Submission from the Catholic Women’s League Australia Inc.

May 2015

  1. Introduction

Catholic Women’s League Australia Inc. (CWLA) is the national peak body representing the League’s six member organisations located throughout Australia. We are a Non-Government Organisation and have consultative (roster) status with the Economic and Social Council of the United Nations(ECOSOC). We are also a member of the World Union of Catholic Women’s Organisations.

We seek to make a submission in relation to the community consultation into the taxation system. Our particular concern relates to the current tax regime and the fact that it gives no financial incentive for a parent to defer paid work so as to be able to raise a child at home. As the situation currently stands, income generated by a working parent is taxed without incorporating an assessment of the stay-at-home parent’s contribution to the family life, household and to society at large. Hefty life expenses, such as home mortgages, often require both parents to work and to place their child in day-care. Todays’ reality is that few couples can afford the luxury of having a stay-at-home parent as no recognition of their important contribution is made under the current tax situation. The irony of this situation is that the high cost of day care can often equate to the salary of the parent who elects to work.

The work of the stay-at-home parent is often undervalued by society notwithstanding that it is often one of the most important contributions to childrearing that a parent can make. In the words of C.S.Lewis:

Homemaking is surely in reality the most important work in the world. What do ships, railways, mines, cares and government exist for except that people may be fed, warmed and safe in their own homes? The homemaker’s job is one for which all others exist.

It is our collective concern that the ongoing push for productivity in Australia is progressing to the great detriment of children, marriages and family unity.

2.Benefits

As more women are better educated than ever before in history, the stay-at-home parent’s focused care of their child provides the child with the opportunity to develop to their fullest potential and to become a well-adjusted person. The stay at home parent often has “slow time” with their children and therefore can support the child to reach their developmental goals more quickly than in any other setting.

Where one party is working and the other is a stay at home parent, the working parent is able to return home to find a place of rest and harmony. This is difficult to achieve when both parents are busy working and there is no one to help create a peaceful family environment. Consequently, it is submitted that as a result of such harmony the working parent is able to work more productively at their job, thereby increasing productivity in the workplace.

By having improved family unity it is our submission that society will witness a reduction in truancy and crime committed by younger people. The stay at home parent is furthermore enabled to make a voluntary contribution to the community by way of participating at school functions and other child related events, thereby positively influencing the community.

Once the child reaches school age the stay-at-home parent has the opportunity to re-enter the workplace. By supporting parents who opt to stay at home rather than work the focus in society will be redirected from being so concentrated on the individual to one that is more caring of children, the elderly and the family unit. Reducing the tax that is paid on family incomes might result in the federal government receiving less revenue from income tax: however, the reduced demand for day care and child support subsidies would be substantial.

One study conducted in the United Kingdom by the Institute for Social and Economic Research revealed some interesting findings. According to the study, the impact of having a full-time working mother on a child’s education is that a child is 20 per cent less likely to reach A-level (the equivalent of Year 12 in Australia). Such children were more likely not to perform as well at school, face unemployment in later years and suffer mental stress compared to mothers who stay at home to bring them up.[1]Other studies have highlighted the positive effects of maternal care during a child’s first year of life[2].

The current tax system is focused more on encouraging both parents to engage in paid work rather than recognising the important contribution that parents who choose to stay at home to rear their child make on both the child and the community at large.

It is time that the important and valuable contribution that the stay-at-home parent makes to the community at large is recognised. One effective way of doing this is via implementing a tax regime that acknowledges this contribution.

3.Recommendation

Based on the submissions made above it is our recommendation that income splitting devices be adopted so that a parent who chooses to stay at home is able to be incorporated within the working parent’s income and thus benefit from tax sharing between both parents. For a couple where one parent is a stay-at-home parent, this mechanism would effectively double the tax-free threshold for the couple, thereby resulting in an increase in the accessible income to the family.

Thank you for the opportunity to contribute to the inquiry into the Australian taxation system.

Authorised by: Carolyn Metcalfe

National President, CWLA Inc.

Prepared by:Sonia Di Mezza

Research Officer, CWLA Inc.

1

[1]: at 21 May 2015.

[2] Carneiro, P., K. Løken and K.G. Salvanes, 2009, “A flying start or no effect? Long-term outcomes for mother and child”, working paper; and Blau, F.D. and A.J. Grossberg, 1992, “Maternal Labor Supply and Children's Cognitive Development”, The Review of Economics and Statistics, Vol. 74(3), 474-481