The slow road to a stronger Australian work and care regime

The past three elections have seen work and family issues emerge as increasingly important areas of policy contest. Australian families are animated about the difficulties they face reconciling their work commitments with family responsibilities. Long working hours for some (mostly men), low-paid casual and part-time work for others (mostly women), combined with a lack of access to affordable high quality childcare makes for anxious parents and much hand wringing around Australia’s kitchen tables. Work/life issues have become a ‘barbecue-stopper’– as John Howard termed these issues in 2001. As political pressure has grown, there have been important changes made to work and family policy in recent years. But the issue has not diminished in importance and many areas of public policy require urgent attention if we are to develop a truly equitable work/care regime that is a good fit with the changing nature of work and family in Australia.

Australia requires a robust work/care regime. In the lead up to the 2010 federal election the Work + Family Policy Roundtable ¹ has identified some of the pathways that will lead Australia towards a better, more supportive work/care regime. As in the 2007 election, in 2010 the Roundtable published a set of Election Benchmarks against which assessments of election policy proposals could be measured. ² In 2010, our priorities for discussion and policy development include: more accessible, affordable, quality childcare; flexible working policies to better support carers; improvements in paid parental leave; fair work, fair workplaces and gender pay equity; workforce participation and the tax transfer system, and; superannuation and retirement earnings.

More accessible, affordable, quality childcare

Childcare was a hot political issue in the lead up to the 2007 federal election and is a policy area that has seen much activity. Since then, the Rudd-Gillard Labor Government increased the childcare rebate paid to parents to 50 per cent of out-of-pocket expenses up to an annual cap of $7,500 per child, promised to build 260 new childcare places on school and community land, and committed to delivering 15 hours of free pre-school to all Australian four year olds by 2013. Not all has been delivered. Only 38 new childcare centres were built before the plan was abandoned; the cost of childcare has continued to increase, largely in line with the rebate³; the shortfall in childcare places for 0-2 year olds is an ongoing issue; and parents in the main cities continue to report very long waiting times for appropriate and accessible childcare. The demise of ABC Learning (Australia’s biggest private provider of commercial childcare), its transfer to a non-profit consortium that took control of 570 centres, and the closure or sale of the remaining centres, caused havoc for many families and showed that for-profit childcare was prone to market failure, just as many had predicted.⁴

While not all policy activity on the childcare front has been positive, childcare has become an important feature of the political and policy agenda. A long term commitment to delivering high quality childcare is reflected in the National Quality Framework for Early Childhood Education and Care (ECEC) due to be progressively implemented from July 1st 2010. The framework agenda aims to improve the quality of the 0-6 years experience by:

• improving the training level of ECEC teachers and staff
• providing the first national curriculum framework for early learning
• improving staff to child ratios, and
• consolidating quality measures and regulation across the country.

Low staff-to-child ratios are a critical determinant of high quality care and there is an urgent need to deliver this improvement to Australian children and parents. Ratios of 1:3 for 0-2 year olds; 1:6 for 2-3 years; and, 1:10 for 3-5 years are recommended. But lower ratios are not easily delivered and will require extra funding to employ more teachers. Higher demand for early childhood teachers will also be driven by the government’s goal to provide 15 hours of preschool per week to all Australian four year olds, delivered by a four-year trained university teacher in an accredited pre-school centre by 2013.

Attracting and retaining sufficient trained teachers is expected to be difficult unless significant improvements in the work conditions (especially pay) and training levels of ECEC teachers are made. As most early childhood teachers are now also qualified for primary schools, it is difficult to attract them to lower pay and longer hours in early childhood centres. Low wages and insufficient training for most other ECEC staff make employment in the sector unattractive and unsustainable for many. University level trained teachers should be used across the services, not only for the four-five year olds. However, this would also raise costs and require higher subsidies to keep services affordable. Employment of more trained teachers across the ECEC sector is important, along with appropriate training and skill development and recognition in the sector more broadly.

Affordability of childcare remains a vexed issue. The 50 per cent childcare rebate is politically popular and initially made formal centre-based childcare more affordable for parents. However funding support made via cash payments to parents has a number of limitations. First the payment is not linked to the delivery of high quality care, raising a question about appropriate use of public money. More importantly, payments made to parents are likely to reduce the cost of childcare only in the short term. Over the longer term, centres are easily able to raise their daily fee to ‘absorb’ the government subsidy, ultimately pushing prices up. A better approach to improving affordability and quality would be for government support to be paid directly to childcare centres that meet quality benchmarks and other conditions. It should also be combined with the child care subsidy.

