We live in an era where n women are simultaneously being encouraged to have children to address the needs of an ageing population and to return to work sooner and move up the corporate ladder.
Let’s remove huge barriers standing in their way.
If ‘s childcare system was more affordable and accessible and the tax system stopped penalising women who return to work, more women would work.
They also may have children sooner. In nations where women have more support to work, such Scandinavian countries, fertility rates are significantly higher.
But ‘s tax system isn’t built for the 21st century. It is built on the old assumption that home and work are independent of each other.
When women take on greater roles in the paid economy, they don’t simply abandon their families and managing their households.
A woman’s ability to participate in the workforce is usually wholly dependent on her ability to acquire childcare (the same applies for a man if he’s the primary carer, but women typically take on the primary caring role).
n women experience high effective marginal tax rates when moving from three or four days a week to full-time work due to the loss of family and child benefits.
While childcare salary sacrifice options for higher income earners in the public service and some large corporations are available, it’s not widespread.
Our tax system allows us to claim against our income tax the cost of laptops and office equipment as “work-related expenses” but not childcare.
So, when push comes to shove, many women are forced to reduce working hours to look after their kids.
The longer that women stay out of the workforce, the harder it is for them to go back in. And even if they do so, it’s often on lower wages.
This in turn has other negative economic consequences – women retire with less superannuation and become more reliant on the age pension and other welfare support.
A recent Grattan Institute report noted that if n women did as much paid work as women in Canada, where there’s subsidised childcare – implying an extra 6 per cent of women in the workforce – ‘s GDP would be about $25 billion higher.
But suggestions to try and get women back into work – the most common and controversial being tax deductible childcare or other employer-driven tax incentives for childcare – get struck down.
It is politically hard to sell the case of giving tax incentives to women on higher incomes. A 2015 Productivity Commission review found making childcare tax deductible would not benefit women on low incomes, but higher income earners paying higher marginal rates of tax.
And so the PC not only recommend the government abandon any move towards tax deductible childcare, but it also went further and suggested limits on employers and not-for-profits from getting fringe benefits tax (FBT) exemptions if they provide staff childcare.
But there are already limits. Currently, employer-provided childcare is exempt from the FBT, provided it occurs at a childcare centre on the employer’s “business premises”.
This has meant that only the nation’s biggest employers – the banks, universities and governments – which can afford to build or lease childcare centres, have been able to provide on-site childcare.
In 2006 a parliamentary committee, chaired by Liberal MP Bronwyn Bishop, held a Balancing Work and Family Inquiry, which took a different view to the PC.
It suggested that the FBT be removed from all childcare, so that all or any childcare provision made by employers to assist employees – in-home nannies and au pairs, family day care, occasional care, vacation care, or outside school hours care – is exempt. It also supported tax deductible childcare, with several caveats.
First, a tax deduction could only be claimed for the days of work on which the taxpayer can demonstrate the care was necessary in order for them to work.
Second, a tax deduction between parents in a couple family shall be apportioned between them in proportion to income earned by each.
Third, any unused portion of the tax deduction shall not be transferable between spouses.
The most important caveat: where a taxpayer elects to claim a tax deduction for child care expenses, the child care benefit and the child care tax rebate shall not be payable.
And where a taxpayer elects to claim the child care benefit and child care tax rebate, a tax deduction shall not be available.
This leaves the choice up to women and ensures women on low incomes, who cannot deduct against a high-income and get a tax benefit, still get support.
It is time revisits the issue of tax deductible childcare, even if it does so with income caps (there would likely be general public acceptance to limit those on very high-incomes).
The government also needs to simultaneously consider the plight of low-income women, and their ability to access welfare and pay for childcare costs.
If after all these reforms, women choose not to work to take care of young children, that’s up to them. The point is, they need to have a real choice. Not choices that penalise them.
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