Rosemary Howard

Childcare for many families is the second biggest expense after the mortgage. If laptops, cars and mobile phones are all tax-deductable, why isn’t childcare?

In a recent Knowledge@Australian School of Business article, leading business women and academics have flagged childcare as the single biggest and most directly related cost to earning income that should be eligible for a tax rebate.

That’s why it makes economic sense for it to be firmly on the agenda for next week’s Tax Summit in Canberra.  To fulfill the required rise in national productivity and global competiveness, we must address this issue head-on.

The prohibitive cost of childcare affects all families. The lack of financial support in the form of childcare incentives is a serious impediment to women’s participation in the workforce. It is at odds with the nation’s shared objectives when it comes to advancing women into leadership roles, including those at the executive and board level.

Women’s poor representation at the top of the business ladder has been a topic of robust discussion. The latest statistics show that of ASX 200 appointments, woman make up 51 per cent of professionals but only fulfill 2.5 per cent of chair people, 11 per cent of board appointments and 3 percent of chief executive roles.

The 2010 Global Gender Gap Report, a publication of the World Economic Forum, found Australia ranked as No. 1 in terms of educational attainment but No. 44 for labour-force participation of women. This shows that Australia has one of the most highly educated female populations in the world, yet we do not allow women to fully participate in the workforce. 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. This is supported by the Productivity Commission’s July 2011 research which shows that a 1 per increase in early childhood education and care fees leads to a 0.3 per reduction in the employment rate of mothers with young children and a 0.7 per decline in hours worked.

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.

Unless the government is prepared to increase taxpayer subsidies for childcare, the increasing cost of childcare will continue to limit women’s participation in the workforce; ultimately inhibiting their career advancement.

Rosemary Howard is Executive Director and Conjoint Professor of AGSM Executive Programs at Australian School of Business, UNSW.