Page 4115 - Week 13 - Wednesday, 13 December 2006
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… this proposal does not meet the standards of fairness expected by the community.
Mrs Markus continues:
Uncapped tax deductions that favour the wealthy could create market distortions such that providers might be inclined to service wealthier people at higher cost on the basis that they have a deduction, rather than servicing middle and lower income families who have less capacity to pay. Over time uncapped deductions are likely to push up fees, which may impact unfairly on low and middle income earners.
Male total average weekly earnings are currently at around $950 a week, amounting to around $50,000 a year. If only individuals earning over $75,000 will receive any sort of benefit from tax-deductible childcare and the average wage is $50,000, it is clear that middle Australia will be left out in the cold by tax-deductible childcare.
Econtech found that tax-deductible childcare was no real incentive to encourage women to increase their work force participation, so tax deductibility will not persuade women to return to work and it will not encourage women to increase their working hours. If this is the case, we must seriously question the motives of the policy that would introduce tax-deductible childcare.
If increasing female work force participation is an economic imperative, surely childcare reform must not only be equitable but also suit the needs of all families and all parents. Tax-deductible childcare will not suit the needs of all families and all parents. Tax-deductible child care is bad for middle Australia and it is bad for the economy. The Australian Taskforce on Care Costs stated in the Australian last week that parents want cash in hand reimbursement for childcare expenses, not an end of the year tax deduction.
The task force quoted modelling of the Melbourne institute that shows that cash in hand reimbursements will encourage more women to enter the work force. The scheme the Melbourne institute suggested—that is, a 50 per cent immediate reimbursement for all parents regardless of income, capped at $10,000 a year—would be more expensive, but surely the benefit of an equitable investment in childcare would outweigh the cost to the federal government. The Melbourne institute’s scheme is only one proposed solution, but it highlights what is possible when creative thinking is employed. I do not believe that tax-deductible childcare only is in the best interests of people in the ACT. The economic benefits of an increase in female work force participation—which can be achieved only by making work and family life easier to balance for all and by making appropriate childcare equitable, affordable and appropriate—is the policy that we are looking for.
Parents, families and the community in the ACT need good childcare policy reform. I call on the commonwealth government, through the Minister for Disability and Community Services, to reform childcare policy in an equitable and fair way to the benefit of these parents and these families, and indeed for our children.
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