Flexible working policies to better support carers

A growing body of international research shows how policies that give workers more say over their working time arrangements to accommodate their care responsibilities improve the well-being of workers and their households. Such policies are often best made available to all workers – men and women, young and old, those with and without current care responsibilities – because they increase workers’ general acceptance of such arrangements, enhance gender equality and facilitate a life course approach to workplace policies.⁵

Since 2007 there have been significant improvements in the support for Australian working carers that are available to men as well as women, including:

(1)   the right to request flexible working arrangements as a National Employment Standard (NES) in the Fair Work Act 2009 (from January 2010)

(2)    a new duty on employers to reasonably accommodate the parental and carer responsibilities of a wide range of workers (2008 amendments to the Victorian Equal Opportunity Act 1995). The federal government also recently announced it will amend the Sex Discrimination Act 1984 to extend protection against discrimination on the grounds of family responsibilities to men as well as women as well as provide improved protection to carers against unfair treatment as well as dismissal.

These changes will improve the work/care regime for working parents. However, some significant gaps remain and some new problems have emerged. The new ‘right to request’ is far more limited than similar provisions in the UK or New Zealand because there is no meaningful review of employer refusals to grant requests, and eligibility is limited to parents of pre-school children who have 12 months service. International evidence suggests that the right can be extended without difficulties for business. Indeed the UK government has recently announced it will extend this right to all employees as is the case in the Netherlands and Germany. Extending the right to all employees has benefits: it is simpler for employers to manage, and it can encourage innovation in work organisation and increase workplace acceptance that men as well as women need to be supported to be working carers.⁶

In Australia there is strong evidence that flexibility for some workers is decreasing and for most not increasing.⁷ Casual and part-time workers and workers in regional areas have limited access to flexible working arrangements⁸ and where they do, carers often achieve flexibility by accepting poorer working conditions and worse work/life outcomes.⁹ There is growing concern that the individual flexibility agreements (IFAs) that must be inserted in all new awards and enterprise agreements may exaggerate this trend.¹⁰ For example, employees may have to give up their entitlement to penalty rates or shift to casual work in order to be able to work the schedules they need to accommodate their caring responsibilities.¹¹

In Australia, many new mothers switch to part-time work as a specific strategy to reconcile work and care. However part-time work is often of a lower quality than regular full-time employment in terms of award protection and career development opportunities. Some modern awards discriminate against those who work on a less than full-time basis and many workers find themselves sidelined from promotion opportunities and other benefits. Reducing the distinction between the status of part-and full-time jobs should be made a work-family policy target, in particular by prohibiting discrimination on the basis of hours worked to protect those working less than full-time. Policy developments in this area would be facilitated by Australia ratifying ILO Convention 175 on part-time work.

Paid parental leave

Government legislation passed in June 2010 provides for 18 weeks of paid parental leave at the weekly minimum wage. This is an historic first step which provides Australian working parents, particularly women, with a work-related payment that acknowledges their contribution to the workforce. At present, it is estimated that only a third of Australian working mothers have actually taken some paid maternity leave¹² and just under half of all working women have access to paid maternity leave.¹³  Most of these women are in higher status jobs, in the public sector or work in larger firms and in most cases have access to a period of paid leave less than that recommended by the World Health Organisation (16 weeks) or the International Labour Organisation (18 weeks). The new paid parental leave legislation will provide significant improvement to the financial circumstances of most working mothers – particularly those in low-income households and who work for small business who had little or no entitlement to leave with pay. Those with existing entitlements will retain them and be entitled to more. There is, however, more that needs to be done.

The next federal government must establish medium and longer term goals to increase the period of parental leave and the level of payment in line with international best practice. Paid maternity and parental leave for six months or more is common in Europe. In the UK, nine-months is now the statutory minimum. A longer period of paid leave for Australian parents will promote maternal and infant well-being and women’s labour force attachment.¹⁴

A good paid parental leave system will include an independent entitlement for fathers (supporting carers) to increase their opportunity for taking leave. The payment level must also be enhanced where the minimum wage is less than current earnings, to approach earnings replacement levels – as is the case for personal and annual leave. This will deliver economic security to households and promote gender equality between men and women at all earnings levels.

Fair work, fair workplaces and gender pay equity

The Fair Work Act 2009 introduced a number of provisions with the potential to progress the position of women and all carers in the workforce. Legislative change under the Act removed Australian Workplace Agreements, strengthened the safety net and work and family provisions, prioritised collective over individual bargaining, expanded equal remuneration provisions and increased anti-discrimination regulation. Each of these changes has the potential to improve women’s pay and conditions directly or indirectly.

Gender inequity remains a serious problem in Australian workplaces. Since February 2007 the gender pay gap has widened by 1.6 percentage points to 82.6 per cent (for full-time ordinary-time earnings), largely as a result of deterioration in the relative pay of women in private sector employment. There is also growing evidence of a much larger gender pay gap at the upper level of the pay scale.¹⁵

The Making it Fair report released in November 2009¹⁶ provides a very comprehensive set of pro-active recommendations to improve pay equity and should be used as a guide for government to improve the status of women in the labour market. These could be strengthened by making gender pay equity an explicit objective of the Fair Work Act 2009. The impact of the recommendations on women’s relative wages must be monitored, with special attention paid to the process of award modernisation, implementation of individual flexibility clauses, multi-employer bargaining in the low paid stream, and equal remuneration provisions. Pay equity must also be considered in enterprise bargaining negotiations and minimum wage adjustments. Establishment of a specialist Pay Equity Unit would assist in the coordination, development and implementation of strategies to address gender pay inequity.

