Before Queanbeyan mother Lindsay Anderson had her third child, she hadn't realised just how big a role the cost of childcare would have on that decision. After doing their sums she and her partner Trent decided it would be better to wait to help deal with those high costs.
The latest report from KPMG suggest the couple isn't alone and that Australia's GDP could be boosted by as much as $700 million if the federal government adopted a "radical plan" to overhaul the child care subsidy.
The accounting giant announced its suggestions for revamping the scheme on Wednesday, as part of its series of reports looking at options to cut Australia's workforce participation gap between men and women.
KPMG said the interaction between the country's tax and transfer systems had created disincentives, primarily for secondary earners, to re-enter the workforce or work greater hours.
Secondary earners in a family are more often women.
By following its recommendations for the child care subsidy, KPMG said the economy would be boosted by almost 30,000 additional working days per week and would generate twice the additional cost for the government.
KPMG acknowledged that the subsidy had left many families better off, but in many cases when a person decided to work more hours any additional wage was eaten up by child care costs or tax, often leaving families worse off.
KPMG Australia chair Alison Kitchen said the plan would particularly benefit households on modest incomes.
"Our main proposal is to cap the [workforce disincentive rate] at the secondary earner's marginal income tax rate, plus 20 percentage points. There would then be a top-up payment through the child care subsidy system," Ms Kitchen said.
An alternative option put forward by KPMG was to increase the subsidy to cover 100 per cent of a family's second child, and subsequent children, simultaneously in child care. The current model only covers up to 85 per cent of any child's daycare cost.
Ms Anderson said the costs of child care dictated many decisions she and Trent made, including how much she would work.
The federal public servant recently returned to work after maternity leave working seven days in a fortnight, while two of her three children, Lucy, 5, and Sonny, 11 months, spend four days at family child care between them.
She said while she was very grateful for the subsidy, which means the couple only have to pay a portion of the almost $800 fortnightly fee, if she knew she would actually pocket more by working more she would be willing to increase her hours.
"You want to go to work to talk to people about things other than kids," Ms Anderson said.
She said she'd wanted to have Lucy and Sonny closer together, however with child care costs she believed she wouldn't have been able to go back to work at all.
"I'd pretty much have been working just to pay for daycare," she said.
Ms Anderson supported the proposal to subsidise 100 per cent of fees for children after the first child, as she had to rely on a family member looking after her daughter on one day as the child care cost was too prohibitive.
She said she knew groups of women who opted to work from home and rely on family to avoid child care costs.
KPMG Economics and Tax Centre partner Grant Wardell-Johnson said with conservative assumptions $368 million in spending could generate $678 million for the economy.
"Without a major shift in the public policy philosophy underlying taxpayer-funded child care subsidies, these workforce disincentives, currently falling predominantly on women, will persist," he said.
"Given Australia's weak productivity performance, it is crucial that we make better use of the skills and experience of many parents who have taken time out of the workforce to bring up children."
