Leading business women and academics have identified childcare as the single biggest and most directly related cost to earning income that should be eligible for a tax rebate.
Childcare for many families is the second biggest expense after the mortgage, and it should be firmly on the agenda for next week's Tax Summit. Addressing this issue will contribute to the required rise in national productivity and global competiveness.
Rosemary Howard, Executive Director and Conjoint Professor at AGSM said: "It makes economic sense. If laptops, cars and mobile phones are all tax-deductable, why isn't childcare?"
The prohibitive cost of childcare affects not only low-income families but well-paid women in executive roles. "The lack of financial support for working families, in the form of childcare incentives, is an impediment to women's participation in the workforce, particularly when it comes to advancing women into leadership roles and at board level," says Howard.
Women are poorly represented at the top of the business ladder, holding only 11 per cent of the top 200 board appointments. According to a 2009 Goldman Sachs report, Australia's Hidden Resource: The Economic Case for Increasing Female Participation, having more women in leadership roles has the potential to boost the level of economic activity in Australia by 20 per cent.
"The current gender bias means that women are not being employed in roles where they can be most productive. Substantial childcare incentives could not only help lessen the gender gap, but drive productivity levels," says Howard.
Investing in childcare should be seen as adding value to the economy, according to Rosamund Christie, Program Director for the Women in Leadership program at AGSM.
"Tax-deductibility of childcare ought to be a right. Our economy depends on a fully functioning workforce and – however it gets that – it should be supported," Christie said.
Judith MacCormick, a post-doctoral research fellow at the Australian School of Business, believes that ultimately, our outdated business structure is the underlying roadblock prohibiting governmental buy-in.
"We are working from a 150-year-old model that was suited to the industrial era and that's also very hierarchical. It is simply not possible to provide adequate care for young children while also performing work duties," MacCormick said.
Helen Hodgson, a senior lecturer in Business Law and Taxation at the Australian School of Business adds: "A family with two, full-time earners probably won't get too much childcare benefit and most women w ho are working more than two or three days a week will be relying on the childcare rebate. The impact of the cost increases in childcare is that women will be out of pocket by at least 50 per cent of the increased amount because they only get reimbursed for, at most, half of the cost if they remain under the A$7500 cap."
Research highlighted by the Productivity Commission in July 2011 shows that a 1% increase in early childhood education and care fees leads to a 0.3% reduction in the employment rate of mothers with young children and a 0.7% decline in hours worked.
The commission warns that unless the government is prepared to increase taxpayer subsidies for childcare, the increasing cost of childcare could reduce women's participation and contradict Prime Minister Julia Gillard's agenda of encouraging more people into the workforce.
For more insight, read Knowledge@Australian School of Business' feature on Tax-deductible Childcare: What Women Want Makes Economic Sense.
For media enquires and to arrange an interview with Rosemary Howard, please contact:
Lindsay McHugh, P: 02 8987 2100 E: LMcHugh@porternovelli.com.au
Cené Dimeska, P: 02 9931 9423 E: firstname.lastname@example.org
Adjunct Faculty, AGSM @ UNSW Business School