Editorial: Childcare policies a tiny step

Individual family circumstance will be uppermost in parents' minds when they come to judge the National Party's promised childcare rebate. The age of their children and the type of childcare centre they attend will be key determinants of whether this package, or the Government's planned change, is most beneficial to them. Implicit in the two policies are different philosophical approaches. That of Labour emphasises targeting and the education quotient. National's rebate, in contrast, embraces all pre-schoolers and incorporates fewer restrictions.

Whatever those parents conclude, however, they will know that both National's option and Labour's 20 free hours of attendance at community-based centres for 3 and 4-year-olds will cover only a small percentage of their childcare costs. And that neither, therefore, will be enough to drastically increase the proportion of women who are in the workforce.

The National leader, Don Brash, tried not to cast his party's initiative in that light. The rebate was not intended to force women into the workforce but to give them a choice, he said. No doubt he was seeking to establish a point of difference with the Government, which has stressed that increasing women's workforce participation rate is high on its agenda; and that spending on childcare is very much part of the means of achieving that.

Dr Brash knows, however, that whatever way his party's policy is projected, the economic reality is inescapable. Given the country's straitened labour supply, women must be encouraged back into the workforce. In that context, the policies of both National and the Government fall well short of what is required.

The Prime Minister, in her state-of-the-nation speech in February, suggested economic output would rise 5 per cent if the women's workforce participation rate could be lifted to the level of the top five developed countries. She noted that, in particular, New Zealand women's participation lagged in the 25 to 34 age group. According to the OECD, the number of women in the workforce might be boosted by about 60,000 if New Zealand were to match Denmark's top-of-the-range level of publicly funded childcare.

The problem there is that the Danes' spending on formal daycare centres and early childhood education represents a sizeable 2.7 per cent of their gross domestic product. The comparable expenditure here, in a smaller economy, is 0.4 per cent. Indeed, New Zealand's spending is only about 30 per cent of the OECD average, as a share of GDP.

Quite probably, the potential gain of increased women's participation in the workforce has been somewhat overrated. Sometimes, the barrier to joining the workforce relates as much to shortcomings in education as in childcare. Women with university qualifications have higher participation rates. Nonetheless, comparisons with Scandinavian countries cast the policies of National and the Government in a salutary light. At a time when a shortage of both skilled and unskilled labour is a significant constraint on economic growth, their approach to childcare is, at best, half-hearted.

Of the two, National's provides parents with greater choice. Its rebate can be used for home-based childcare and for any childcare centres, not just the non-private centres advantaged by the Government's latest prescription.

Hopefully, that will entice a number of women back into the workforce, providing a minor fillip for the economy and, in many cases, a major boost in personal self-esteem. But far more would be accomplished if this tiny step became a stride.