The RBA Governor’s call for stimulus signals that now is the time to consider further policy measures to boost Australia’s labour force. One such measure would be to make the cost of child care tax deductible.

The latest Household, Income and Labour Dynamics in Australia Survey, released today, has found the cost of child care is up from an average of $62 a day for a child in 2002-03 to $152 in 2016-17. This outruns the cost each year of privately educating one child through high school.

Well-educated women are choosing to stay home rather than return to work as childcare costs escalate. Credit:Phil Carrick

This cost is forcing many families to make the decision that it is not financially viable for both parents to return to work. The casualty of this is that highly qualified income earners – disproportionally women – are not returning to the work force.

This policy issue has been raised as a matter for reform consistently since the 1970s. In December 2006, the former federal member for Mackellar, Bronwyn Bishop, chaired a house committee inquiry into balancing work and family and recommended that the Income Tax Assessment Act 1996 be amended to allow child care expenses to be deducted. This recommendation was not taken up by the incoming Rudd government in 2007.