Dave Sharma (Wentworth, Liberal Party) Share this | Link to this | Hansard source

In my first speech here I spoke about the reality of modern family life, with both partners working and having career aspirations and struggling to make this work along with the desire to have a family and raise children. I described the dilemma when one partner is often forced to take a career backseat as not only being frustrating for that partner, who might wish to pursue their professional career, but also being a lost economic opportunity for the country. As a speech by Guy Debelle, the deputy governor of the Reserve Bank, delivered last week makes clear, we have come a long way in reducing the gap between male and female workforce participation in Australia. The share of the population participating in the labour force is at a record high, and the two main groups contributing to this rise in participation are females and older workers. This trend is welcome. Further, female employment growth in particular has accounted for two-thirds of employment growth over the past year, the female participation rate at its highest rate, and the gap between male and female participation is now the narrowest it has ever been.

Increasing flexibility of work arrangements, the growing availability of child care and policies such as paid parental leave have all helped drive this. And, while this gap has closed somewhat, the gap persists, and it is wider than in a number of other OECD countries. Closing this gap further would be one of the more meaningful reforms we could pursue. It would address one of the three P's—population, productivity and participation—that ultimately drive economic growth. And the research is clear: the availability and cost of child care is a big factor in whether parents, particularly mothers, participate in the workforce.

I was pleased to help launch a report last month written by Rosalind Dixon, Richard Holden and Melissa Vogt of the University of New South Wales. The report, titled (Un)Taxing child-care: boosting choice and labour supply through subsidised and tax-deductible child-care in Australia, makes a significant research contribution to this policy issue. The report notes that our current childcare subsidy is widely used and accessed, including by low-income families. This subsidy plays an important role in ensuring affordability and accessibility of child care across Australia. Female labour participation has risen in concert with greater availability and affordability of child care.

The cost of the childcare subsidy to the federal government was around $8½ billion in 2017-18, or around 1.7 per cent of total government expenditure, and is forecast to grow. This is a significant sum of money, and we should always be prepared to examine our policy measures to ensure that they are achieving their intended purpose. As I said, we have come a long way in closing the gap between male and female workforce participation, but, according to the Productivity Commission, there are still some 165,000 parents, many of whom are women, who would like to work or would like to work more hours.

Although the gender pay gap has also narrowed over time, the gender pay gap persists, in large part a function of the greater amount of time spent out of the workforce by women than men, on average. As the Productivity Commission has found, at times the interaction of our progressive tax system, high marginal rates and our means-tested childcare subsidy can create disincentives for parents to enter the workforce or to increase their hours of work. The report by Ros Dixon and Richard Holden makes a number of interesting proposals to address these issues, including making work related childcare expenses tax deductible up to a point whilst maintaining the option to remain within the existing system of childcare subsidy such that no family would be worse off. The paper makes the case that the loss in tax revenue that would result from such deductibility would be more than offset by an increase in hours worked. The paper also argues, quite rightly, that we should not be viewing this issue solely through the lens of the progressivity of the tax system. This is a function which is best left to other parts of our tax system. Rather, we should be looking at this issue through the lens of providing incentive and encouraging positive behaviour.

The proposals contained in this paper merit further study and analysis, I believe. Increasing female workforce participation would be one of the most impactful and meaningful economic reforms we could pursue, not only for the economy but for those people, predominantly women, who would prefer not to put their professional careers and ambitions on hold or in the slow lane in order to balance the commitments of family.

This is an issue I will continue to advocate for. I welcome the meaningful contribution made to this policy challenge by this paper and commend the work of Professor Ros Dixon, Professor Richard Holden and Melissa Vogt to this important policy issue.