Top companies are singing the childcare blues

SYDNEY - Australian companies including Westpac and the ANZ are urging Treasurer Peter Costello to extend tax breaks on childcare to help draw more women back into the workforce.

A Bureau of Statistics report says a shortage of childcare is preventing more than 250,000 women from taking jobs - or working longer hours. It also says about 175,000 children are on waiting lists for care.

Australia's proportion of working mothers ranks 15th out of 19 Organisation for Economic Co-operation and Development nations, ahead of only Greece, Italy, Ireland and Spain. Fifty-five per cent of Australian mothers with one child work, compared with 76 per cent of American mothers and 73 per cent of British mothers.

A Deloitte report, sponsored by Westpac and ANZ, says women leaving the workforce to care for their children cost the Government more in lost tax revenue than subsidising childcare would.

"There is a cost to the economy," said Annette Beacher, who returned to her job as an economist at Citigroup Global Markets in December after taking a year off to care for her first child.

"If Peter Costello wants more taxpayers, he is going to have to find more childcare places so mothers can actually get back to work." Beacher's husband is now looking after their son.

Deloitte says a woman earning the average Australian wage of A$50,000 ($55,360) and paying A$16,800 in child care fees a year would cost the Government A$5,292 in subsidies. If she opted out of the workforce, the Government would lose A$11,922 in tax revenue.

The Deloitte report calls on the Government to extend tax breaks to companies that provide off-site child care. The breaks now go only to companies with on-site care, which is made prohibitive by high office rents and lack of space. A Federal Government agency found only 90 of 3000 Australian companies surveyed offer on-site child care.

In the United States, the proportion of companies offering on-site child care is more than double, at 7 per cent, Families and Work Institute data shows. Forty-five per cent of employers allow working parents to pay as much as US$6000 of childcare expenses from pretax earnings.

Female politicians are calling on Costello to use some of his estimated A$11.5 billion budget surplus to increase funding for day-care centres by almost 50 per cent. Last year, the Government last year allotted A$36.7 billion of assistance to families over four years, including a 30 per cent tax rebate on child care fees, up to a maximum of A$4000 a child.

In the US, most parents can claim a tax credit for as much as US$3000 for each child under 13 for care while they work or look for work, provided they have income.

"We can do better as a society in supporting working parents and giving them genuine choice," said Australian politician Bronwyn Bishop, who is chairing a parliamentary committee on family and human services.

The difficulties that women face in returning to work after having a child can be seen in the gap between the number of men and women in the workforce. The male participation rate was 71.9 per cent in December. The female rate was 57.1 per cent, suggesting that many women drop out of the workforce after starting a family.

The Bureau of Statistics says childcare fees have risen 60 per cent in the past four years, amid surging demand for sites and rising costs, such as wages for caregivers.

"You can draw a pretty strong conclusion that better availability and cheaper child care would certainly encourage more women to work," Beacher said.

Costello also wants to reverse a decline in the nation's birth rate: to a record low 1.73 babies a woman in 2001 from three babies 30 years earlier. On announcing a A$3000 baby bonus for new parents in 2004, he encouraged couples to have "one for the father, one for the mother, and one for the nation".

Last month he told a radio station: "I have had a theme for several years now to encourage Australian families to lift birth rates. If that is one of the focuses of Government policy, then child care is a big part of that."

IN NEED OF CARE

* A shortage of childcare is preventing more than 250,000 women from working - or working longer hours.

* 175,000 children are on waiting lists.

* 55 per cent of Australian mothers work, compared with 76 per cent of US mothers and 73 per cent of UK mothers.

* Lost taxes costs the Government more than subsidised childcare would. Top companies are singing the childcare blues

- BLOOMBERG