A new report has found that tens of thousands of women across Australia are restricted from participating in the workforce because of the Federal Government’s Activity Test.
The Activity Test links access to subsidised early childhood education and care with both parent’s participation in labour market activities, and a new report by Impact Economics and Policy assessed the impact of this on Australian families and the economy.
The report says: “Women in families with children under the age of 5 have the lowest levels of labour force participation amongst people of prime working age.”
“Many of these women would like to re-engage with work but cite caring for children as the main barrier to entering the job market.”
Supported by Minderoo Foundation’s Thrive by Five campaign, the report explores the decisions of mothers to return to work and how this affects children in accessing early learning and childcare.
“Instead of incentivising a return to work for parents resulting in more economic activity, as was its original purpose, the Activity Test has done the exact opposite and has restricted economic participation for far too many,” says Thrive by Five’s Director Jay Weatherill on the report’s results.
Calling for the Activity Test to end, the report highlights that scrapping it would increase workforce participation by approximately 39,620 women, and most of those increases would be amongst women in households with incomes below $72,000.
Weatherill warns that the Australian economy is “losing out on more than $4.5 billion in GDP contributions from parents who would otherwise be active workforce participants” by using the Activity Test as a precondition for childcare subsidy allocation.
“Most concerning is that the Activity Test is forcing more than 126,000 children from low-income households in Australia to miss out on early childhood education and care,” says Weatherill.
“This means that a single policy measure is restricting hundreds of thousands of Australian children from accessing the lifelong benefits of high-quality early learning which is simply unacceptable.”
The cost to the Australian Government of abolishing the Activity Test would be $1,306 million in 2023-24 and be offset by higher taxation receipts and lower government payments.
Weatherill says Thrive by Five is calling on the Federal Government to take action and abolish the Activity Test in the upcoming May Budget.
“This report is perhaps the clearest indictment of the failures of the Activity Test,” says Weatherill.
“Abolishing this test would ensure that children and their families have greater access to early learning and childcare that positively supports their development and continued learning.”
“Now is the time for our political decision-makers to act boldly and eliminate the Activity Test requirements for all families,” he says.