What can (and can’t) the budget do to improve economic outcomes for women

“I couldn’t even get a car loan in 1962,” recalls Wendy McCarthy, AO. “I wanted a Mini Minor to drive to my job as a teacher and I remember the bank manager, he said: ‘Your father will need to be guarantor.’

“I said: ‘Well, my father’s dead.’ He said: ‘Have you got a brother? Maybe he could do it?’ I said: ‘Yes, he’s 12’.”

Wendy McCarthy remembers being unable to get a car loan because she lacked a male guarantor.Credit:James Alcock

McCarthy laughs at the memory, but the consequences of her lack of an older male guarantor were real back then. “[The bank manager] was serious. He would not give me the money.”

This week, McCarthy, who would go on to serve on Malcolm Fraser’s National Women’s Advisory Council before a successful career in business, was one of five signatories to a joint policy statement calling on the Morrison government to use the May 11 budget to make Australia “a nation in which all women can live and work freely and safely and reach their full potential”.

It’s a sign of shifting times that two other co-signatories to the statement, representing Australia’s peak bodies for unions and promoting business interests, were also women (Michele O’Neil and Jennifer Westacott).

Their list of demands includes universal access to quality early childhood education, 26 weeks of paid parental leave (with a two-week bonus for each parent if leave is equally shared), more funding for family violence services, adequate funding for aged care and the reinstatement of “gender-responsive budgeting”. And they want it now.

It has been an extraordinary year for women’s activism in Canberra. But does it herald a breakthrough in how women figure in the budget?Credit:Alex Ellinghausen

This year has been dominated by shocking revelations of sexual crimes and misogynist misbehaviour in the very heart of Australia’s democracy – its Parliament.

But deeper forces are also driving a reckoning over the inferior economic outcomes experienced by women in Australia.

“Women aged 60 and over are the new face of poverty in Australia,” says McCarthy. A persistent pay gap drives meagre retirement savings, leaving women particularly vulnerable in cases of family separation. One in three women are retiring today with no superannuation at all, according to Mercer figures.

Meanwhile, COVID-19 has exposed new gender faultlines.

Danielle Wood is the chief executive of the think tank, Grattan Institute. She sensed early on that the pandemic would be unlike any other previous economic crisis in the way it affected the genders.

“If you do the lens on the Global Financial Crisis and the 1990s recession, men’s jobs were hit much harder,” says Wood. “Whereas this time, it was a services sector recession – and that is where women disproportionately work.”

Wood was an immediate and vocal critic of last year’s October budget and its heavy focus on investments in hard infrastructure to drive economic recovery.

“They were bringing out that old playbook. Today, 80 per cent of jobs are in services. It just didn’t make sense to me that the stimulus was targeted at construction jobs,” she says.

At the peak of the lockdowns, Australia’s female jobless rate was the worst affected. And while it has since recovered, concerns linger about the long-term impact on Australian women.

So what is holding women back from achieving equal economic outcomes — and can the budget solve it?

Bob Breunig is the director of the Tax and Transfer Policy Institute at the Australian National University. He says there are three main policy changes the budget could make to improve women’s economic outcomes. But, he says, it’s complicated.

“These gender norms are very, very strong — this idea of the male breadwinner and the nurturing caregiver who stays at home to take care of her children,” says Breunig. “Labour markets have evolved much more quickly than those private gender norms. And it’s harder to change those cultural norms with government interventions.”

Indeed, Breunig’s own pioneering research with his female colleague, Yinjunjie Zhang, a research fellow at the institute, has unearthed potentially deadly consequences for women who do break out of the norm.

The rate of domestic violence occurring within heterosexual relationships rises from 4.5 per cent in couples who conform to the male breadwinner model (a shocking statistic in itself) to 6.1 per cent in couples where the woman out-earns the man.

Other studies have found that the higher the likelihood a woman will out-earn her husband, the more likely she is to eschew paid work and stay at home.

“And when she does keep working, she compensates by also doing more at home,” explains Iris Bohnet, a Harvard University behavioural economist, in her What Works: Gender Equality by Design.

Economists like to assume men and women engage in utility-maximising decisions for their household about the optimal division of labour between paid work and caring responsibilities.

But, says Bohnet, “these findings strongly suggest that we need more research to better understand how negotiations within the household work”.

