As Australia’s fertility rate falters and its population ages, the Morrison government should introduce universal childcare, parental leave and family allowances to deliver tax and transfer policy settings that alleviate the burden on families, according to new policy advice.
A new policy brief titled Tax & the Fertility Freefall, published by the University of Melbourne on Wednesday, suggests that the Morrison government’s 2021 Intergenerational Report ignores “obvious” strategies to support fiscal and economic wellbeing in a fair way by cropping out half of the picture on the nation’s fertility rate: the cost of childcare.
Miranda Stewart, a professor at the University of Melbourne’s law school, fellow of the Tax and Transfer Policy Institute, and author of the policy brief, said the federal government’s 2021 Intergenerational Report fails to recognise the cost and value of care for children.
“By seeing only half the picture, the IGR ignores obvious strategies to support fiscal and economic wellbeing in a fair way,” Ms Stewart said. “Current tax and transfer policy settings fail to share the cost of childcare, or to alleviate the economic burden on families, especially women.
“The 2021 IGR assumes a dramatically lower fertility rate, below 1.6, than the 2015 IGR, which assumed a fertility rate of 1.9. The lower rate reflects current reality and is in line with comparable countries. It is significantly below the population ‘replacement’ rate of 2.1 and governments are starting to wake up to the implications of declining fertility.
“A key consequence is ageing of the population. The IGR presents the old-age dependency ratio, which is declining as the ratio of working-age people to those aged 65 or over falls. But the IGR fails to recognise the cost and value of care for children. The IGR also fails to recognise both private and public costs of care, in money and time, for all dependents.”
The first of the brief’s key recommendations urges the federal government to invest in financial support for parental care time for all children with options suited to both parents. It suggests making the support available for the first 12 months after birth, alongside universal public childcare for all children.
“We can easily improve policies to reduce the burden on families, and especially women, and share the cost of investment in our children,” Ms Stewart said. “One way to do it is obvious — and already widely discussed: universal free childcare.”
The brief points to research that shows that the majority of time invested in children is made by women, and that, while women often bear the economic cost of care, they aren’t remunerated for it.
It suggests that women take jobs which mean that they do not fully benefit from the economic independence, reward or security that would come with the full-time opportunities that would otherwise be available to them.
“Paid parental leave is also crucial,” she said. “We should invest in financial support for parental care time (leave is a misnomer) for all children with options suited to both parents, for at least the first 12 months after birth and probably longer,” she continued.
Another recommendation made by the brief is the introduction of universal family allowances, so those with lesser job security and limited employment options aren’t subjected to poverty.
She said: “[We] should reinstate universal family allowances to support families, especially those who need it most and don’t have good work options, to care for their children without living in poverty.
“Universal child endowment was adopted until the 1980s in Australia.”
Ms Stewart said it’s important to be clear on the fact that such policies wouldn’t only be inexpensive, but offer taxpayers good value. If introduced, she said, these policies would shine a light on the barriers that limit the contributions of skills and labour for Australian women “and parents more generally”.
“The view that public investment in childcare and parental leave would cost too much, or be fiscally unsustainable, is not only misguided, it is akin to [being] blind drunk — it only looks under the streetlight because that’s all they can see,” Ms Stewart said.
“If the IGR — and we as a society — properly examined public and private resources and investment, we could take some simple steps to save on cost, improve justice and reduce inequality of resources for all children, between women and men, between rich and poor families, and across generations.”
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