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Complete ‘rethink’ of childcare system sought to keep women in jobs

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
29 May 2020 1 minute readShare
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The small business ombudsman has backed calls for a complete “rethink” of the childcare system, calling it “an essential service for women in small business”.

The federal government introduced a temporary $1.6 billion childcare scheme back on 6 April, freeing some 945,000 Australian families from the cost of childcare.  

But the scheme, which also ensured childcare centres were kept in business during the crisis, is scheduled to expire on 30 June, promoting calls for an extension.

“Women make up more than a third of Australia’s small-business owners (35 per cent) and more than 5 million women work in these businesses,” Ms Carnell said.

She explained that the latest ABS labour force data, showing female workforce participation rate falling to 58.4 per cent in April, is particularly worrying.  

“Many of the women who are still working and running their businesses are relying on JobKeeper payments, which will not cover childcare fees if they are reinstated in full from [1 July],” she said.

“This could force mothers out of their jobs, which is detrimental to working families and even worse for the economy.”

Her suggestion to the government is to turn to “innovative ways” to increase participation rates for women and ensure productivity gains for businesses.

“There are a number of ways for government to do this, including making childcare tax-effective or by phasing in an expanded subsidy scheme as recommended by the Grattan Institute, estimated to deliver an $11 billion boost to the economy,” Ms Carnell said.

“Economists have often referred to the ‘double dividend’ of childcare increasing workforce participation rates and providing early education.  

“Equally, the government needs to look at supporting childcare centres, many of which are small businesses, which have suffered losses due to the structure of the current measures.”

The Grattan Institute has suggested an expanded subsidy scheme, which increases temporarily the maximum rate subsidy from 85 to 95 per cent of out-of-pocket costs.

“Our modelling suggests a subsidy of 95 per cent of childcare costs for low-income families, tapering down slowly to zero as family income increases, would cost taxpayers an additional $A5 billion a year, compared with at least $A14 billion more for a universal scheme,” the institute explained.

This would provide an $11 billion boost to the economy, according to the institute’s calculations.

Complete ‘rethink’ of childcare system sought to keep women in jobs
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Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

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