New modelling shows income tax cuts will leave women in the cold – what about ECEC?

New modelling from The Australia Institute shows the Federal government’s planned income tax cuts would deliver $2.28 of benefits for men for every dollar that flowed to women, widening the economic divide between men and women. 

When it comes to the early childhood education and care (ECEC) sector, with 97 per cent of the workforce being female, the proposed changes are of interest to the sector not only on an individual level, but also for the impact that reduced female participation in the workforce may have on the uptake of ECEC services. 

In discussing the results Georgie Dent, Executive Director of The Parenthood said the Federal Government was “in denial” about the impact of the COVID-19 pandemic on women, with “no plans for addressing the ‘pink recession’ gripping the country”.

The Australia Institute analysis shows that 91 per cent of the benefits of these tax cuts would go to just 20 per cent of taxpayers, Ms Dent said, adding that “while men stand to benefit at more than twice the rate as women, the broader economy won’t”.   

Rather than providing the tax cuts as outlined, which Ms Dent believes would have “a very limited stimulatory effect on the broader economy because those gains are saved not spent,” The Parenthood called instead for greater investment in the ECEC sector.

Universal, high-quality early learning, in which Grattan Institute modelling has shown that spending $5 billion to increase the childcare subsidy would deliver $11 billion in increased economic activity by helping women back into the workforce would be a better choice, Ms Dent added. 

“We know families and women who are on middle and low incomes tend to spend additional money on goods and services which boosts the economy,” she said.   

“The Australia Institute also finds spending $1 million on education jobs, still a female-dominant sector, results in, on average, 9.2 jobs, compared with sectors such as gas where the return is a single job.”

The upcoming Federal Budget, Ms Dent continued, is “a core opportunity for the Government to demonstrate a commitment to proactively supporting early learning and the benefits it brings for women, children, our society and our wider economy.”