The introduction of greater anti-discrimination protections in the Fair Work Act 2009 (Cth) will protect workers against adverse action in all stages of employment and not only termination. In addition, the extension of anti-discrimination law across the employment cycle is specifically strengthened for workers with caring responsibilities by the Government’s recent announcement that it will extend protections in the Sex Discrimination Act 1984 (Cth) to cover both direct and indirect discrimination on the grounds of family responsibilities across all stages of work, not only dismissal. This is good news for working carers. However, vigilance is required. In the process of streamlining federal anti-discrimination laws and harmonising federal and state laws, these and other protections provided to workers with caring responsibilities must not be diminished. ‘Best practice’ federal laws must be used as the model in the streamlining process and employers must be required to provide ‘reasonable accommodation’ to all protected groups. In harmonising federal and state anti-discrimination laws, the Victorian Equal Opportunity Act 2010 should be used as the best practice model, imposing a positive obligation on employers to take ‘reasonable and proportionate’ measures to eliminate discrimination, sexual harassment and victimisation.

Workforce participation and the tax transfer system

Income support and tax/transfer policies play an important role in shaping work and care patterns.  The penalties and rewards embedded in the tax/transfer system influence the choices households make about who works and who cares. OECD analysis points to the importance of appropriate family tax policy to achieving higher female participation.¹⁷

Current arrangements in Australia distort and depress female participation in paid work. This is partly due to the way in which Australia’s progressive individual tax system has effectively become a system of joint taxation that discriminates against partnered women with children who choose to move between care and paid employment. When women re-enter the workforce, family benefits decrease, imposing a high effective marginal tax rate (EMTR) on women as family benefits are withdrawn against both increases in total household income and the income of the second earner. This creates a disincentive for women to undertake paid work, and is acknowledged as a fundamental problem by the recent Henry Tax Review.¹⁸ Changes to the design of some payments and taxes, as recommended by the Henry Tax Review, would remove many of the disincentives to women’s workforce participation currently embedded in the tax/transfer regime. The Henry Review recommends simplification of family payments and a reduction in the withdrawal of family assistance at a single low withdrawal rate of 15–20 per cent. Any redesign of the tax/transfer system must recognise and respect most families’ needs for financial support for both the direct costs of children and the costs of reduced access to paid work.

Superannuation and retirement earnings

Women who undertake significant periods of unpaid work have fewer years of full-time workforce participation, earn lower wages than men and as a result have relatively low superannuation accumulations. An indicative comparison suggests that women’s accumulated superannuation in 2007 was worth approximately 60 per cent of men’s. ¹⁹ Approximately one third of women aged 55-64 years have no superannuation coverage.²⁰

Inequality is further embedded through the application of concessional taxation arrangements on superannuation contributions and earnings – valued at approximately $24 billion for 2008-09.²¹]The benefits of these concessions are skewed strongly to favour those on high incomes (typically men) who receive higher employer contributions and can make additional personal contributions that are taxed below their marginal income tax rate.  The Henry Tax Review noted that approximately 1.2 million individuals did not receive an income tax benefit from their concessional superannuation contributions; 1.2 million people receive a concession of only 1.5 percentage points and around 200,000 taxpayers earning more than $180,000 received a concession on their superannuation contributions of 31.5 per cent. ²² Interaction between women’s labour force participation, their care responsibilities and the existing structure of superannuation clearly penalises women and leaves many economically vulnerable in old age.

Recommendations made earlier in this chapter that relate to income replacement for paid maternity leave, pay equity, affordable childcare, taxation, and transfers will together contribute to creating a fairer workplace for women and more equitable retirement outcomes for all. However, specific changes to the superannuation system must also be made. The following measures would go some way toward promoting improved economic security for women in retirement.

Conclusion

Australia’s work and family arrangements have improved in some ways in recent years but we have a long way to go. The pace of change in patterns of workforce participation and household shape make a faster and comprehensive response to the current work/care regime a pressing policy issue. Evaluation of change in Australia, including changes to labour regulation, along with careful consideration of lessons that arise from international experience must inform progress in this area. Hopefully the newly-elected Gillard minority Government will recognise the ways in which current arrangements add to the stress of working men and women and their dependents, and accordingly recognising the need to rise to these policy challenges.

Photo Credit: Big Grey Mare, http://www.flickr.com/photos/biggreymare/2839333345/

Endnotes