continue to do most of the unpaid household work, which further constrains their choices about doing more paid work.

The federal government should extend the parental leave scheme to offer six weeks “use it or lose it” leave at minimum wage for each parent, plus 12 weeks they can share between them. This would cost an extra $600 million a year, but would help fathers spend more time with their children in the critical first year of the child’s life.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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