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PKF Australia

Accountants and Business Advisers

The 'Childcare Issue' is a two-headed beast

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Nick Falzon

Partner

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The 'Childcare Issue' is a two-headed beast

Posted 21 Jul 14 by Nick Falzon

In light of the 2014-15 Federal Budget announcement to reduce the Paid Parental Leave cap to $100,000 from 1 July 2015, it is worth asking: how realistic is it to juggle a career with raising a family in this country?

It is very pleasing to hear such constructive debate over recent months about childcare, Paid Parental Leave and women in the workforce. Finding equitable resolutions to these closely linked issues is vitally important to our country's social and financial well-being.

However, the debate is often circular. To have a chance of finding a solution we must acknowledge that we are really considering two separate concepts.

"The importance of providing support and encouragement for new parents to return to work cannot be underestimated."

Firstly, as a society, we should provide support to new parents. Paid Parental Leave assists families financially at a crucial time, immediately after the birth of a child. Any scheme which allows the basic means to help a mother or father devote time to nurturing, and bonding with, a new baby should be supported wherever possible. Affordable childcare must be available to parents who have no choice but to return to work. Children must have somewhere available that provides safe care for them or we cannot call ourselves a first world country.

Secondly, and just as importantly, we must do everything we can to encourage our brightest and most dedicated men and women to contribute to the workforce. To maintain our standard of living, Australia must be innovative and intelligent. We are in an internationally competitive environment and cannot win this fight with one hand tied behind our back.

Not all people choose to engage in the work force and this is a perfectly valid choice. All the smart kids at school don't become doctors, but may they still contribute enormously. The president of my daughter's school P+C is very bright, but (to my knowledge) doesn't have a paid job, but still makes an enormous contribution to the country. The point is that how she makes that contribution should be her choice. She must never be excluded from the work force. 

We must also create an incentive for parents to pursue careers. Working does provide, for many, mental stimulation and emotional engagement. It can be a good balance from raising children, but it does create difficulties.

Most people consider the cost of any job compared to the financial reward for doing that job. Cost includes the difficulty of doing the job, the time away from family, and the pressure on family time when you are home. The financial reward is generally agreed to be the amount received after tax and the expenses necessarily incurred to do the job.

Effectively reducing the cost of childcare, including nannies and au-pairs is a simple way to increase the financial reward for returning to work and encourage more people to do so.

On the assumption that the best and brightest talents are the best paid; by making the cost of childcare tax
deductible you increase the financial reward for these people working. The logical outcome of this is that more will choose to work and our national productivity will benefit.

There is still plenty of debate to be had on this, but we must deal with the two issues separately or we will never get close to the solution. Contact Nick Falzon on (02) 8346 6000.


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