Federal election 2016: tax, costs ‘leave mums on $5 an hour’

Mothers with fulltime jobs are working for as little as $5 an hour once they pay tax and childcare costs, research reveals.

Tamara Millard with Holly, 3, in Adelaide. ‘Just not worth it’. Picture: James Elsby

Mothers with fulltime jobs are working for as little as $5 an hour once they pay tax and childcare costs, research reveals.

A woman on the average wage pockets just $8 an hour on her fourth day of work and $5 an hour on the fifth day, after paying tax and daycare fees.

Low-income women work for nothing on the fifth day, based on Australian National University ­research that reveals rising childcare costs are trapping women into part-time work.

For a low-income family, a mother who works more than one day a week, with one child in care, will lose two-thirds of her gross earnings in tax and childcare fees.

Childcare costs and taxes soak up more than the entire fifth-day earnings of a mother earning $43,000 year.

She pockets $15.43 an hour for the first day of work, $6.66 on the second day, $5.99 on the fourth day and is 30c-an-hour worse off on her fifth day on the job.

The ANU Centre for Social ­Research and Methods has calculated that a woman on the average wage will bring home $22.39 an hour for the first day of work, $13.83 for the second day and $5.08 on the fifth day.

The research was commissioned by Australia’s biggest childcare provider, Goodstart Early Learning, which warned yesterday that women would not find it worthwhile to work more than two or three days a week without higher subsidies.

“This locks many women into part-time work,’’ said Goodstart spokesman John Cherry yesterday. “Government childcare assistance has not been keeping up with the cost of care, and working families need help now.’’

Tamara Millard, 29, works three days a week, but plans to cut back to two days when her second child is born in July. Ms Millard, an Adelaide marketing co-ordinator, has calculated she would take home just $9 an hour on her third day at work after paying tax and childcare costs for the new baby and three-year-old daughter Holly.

“It’s really important for women to be in the workforce,’’ she said yesterday. “Working two days isn’t ideal for my career prospects, but working three is just not worth it financially.’’

ANU research fellow Ben Phillips said families faced very high effective marginal tax rates if the secondary income earner, ­usually the mother, wished to work extra days.

He said a low-income woman with one child in daycare would “effectively be working for nothing” on her fifth day at work.

The Parenthood lobby group said childcare should top the list of spending promises during the election campaign.

“Mums are doing the numbers and quickly realising that after the cost of childcare, tax and other work-related expenses they’re only making a couple of dollars an hour,’’ executive director Jo Briskey said yesterday. “You have to ask, Why would they bother?’’

In this month’s budget, the Turnbull government delayed its promised childcare reforms until July 2018.

The existing system subsidises childcare fees based on family ­income, and then refunds all ­families half their out-of-pocket costs to a maximum of $7500 a child each year.

The Coalition promised a year ago to abolish the limit for families earning less than $185,000 year, with a $10,000 per child limit for wealthier families.