The Activity Test causing Women and Children to Miss Out: Report
06 March 2023 – Tens of thousands of women across the country are restricted from participating in the workforce due to the Federal Government’s Activity Test according to a new report by Impact Economics and Policy which assessed its impact on Australian families and the economy.
The report, supported by Minderoo Foundation’s Thrive by Five campaign, explores the decisions of mothers to return to work and the resulting impact on children accessing early learning and childcare and found that instead of acting as an incentive, the Activity Test increases the search costs for mothers and is a barrier to employment.
Thrive by Five’s Director Jay Weatherill said the findings made it abundantly clear that the Activity Test is an obsolete and restrictive policy measure that must be scrapped.
“Most concerning is that the Activity Test is forcing more than 126,000 children from low-income households in Australia to miss out on early childhood education and care.
“This means that a single policy measure is restricting hundreds of thousands of Australian children from accessing the lifelong benefits of high-quality early learning which is simply unacceptable.
“By continuing to utilise the Activity Test as a precondition for childcare subsidy allocation, the Australian economy is losing out on more than $4.5 billion in GDP contributions from parents who would otherwise be active workforce participants.
“Instead of incentivising a return to work for parents resulting in more economic activity, as was its original purpose, the Activity Test has done the exact opposite and has restricted economic participation for far too many.
The report highlights that abolishing the Activity Test will result in an increase in workforce participation by approximately 39,620 women, and most of those increases would be amongst women in households with incomes below $72,000.
The cost to the Australian Government of abolishing the Activity Test would be $1,306 million in 2023-24 and be offset by higher taxation receipts and lower government payments.
“This report is perhaps the clearest indictment of the failures of the Activity Test which is why Thrive by Five is calling on the Federal Government to abolish the Activity Test in the upcoming May Budget.
“Abolishing this test would ensure that children and their families have greater access to early learning and childcare that positively supports their development and continued learning.
“Now is the time for our political decision-makers to act boldly and eliminate the Activity Test requirements for all families,” he said.