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The real reason Abbott needs women to work

AAP

AAP

The Abbott government’s signature childcare package has been been interpreted as a conscious attempt to win favour with families and, in particular, female voters.

But there are also urgent economic reasons why the government needs more women in the workforce – and they relate to the looming problem of the ageing population.

The 2015 Budget Overview identifies the ageing population is the number one challenge for the future. 

“There is an urgent need,” it states, “to build productivity and increase participation in the workforce.”

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This urgency is clearly illustrated by the following fact. Currently, for every retiree there are 4.5 working-age Australians. But the intergenerational report estimates that by 2055, the number of working people to every retiree will fall to 2.7.

That’s a massive drop, and will put enormous pressure on the age pension.

The government therefore needs more women to work, firstly to help pay for people on the age pension; and secondly, to build up their own superannuation, thus taking pressure off the age pension in the future.

Women and super

Australia’s super system may be one of the most effective in the world, but it has one major failing: it discriminates against people who do not work.

This quirk has a stark effect on women.

AAP

The government enlisted the help of Dr Karl to warn of the challenges of the ageing population. Photo: AAP

According to the 2011/12 figures, a woman’s average superannuation balance at 65 is $105,000. That’s just over half as much as the average man’s $197,000.

This means women – and in particular single mothers – are much more likely to be reliant on the age pension. It would therefore seem natural to assume that getting more women with young children into work would reduce this reliance.

But is this assumption correct?

According to Professor Robert Breunig of the Australian National University’s Crawford School of Public Policy, the answer is yes, but it is hard to say by how much.

“It is clear that childcare benefits will lead to people working more. So it will bring people who aren’t working into the workforce, and it will effect people who are already working to increase their hours.”

However he said the effect on superannuation was “difficult to quantify”.

“In order to cost that, you have to compare a world with higher subsidies and a world with lower subsidies. And even under the current childcare benefits, many women leave work for a couple of years and then come back into the workforce,” he said.

“So I don’t think you’re comparing women who are in the workforce for 40 years with women who are in the workforce not at all. What you’re doing is comparing maybe an additional six months or a year in the workforce.”

He said to project that forward 40 years to the woman’s retirement relies on making a number of highly subjective assumptions.

“I think that anybody who tells you a number based upon superannuation is probably making it up,” he said.

“It’s important, but I think it’s hard to quantify, and I think it’s probably not as large as people want to claim it is. But I’m still saying it’s there and it’s important.”

An equitable solution?

Australia’s leading advocate for improved superannuation outcomes for women is the super fund-backed organisation, Women in Super. Unlike the government, its focus is on equity for women rather than taking pressure off the budget.

And on the equity front, Women in Super national chair Cate Wood said the child care package is far from ideal.

“It’s typical: women only get something when they have to lose something. And that’s what I think is happening in this budget,” Ms Wood said.

“Yes, there’s changes to childcare to try and get more women back in the workforce, and that’s a good thing. But it’s underpinned by their continued commitment to take the low income super contribution, which will impact two million low-paid women.

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Professor Robert Breunig said childcare can be beneficial to children if there is an educational element. Photo: AAP

“So whilst getting back to work might help women’s super savings, on the other hand they’re taking away something that boosts women’s super savings.”

Ms Wood was also scathing of Scott Morrison’s changes to the paid parental leave provisions to ban ‘double dipping’ on government and employer parental leave scheme.

“They’re actually attacking women and presenting them as somehow cheating the system by double dipping, when what is happening at the moment is totally legal and represented in the legislation.”

The ban on double dipping may end up further disadvantaging women’s super balances, as government paid parental leave does not include super contributions.

Ms Wood said three ways the government can immediately improve outcomes for women is by keeping the $500-a-year low-income super contribution, including super contributions in the government’s paid parental leave, and abolishing the superannuation guarantee lower threshold of $450 a month.

But the government’s clear aversion to ‘welfare’ – Scott Morrison was quick to stress that the childcare subsidy “is not a welfare payment” because it requires recipients to work – make it unlikely to take up Ms Wood’s suggestions.

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