Gender was invisible in the 2016 Budget. But as our gender audit of last week’s federal budget reveals, neither party can afford to ignore it in the current election campaign.
Treasurer Scott Morrison has previously implied that women’s concerns about the inequality in tax and expenditure measures are “petty”. But gender bias in economic thinking ignores the gender division of labour, including women’s under-representation in paid work, their over-representation in unpaid and low paid caring work, and men’s over-representation in full-time work, and higher paid jobs.
It results in false assumptions about the “average worker” and inhibits a proper understanding of the investment impacts of childcare, paid parental leave and aged care funding. The oversight and attitude need to be remedied in the development of policy for the next term of government.
Gender and jobs
Gender equality is not only an important end in itself but also a means to raise a country’s standard of living. Reducing gender gaps have been shown to increase jobs and growth. For instance Australia’s GDP could grow by 11% if the female labour force participation rate rose to equal men’s.
Australian men have higher participation rates and currently work relatively long hours, while women’s paid work hours are relatively low, due to a high rate of part time work.
Women’s participation rates had been on the increase but the growth in women’s workforce participation rates stalled around 2009-10.
The participation gap is a significant brake on Australia’s economic performance and policies and budgets that address the constraints on women’s participation in the workforce are required. Remedying the relatively low rate of female workforce participation would also go a long way to addressing concerns about government revenues and expenditures. The extra employment would increase tax revenues and reduce welfare spending.
Gender and bracket creep
However, the measures in the 2016 budget, which flagged the current government’s “economic plan”, focused on the incentives for full-time workers (who are mostly men) to work “an extra shift”, and they did nothing to lessen the barriers to women’s workforce participation. The changes to the income tax thresholds will benefit individuals on annual incomes greater than $80,000. The average full time male wage rate is just over $87,604 and, thus, many men will benefit from the change.
However, the average full time female wage rate is only $69,846; a number well south of the cut off point for the tax cut. Perhaps more importantly, the majority (56.3%) of women who work in part time jobs were missing in the Treasurer’s calculations of “the average worker”.
Childcare subsidies and aged care cuts
The postponement of new streamlined childcare subsidies and the Community Child Care Fund to July 2018 will mean that participation in paid work will continue to be financially unviable for many women. It’s a cost-cutting measure that goes against the weight of research evidence, which demonstrates the importance of affordable and accessible high-quality childcare to the workforce participation of women from low-income households in particular.
The cuts to aged care spending will also exacerbate the barriers to women’s workforce participation. As with childcare, when aged care is not adequately funded women’s unpaid care burdens increase, and this reduces their capacity to participate in paid work.
Paid parental leave
The changes in Paid Parental Leave (PPL), included in the 2014 budget and retained in the current “economic plan”, will force women to choose either government or employer-funded PPL with adverse social and economic impacts. The amount of paid leave available for many mothers to spend with their newborns will be reduced and the costs of time off work for parents will rise.
Some women will not return to work, resulting in a loss of skills and expertise from the workforce. Others will be forced to return to work earlier than the 26 weeks recommended by experts and recently recognised as desirable by the Productivity Commission.
A more effective, efficient and fair economic plan would invest in childcare and aged care services to boost employment earnings and economic growth, as well as foster gender equality. The major source of jobs in the Australian economy is the caring industries.
An investment of 2% GDP in the caring industries has been estimated to generate an additional 600,000 new jobs; many more than could be generated from equivalent investments in other sectors.
Importantly, because the caring industries rely heavily on the skills and competencies of women, investment in them will increase the incentives and opportunities for women to participate in paid work. Through the provision of childcare and aged care services, investment in these industries will also help to resolve key “supply side” barriers to women’s workforce participation.
Gender equality policies are increasingly being recognised by economists and international institutions like the World Bank for making a positive contribution to growing jobs and raising living standards. Recently the OECD advocated governments taking advantage of low interest rates to fund investments in pro-growth structural policies.
Australia needs an economic plan that sets out how government spending and revenue raising will capture these benefits.