Wednesday, 21 October 2020
It’s often said budgets are a statement of a political party’s values. Two weeks ago the Morrison government delivered a budget that left too many people behind and held too many people back. In fact, after $1 trillion worth of debt, there was nothing in it to help families struggling with the cost of child care, nothing to provide structural reform for our economy and nothing that would provide a long-lasting legacy for this country. It’s been described as ‘a blokey budget from a blokey government’. It’s not me saying that. In fact, it’s not women saying that. It was actually Ross Gittins, the economist, who said that today. The government tried to spin, in the usual way, that this budget was for women because ‘it helped women drive on roads’, because they were investing in infrastructure. I guess that is a little bit better than arguing that women would benefit from an extra lane because they could give birth in it—anyway!
This Liberal budget and the budgets before it have done nothing to fix our broken childcare system, which, under this third-term government, now has some of the highest costs in the world. Their budget has done nothing to fix how expensive this is for so many families. Many families are now choosing between working for nothing or staying home. The most recent evidence is that 100,000 families are locked out of the system because they just can’t afford it. This year, the fees have been jacked up by 4.5 per cent, pushing up out-of-pocket costs again, and they have now gone up by almost 36 per cent since this government was elected. It’s a system that is so expensive that more than half of families say it impacts on their weekly grocery budget. It’s a system that has built-in design faults that are a barrier for the second income earner to work more. These barriers are caused mainly by the current subsidy and taper rates and cliffs—and that dreaded annual cap.
This has resulted in the birth of a new term: ‘the workforce disincentive rate’. It is this government that has caused this new term. This workforce disincentive rate measures how little financial return the second income earner gets if they increase their days of work from perhaps three days to four or five days. Let’s be clear here, the second income earner is usually a woman. We had a government senator saying yesterday that this is an insulting term, that in this day and age we shouldn’t be talking about the second income earner usually being a woman. But he acknowledged afterwards that it usually is a woman. Of course it is! This government needs to live in the real world.
Modelling by the Grattan Institute has shown that a father earning $100,000 a year working full-time and a professionally trained mother with a salary of $70,000 full-time working three days faces a workforce disincentive rate of 91 per cent if she wants to work five days. That is, she will only get nine cents in every dollar she earns. The Prime Minister’s childcare system, which he designs, penalises women who want to work full-time.
This week we’ve heard from families struggling under the current system. Bec from Perth is a solicitor and a mum of two who only works three days a week because she says working four days left her worse off under the Prime Minister’s childcare scheme. Bec’s family has a combined income of $193,000. The government’s budget did nothing to help women like Bec get ahead by taking extra work during this recession.
Liz works as a software professional. She and her partner together earn $200,000 and are paying $25,000 a year in out-of-pocket costs for childcare. Liz says she can’t go for promotions at work because she would be expected to work more hours and would lose money paying for child care. Why is this government holding back women like Liz from taking on extra duties and responsibility at work? The Prime Minister likes to say, ‘If you have a go, you get a go,’ but not if you’re Liz. Not if you’re one of the many women actually wanting to go back to work but facing this expensive childcare system.
Two weeks ago Labor delivered a reform plan to better support working families, smash down barriers for the second income earner and supercharge Australia’s economic recovery. Our plan will increase the subsidy rate and tapers, and will mean that 97 per cent of families in our childcare system will be better off. The same family who gets nine cents in the dollar under the Prime Minister’s system will get 32 per cent better under our plan. Overall, the Grattan Institute has found that Labor’s policy will lead to an 11 per cent increase in hours worked by the second income earner with young children. This will increase our productivity and will deliver a sustained boost to economic growth.
Economic modelling by the Grattan Institute and KPMG has estimated that policies similar to Labor’s would increase the GDP annually in the range of $4 billion to $11 billion. This is a strong return on investment. Australia will only pay off the trillion dollars of Liberal debt by growing the economy. That might be news to the Liberal Party, but Labor, on this side, understands. Our policy will help to do that. The government has been tying itself in knots over the week trying to work out how to attack Labor’s plan. First, the minister, or someone from the minister’s office, said, ‘We’ve got to lay the groundwork. We’ve got to do better. There’ll be something one day.’ Then the Prime Minister attacked the cost and said that it would just cost too much—that was the day after, or a couple of days after, he announced a trillion dollars of debt. Then they spruiked how much they already spend on child care, which does nothing for families doing it tough. Then they talk about how much child care costs per hour. Do they seriously think they can pull the wool over families’ eyes? When they talk about $5 an hour you’ve got to times it by 12. Then you’ve got to times it by five, because that is what families are paying. When you hear the government say $5 an hour what they’re talking about is $300 of out-of-pocket costs every single week for Australian families. That’s what they’re trying to do. Of course, it’s the normal spin by this government, but families are not fooled.
What we need to do is seriously have a conversation about making it easy for families to participate. We need to have a serious conversation about economic recovery. But, as usual with this government, they continually try and spruik that women’s workforce participation has increased on their watch. Of course, what they never tell you is Australia has one of the highest part-time-employment shares in the OECD.
Australian women are working part-time because, in most cases, they are working in a system that this government has designed that makes it economically disadvantageous for them to work full-time. This is the system that the Prime Minister has designed.
Of course, in question time this week, we had the government attack Labor’s policy because it says it’s for the ‘top end of town’. This is an extraordinary comment from senior Liberals to make, and shows what a tin ear they have when it comes to Australian families. This system punishes many families with a range of combined incomes, but, particularly, as we’ve highlighted through the annual cap, punishes families with a combined family income of over $189,000—$189,000 is a police officer and a teacher working full-time. Does the government seriously think these families are rich? Does the government seriously think that these families should have a workforce disincentive built into their take-home pay?
It’s also worth remembering that the Prime Minister’s original 2015 budget marketing brochure for his new system included a 20 per cent subsidy for all families over $200,000. But he’s abandoned this now. He’s abandoned this, saying that these families don’t deserve extra funding and these families don’t deserve extra support. Why? Because this Prime Minister is just too proud. He cannot bring himself to support Labor’s good policy, but this policy is the right policy for the country. Labor’s policy is good for families, good for children, good for business and good for the economy.