Should we charge babies for child care?

Ryan Batchelor’s post the other day on Paid Parental Leave reminded me how difficult the debate still is.

The fact that Tony Abbott’s paid parental scheme has turned out to be controversial is not that surprising but the truth is, appropriately recognising the economic impact of having and raising children is a lot more complicated than whether a woman earning $100,000 plus should be getting a “hand out” from the Government.

The majority of media outlets still caging this debate in terms of child care and parental leave being a sop to women is part of the problem. “Aren’t dads lucky to have two weeks under Labor’s scheme to babysit?” “… And mums so fortunate to have them around to lend a hand?” The Liberals’ Paid Parental Leave policy is actually written exclusively in terms of mothers and fathers – they don’t even have the customary nod to primary and secondary caregivers and in a way, they’re right: women are carrying this burden disproportionately.

This is an economic issue as much as a social one.

Tim Toohey, the Chief Economist at then Goldman Sachs JBWere, wrote a reportin late 2009 which stated that closing the gap between male and female employment rates would boost the level of Australian GDP by 11 per cent.

The economic benefits of getting women into the workforce are obvious.

Despite being a highly privileged white middle class woman, it gives me pause that I have now ‘lost’ about two years to babies (and will likely ‘lose’ more), much as I love them both as a concept and reality. By ‘lost’ I mean less salary, less superannuation when I retire, less career progression. I did not qualify for any parental leave as I was earning too much in the first instance and now I have not been working enough (ahem, for money) to get it for the next baby.

No one should be playing a violin for me. I acknowledge my privilege. If you compare me to a woman in the lowest SES quintile, I’m still living the Life of Riley; but let’s not forget, if you compare me to my male peers, I am behind the eight ball. My male peers who are younger than me, now earn more than I did when I left the workforce two years ago. Over the period of my baby-led-workplace-senescence I have added between $250k and $1 million to the country’s economy (a broad estimate of spending on a baby to age 18) yet I personally have lost thousands. Where’s the love, Australia?

Of course, I’m grateful for the privilege of motherhood.

I appreciate the arguments about how unfair it is for Ms Lower SES quintile to pay for my parental leave with her taxes.  But in real terms over the course of our lives, this convenient fictional person used by some debaters could already be argued to be paying my Medicare and contributing to my children’s education. The tax system doesn’t work that neatly. Often Ms Lower SES is a net recipient from the tax system and I may be paying for her parental leave and that of some of her friends. As someone who believes passionately in progressive taxation, I believe this is how it should be. But this is profoundly not the point – and why are we pitting Ms Lower SES quintile and me against each other anyway?

I’m not saying I think Tony Abbott’s scheme is the winner; I’m saying the whole debate is miscast.

Treating parental leave as part of the progressive tax system implies that we are compensating people for having babies relative to their ability to pay for their upbringing. But babies aren’t a disability or akin to an ‘affliction’ like unemployment. They are a natural and desirable part of our economy, not to mention our way of life (unless we want soshoku danshi to flourish in Australia).

Even if it’s not strictly statistically accurate, we believe that each baby in Australia has the same capacity to be a millionaire (or a brilliant artist or discover the cure for Ebola), so while we are compensating the family at the time, the potential economic benefit of doing so is not neatly correlated to the economic impact of bringing up the child and their subsequent existence and economic contribution.

The situation is more analogous to the original conception of HECS – we subsidise people to go to university because we know they will actually return more to the economy than the personal benefit they get from higher education (which is also real). Similarly, we subsidise families to have babies because we know we need those babies in order to have an economy (unless we decide skilled immigration is a better substitute as one of my intentionally childless friends posited; they are much cheaper than kids, but I digress). As originally conceived, in higher education, we had two types of payment – HECS, which was available universally and the paying back of which was means tested – you paid once you hit an income threshold. Plus, Austudy which was means tested to enable payment of your living expenses (in some cases) while you were actually attending to get that “lucrative” education.

The analogy is imperfect as it applies to babies. You could say that the child care rebate (currently not means tested) is the equivalent of HECS and paid parental leave is the equivalent of Austudy. We could beef up the rebate to 100% then recover it from the participants.

However, here things go South quickly. Facilitating women going back to work certainly provides participation dividends to the country and income to them personally, but getting them to pay for a portion of it through some sort of income triggered loan seems a bit off. They’ve already taken a pay, career advancement and super hit during the period of parturition and parental leave. Many, perhaps most women not returning to work don’t access the child care rebate and while they do not contribute as much to the economy via taxation, they have still taken a hit to their finances and they have created an economic unit in our society (in the form of a future citizen).

If instead, we attach the loan to the baby when he or she reaches majority, this also feels off – they didn’t consent to being placed into child care, may end up resenting it bitterly, and the case for whether child care is actually a benefit is still hotly debated. The idea of our citizens turning 18 with an existing life debt sounds like something out of 1984. The answer to the question in the title of this article from me, accordingly, is, “No.”

Attach it to the secondary caregiver? The childless? A 1.5 % levy on Corporations?  None of it sits easily with us.

One of the reasons why it’s so hard to rework this area is because for so long we have accepted the idea that parents make sacrifices for their children and that this is just and noble. In many ways it is. But we have ignored for years that the sacrifices being made are grossly lopsided economically between men and women. It jangles with us to recognise the economic hit to women in a practical way because it has been largely invisible.

The way some pundits have attacked Tony Abbott’s paid parental leave by making it a class thing between rich and poor women sits poorly when you consider the fact that almost any woman in Australia is still worse off than her male equivalent, regardless of SES quintile partly because of the babies. Pitting women against women in an economic debate is one of the oldest tricks in the book but it’s still annoying.

We rarely have this debate in terms of families or the economy. It’s always about ‘Aren’t women lucky to have paid parental leave?’ Some commentators – like Ryan Batchelor – appropriately talk about “parents” but the underlying problems are unchanged. They’re not Ryan Batchelor’s fault.

The fact remains, it’s only when we as a nation have babies that we have an economy (without babies, there’s no one to buy anything, including, if my baby’s spending patterns are anything to go by, vast quantities of wipes, toast and bananas) but we continue to see babies as a women’s issue because pretty much only women can physically have babies – I know that birth is just one day but then there’s the pressure to breastfeed and bonding and primary care: it’s far from simple.

Biological determinism is so passé. Not to mention economically irrational.

Where is the female, Australian version of Mark Zuckerberg? Quite likely, she stopped off to have a baby somewhere and what did that do to the Oz economy? Nothing good.

This post uses an economic lens to evaluate parenthood and is premised on the idea that the government and business has already put a price on parenting. In a more fundamental sense, parenthood is priceless, the contribution stay at home parents (predominantly mothers) make is impossible to value and what mothers (and fathers) do is worthy for them and our country in and of itself.

The solution to the challenges in paid parental leave is sadly, not in this article, but we need to think harder about it rather than just debating the dollar value and thresholds of the current system.

About Cressida Wall

Cressida Wall

Cressida has been a Chief of Staff and senior adviser to Premiers and government Ministers for nearly twenty years. She was a senior adviser to Premier Steve Bracks and Premier John Brumby and worked in Australia and Israel for Better Place, the electric car infrastructure company. She now works as a consultant.

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