Sunday, October 21, 2007

Childcare - one of the few electoral bribes with an economic payoff

What would you rather - a further cut in your tax rate (hands up if you even noticed the last one) or 50 per cent off the cost of childcare?

If you use childcare as do 700,000 Australian families, or if you would like to, as do many more, it’s no contest.

And if you are concerned about “getting Australians into work”, as the Coalition said it was when it promised $34 billion in tax cuts, mostly endorsed by Labor, you would plump for the higher child care rebate as well...

The Coalition won’t release the economic modelling that it says it has that demonstrates that its promised tax cuts would get people into work.

If it did, we would find that nearly all of the effect came from the tax cuts that affected working mothers - the only group particularly sensitive to finances when it comes to deciding whether to get into work.

Right now many go backwards when they put children into care to return to work.
By boosting the childcare rebate Labor would meet their concerns directly.

And much more cheaply. At a projected cost of $1.5 billion over four years Labor’s 50 per cent childcare rebate is better value when it comes to buying votes and better value when it comes to getting people into work than $30 billion plus of tax cuts.

In last night’s leaders’ debate John Howard indicated that he would soon be announcing a plan of his own. Which raises the intriguing prospect of a 70 per cent tax rebate. Labor’s figuring suggests that it wouldn’t cost that much by the Coalition’s standards.

Research conducted for the 2005 Child Support Review found that the childcare years were the only ones in which most families were really financially stretched. After that, it's easier.

It's looking like a great election to be a pre-school parent.