Fixing the Activity Test could boost the economy

New research from Impact Economics and Policy has revealed that removing the Activity Test could increase female workforce participation by up to 39,620 people per year, delivering an economic boost of $4.5 billion.

New research from Impact Economics and Policy has revealed that removing the Activity Test could increase female workforce participation by up to 39,620 people per year, delivering an economic boost of $4.5 billion.

The research also estimates that in New South Wales and Victoria each year, 108 000 children are at risk of missing out on universal access to pre-school.

The Parenthood welcomes the research, which launched this morning and joins the growing body of evidence identifying the Government’s ‘Activity Test’ as a barrier for parents to be able to access childcare and return to work should they wish to do so.

The test works by determining how many hours of subsidised childcare families receive based on the number of hours they work, study or do other approved activities like volunteering.

It has been criticised by many parents as confusing and financially unviable, with the take-home pay for some families almost cancelled out by the high cost of childcare.

The report reveals that even with new pre-school policies in NSW and Victoria, parents subject to the Activity Test will still need to pay between $7,000 and $24,000 per child over two years.

Jessica Rudd, CEO of The Parenthood describes the test as a lose-lose.

“It’s completely arbitrary. For many families, relying on two incomes to get by is no longer a luxury, but a necessity. Parents are trapped in a cycle of being unable to find a job without childcare, and unable to afford childcare without a job,” says Ms Rudd.

Recent ABS data revealed that Australia-wide there are 80,000 women who want to work but are unable to because childcare is so inaccessible.

“The fact that we have a policy that directly exacerbates the unaffordability of childcare and in turn prevents parents – predominantly women - who want to work from supporting their families and building their careers is unacceptable.

“This research from Impact Economics and Policy reiterates what has been proven by The Productivity Commission, ACCC and Women’s Economic Equality Taskforce in the last few months alone; that more kids attending early learning means more equal opportunities for women.

“Beyond that, greater access to early learning for our children improves our society at large, with more children able to finish school and reach their potential and a more sustainable economy.

“The entire early childhood and education sector is crying out for reform, and the Activity Test should be the first thing to be addressed.”

Read the report here. We are able to connect journalists with case studies on request.