Georgie Dent | Treating women as second-class citizens no longer flies economically, socially

Take a report published by Impact Economics in March which examined the impact of the federal government's activity test on access to the childcare subsidy.

The research uncovered the fact that Australia's first statutory paid maternity leave policy, introduced 12 years ago, increased employment among mothers with children under five years old by 75,000 adding $8.5 billion to the size of the economy.

Since that policy was introduced the participation rate of mothers with children under 5 has increased 14.6 per cent.

If paying women to take time off work after having a baby seems a perverse way to increase the number of mums working, think again.

Universal maternity leave allowed more women to keep their relationship with their employers after having a baby, which made it easier and more acceptable to return when they were ready. So they did.

In economic terms a $2.7 billion annual investment by the Commonwealth government delivered an $8.5 billion return to the economy, not to mention the profound health benefits for mothers and babies and the positive impact on household income and women's economic security.

But just as compelling social policy makes compelling economic policy, the reverse is true too.

Bad social policy is bad economic policy and the childcare activity test is a case in point.

The activity test, as it was revised in 2018, cut the access to subsidised childcare for families where one parent was not working at least 15 hours a week. It was justified by the Productivity Commission and the minister responsible at the time, Scott Morrison, on the basis it would act as an incentive to get parents back to work.

It achieved the opposite. The activity test is contributing to 126,000 Australian children from low-income households missing out on early childhood education and care. These are the very same children who stand to benefit the most from access to great quality early education.

Right now 264,000 women in households with children under five are not participating in the workforce and cite lack of access to early childhood education and care as a barrier.

Using a conservative estimate the removal of the activity test would result in 40,000 more women with children under five participating in the workforce and an increase of $4.4 billion per year to the economy.

Not a bad return for a $1.3 billion per year government investment. And, this doesn't cover the inestimable lifelong social and economic benefits for the children themselves, nor does it factor in the rise in household income and the greater earning capacity for women over the course of their working lives.

The reason this change will work is the same reason that universal paid maternity leave worked - it reduces the search cost for employment. The activity test creates an impossible dilemma for many parents who are out of employment: you cannot find a job if you haven't got suitable care, but you can't afford care if you haven't got a job.

Removing the activity test removes this barrier to finding employment. It is no surprise that both the women's economic equality taskforce, chaired by Sam Mostyn, and the economic inclusion advisory committee, chaired by Jenny Macklin, raised its abolition as an urgent recommendation in interim reports handed to the federal government within hours of one another.

A policy that punishes low-income families, at least half of which are single-parent households, and their children is morally indefensible, as well as abysmal economic policy.

It is an abject failure, for which there is near unanimous support for being axed immediately.

Then there is the wider question of the early childhood education and care system itself - 9.3 million Australians, mainly those living in outer suburbs and regional areas - live in "childcare deserts", where staff are often paid less than baristas (no prizes for guessing 93 per cent of them are women) and there is a 30 per cent staff turnover in services which diminishes the quality of education and care and further exacerbates the issue of supply.

The tax and subsidy system is so poorly designed that women who want to work four or five days instead of three days a week find that they would be working the extra days for no increase in take home pay.

In the year 2023, after the seismic shift in expectations and community attitudes among voters around the nation, it is time to bid farewell to anyone in Canberra who refuses to put a gender lens on economic and budgetary policy. Right now over their lifetime men with children will earn $2 million more than women with children.

It reflects poor social and economic policy.

To illustrate the nature of this policy failure we can look at a country of similar wealth and population to Australia in Canada - and compare the pair.

Canada - 50 weeks paid parental leave, average childcare costs 16 per cent of earnings and no activity test - result 60.7 per cent of women in full-time employment.

Australia - 22 weeks of paid parental leave, average childcare costs 24 per cent of earnings and the activity test - result 31.8 per cent of women in full-time employment.

It is clear Australia needs to do better. A truly universal, affordable early childhood education and care system is not just the most compelling social policy needed. It's the most economically compelling too.

Women have been treated as second-class economic citizens for far too long, often under the false guise of "prudent economic management".

In 2022, all over the country, women of different ages and stages, used their vote to reject the status quo.

A clear majority of Australians backed candidates and parties committed to meaningful, substantive policies to redress inequity. The license to ditch poor social and poor economic policies couldn't be clearer.