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Women wasted in a system that rewards staying at home

/ Nov 13, 2012 8:57AM / Print / ()

Dr Jenny Fagg from the Business Engagement Committee of Chief Executive Women

We cannot expect a mother to return to the workforce, and for the nation's productivity to be improved as a result, if her financial incentive for doing so is hindered by childcare-related expenses, according to panelists at the Committee for Economic Development of Australia's (CEDA) final Women in Leadership event for the year.

The panelists agreed there are a number of problem areas that hurt a woman's opportunity at work, including inflexible and unaffordable childcare, a lack of flexible work practices, and a tax system that does not always make it financially worthwhile for a woman to return to work after having children.

These inhibiting factors continue despite clear research on the benefits of increasing the participation of women in the workforce, said EOWA director and CEDA panelist Helen Conway.

She cited two recent studies that highlight the point. The first, from Goldman Sachs JBWere, found closing employment rates between men and women would see an 11% boost in Australia's GDP. The second, by the Grattan Institute, found that if Australia raised the participation of women by 6%, we could increase our national GDP by $25 billion.

"It's pretty simple: if we don't do it the nation will suffer and Australian businesses will suffer," said Conway.

Former ANZ New Zealand head Dr Jenny Fagg said overhauling the childcare system would help, and get us closer to returning the investment made on the education of the country's women. "Access to quality, flexible and affordable early childhood education and care is a key workforce participation issue, critical to bolstering Australia's productivity," she said.

Representing Chief Executive Women at the lunch, Fagg said CEW members agreed the Productivity Commission was well placed to conduct a review into childcare, with the group identifying five areas up for debate: the complexity of childcare benefits; the true costs of childcare (including regional differences); the ad hoc childcare demands of school-aged children (school holidays and sick days); the need for flexible childcare that suits shift workers and those working long and irregular hours; and limitations of the FBT Exemption (which provides a benefit to those accessing childcare facilities on site), of which only a fraction of Australians can currently access.'

"The heart of the challenge is to balance the social and economic outcomes across sectors. We need a simplified, comprehensive model that looks to best meet the needs of the whole community," said Fagg. "However, we don't believe there is a simple or 'silver bullet' answer, since tradeoffs will need to be made to achieve an appropriate mix of social and economic outcomes."

The Tax Institute's Robert Jeremenko said the tax system could be adjusted to help with the financial considerations a woman makes on returning to work. "Where the tax system can make a real difference is those instances where the decision to stay or leave the workforce is driven by financial factors," he said. "Tax is a big part of this jigsaw puzzle. And one of the areas government can influence."

Jeremenko said positive financial incentives for women to stay out of the workforce needed to be reconsidered (as identified in the Henry Tax Review), and that childcare was one of the Tax Institute's priority areas for reform, given the current system included a number of biases against work.

His opinions were in line with the results of the Grattan Institute, which found the net cost of childcare, as well as high tax rates, are preventing mothers from re-entering the workforce, even though that demographic could play a significant part in raising Australia's female workplace participation rate.

Senator Michaelia Cash, the shadow parliamentary secretary for the Status of Women, said the Coalition recognised there was a role for government in developing strategies that would aid women's workforce participation and increase productivity. "When you think about increasing GDP by $25 billion, as a policy maker, that's a red light."

She said the terms of reference of the Coalition's previously-announced review of the childcare system through the productivity commission "will be broad".

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