Childcare subsidies fail to lift hours worked

Research shows that since the federal government introduced a new childcare rebate in 2008 the total hours worked by a couple with a single child under five has increased by only up to an hour a week, on average.

Subsidies for the cost of childcare has increased the number of hours worked by parents but only by an hour a week or less.

A research report presented by Macquarie University’s Nick Parr and Griffith University’s Ross Guest indicates the childcare rebate, introduced in 2008, has had a marginal impact on workforce participation.

Parr and Guest specifically looked at the working hours of parents between 2002 and 2009. Their research shows that since the rebate began, on average, the total hours worked by a couple with a single child under five has increased by up to an hour a week.

The childcare rebate, which is capped at $7500 a year, is available to all parents who meet a minimum number of hours spent working or undertaking study and was introduced to boost the number of hours worked by mothers in particular. “It’s an important issue because of Australia’s ageing population and one way of mitigating the effect would be to increase the rates of workforce participation,” Parr says. “The rebate has been presented as one policy to boost this but it hasn’t had a major effect on working patterns.”

Parr admits he had expected a bigger boost to parents’ working hours. But he says price, however, did play a significant role in parents’ childcare decisions between 2002 and 2009. “During the period we looked at there was rapid childcare price inflation ... [which] was having a counteractive effect on the hours couples worked,” Parr says.

The study found the rebate had a greater effect in certain segments of the population. “The effect was larger where the male held a bachelor degree or higher and the increased hours were worked by their female partner,” Parr says. “Females with a certificate or diploma increased their working hours more than the average.”

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