In the meantime, what can be done at a policy level?

“Countries that do this well have three things in common,” says Breunig. The first is generous paid parental leave schemes, which are taken up evenly by men and women.

“Men who take paid leave learn that they like to be with their children and we have to give men the opportunity to learn that. And men who have taken leave seem to spend more time with their children when they’re growing up. A lot of the problem with gender inequality has to do with norms about who takes care of the children.”

Second, Breunig says successful countries give more taxpayer money to families – and it is largely non-means-. In Australia, family payments are withdrawn as private incomes rise, reducing the cost to taxpayers but also creating “perverse incentives” for women considering returning to work.

Finally, Breunig supports more generous taxpayer subsidies for childcare.

Miranda Stewart is a tax expert and professor at Melbourne Law School whose modelling has shown Australian women considering working an extra fourth and fifth day of the week confront losing 90 per cent or more of any income thanks to childcare costs, tax and the withdrawal of benefits.

This toxic mix, she says, contributes to Australia having one of the highest rates of part-time work among working women in the developed world.

“Women’s workforce participation rates have increased markedly since the 1970s, but this increase has been concentrated almost entirely in part-time work,” says Stewart. “The greatest dip in female workforce participation occurs when a household is caring for one or more children under the age of five.”

While that might seem to make sense financially for households in the short term, it might not make sense for women in the long run, says Stewart.

Women who do not work lose skills and experience that are necessary if they later decide to – or are forced to – re-enter the workforce.

“Families make choices about what is best for household well-being, including income and care of children. It is not clear whether families, or women themselves, take into account the long-term costs and benefits of the decision about work for women.”

Wood is a big supporter of more generous childcare subsidies.

“The single biggest thing that government could do to help women in the workforce is to fix childcare,” she says. “If you have policy settings that say if you do go to work more than three days a week you’re going to be working for free, essentially, on days four and five, is it any wonder women work part-time?”

Wood is not optimistic this will be achieved in time for this budget, with the necessary policy grunt work taking a bit longer.

Breunig, too, cautions against expecting this budget can solve the gender problem in one go.

“In some ways, there are limits to what the budget can do and I think it’s important to recognise that. What government can do is try to level the playing field for men and women. But if men and women still choose different things, the government can’t force them.”

“My own personal belief is that probably men and women aren’t identical. Even if you had a world of perfect equality, men and women might choose different things. But at the moment, we don’t have equal opportunity and a lot of it [gender differences in paid work] is to do with norms in the household about who looks after the children and policy reinforces those norms.”

Leonora Risse, a lecturer in economics at RMIT University, says it may even be hard for women themselves to discern their own true preferences, given the avalanche of subtle discrimination they face when deciding to work.

‘We still see this leap-frogging’: Leonora Risse.

Risse has long studied how subtle “unconscious bias” holds women back in the workplace.

“When you look around, most people can see how men seem to progress up the promotions ladder more quickly than women – even the women who don’t have children, we still see this leap-frogging,” says Risse.

“And a lot of that just comes down to unconscious bias, that it seems that men are going to be rewarded for expressing ambition. For women, it’s a delicate balance. If you show too much ambition, you can experience a backlash. You have to bide your time, you have to earn your way, to follow the procedures and have fulfilled all the criteria before you apply for a promotion. Men seem to suffer less consequences for breaking those rules.”

”So much of this is underpinned by breaking down those cultural norms around women moving into non-traditional roles, including leadership roles. And in the same way, we want to break down the barriers for men moving into their non-traditional roles, like care-giving.“

Risse says government and politicians must also act as role models in helping to improve conduct across all spheres of society.

“I wouldn’t draw a neat line between what’s within the government’s scope and what isn’t,” says Risse. “The government is very much a role model for how to treat women, how to foster a of gender inclusion and respect.”

Wendy McCarthy will 80 this year and says she is astounded at the progress governments can — and have — for women when they’ve put their minds to it, including equal pay legislation, family planning protections and no-fault divorce.

It was never meant to be set and forget, she adds.

“I was talking to a man my age the other day about his daughter’s experience in the workforce,” says McCarthy. “And he said: ‘I thought we fixed all that in the 1970s.’ And I said: ‘You just took your eye off the ball’.”

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