What counts as work and income for parents in the new economy? An opportunity lost in the roll out of the new Child Care Package

Today the government’s new Child Care Package is being rolled out. While it may be a positive for middle-class families who earn their incomes in a ‘traditional’ manner, the implications for families in more precarious employment is not so clear. In today’s post, Policy Whisperer Kay Cook (@KayCookPhD) of Swinburne University of Technology walks us through the new package and what it means for workers who are increasingly reliant on precarious employment.

An overview of the new subsidy

On July 2, the government’s new Child Care Package begins, replacing the previous and complicated system of rebates and benefits. The two central features of the new package are a scaled subsidy based on combined annual family income, and a fortnightly activity test, which must be met by each parent in order to access subsidised care. When calculating subsidy eligibility, and the subsidy amount and hours of subsidised care, the Department of Human Services requires an estimate of both work activity and income details.

Activities that count towards the activity test include paid work, being self-employed, doing unpaid work in a family business, looking for work, volunteering or studying. Low-income families, earning less than $69,958 annually, who do not meet the activity test will be eligible to access 24 hours of subsidised care without further requirements.

While the new subsidy is a welcome simplification of the child care rebate and benefit system, it misses an important opportunity to inch Centrelink into the 21st century. The system might work extremely well for middle-class, one-and-a-half earner families with regular employment, hours and incomes; but it ignores the realities of our changing economy. This is ironic given that the government is concurrently conducting an inquiry into the Future of Work, whose terms of reference examine the very issues at stake here.

The luxury of flexibility

In a historically ‘traditional’ family economy, for whom our current child care and benefits systems were built, it was typically the mother who worked part-time while fathers worked long hours. These typically middle-class families can often assemble their work around available care, or organise care around their work schedules. This is a chicken-and-egg scenario that has long existed in Australia’s high demand childcare sector: whether to find care that matches your work schedule; or fit your work schedule around the care that is available.

Where care is in high demand, being able to either ‘choose’ your work days to accommodate available care or having certainty in your work schedule is a luxury. However, while mothers are conscious of the need to find jobs that offer part-time hours, such jobs are often hard to find. As these jobs disappear in place of casual, and increasingly contracted, piecemeal work, for both parents, the childcare ‘chicken’ of available days will need to precede the employment ‘egg’ of work availability. However, the new child care package is largely indifferent to these issues; and may exacerbate the problems faced by parents in the new economy who will have less predictable schedules.

For families with full-time or part-time employment in the ‘old economy’, estimated income and work hours are less likely to change, and when they do, they change less often and in less dramatic ways – for example, an additional day of work may be picked up or dropped, or a new job is found where the income changes, but then remains steady at the new rate. However, these are not the jobs that the next generation of parents will increasingly find themselves in. For these parents, the new activity test poses significant questions, which are not addressed in the subsidy legislation or documentation. Indeed, while the Australian Council of Trade Unions calls for gig economy and labour hire workers to be protected in the same way as employees with regards to minimum conditions, unfair dismissal and collective bargaining, this does not lessen the divide between what counts and does not count as work or income in Australian social service legislation and practice.

Implications for workers in the gig economy

For parents with unpredictable work schedules, the Department of Education and Training’s documentation recommends that, “you should provide an estimate of the highest number of hours you expect to work in a single fortnight over a three month period”. But this only applies to hours of work, and does not translate to the gig economy. For those parents looking for work, Centrelink’s part-time job search requirement is typically to undertake 10 job searches per month. As freelance, piecemeal, ‘gig economy’ work increases, especially as facilitated by online technologies, what will such searches look like, and how can these be quantified in terms of hours spent looking for or undertaking work? For example, will parents meet the eligibility requirements if they post 10 ads per month on Airtasker? Does sitting in your car waiting for an Uber fare for fifteen hours per week count as employment?

Due to their need for flexibility, many mothers are dependent on precious jobs, such as as blossomed in the gig economy. This new reality isn't reflected in Centrelink procedures. Photo credit Pexels.

Current accommodations made for casual workers ask individuals to ‘predict’ what is becoming an increasingly unpredictable market, guiding people to err on the side of overestimation. The error rate these predictions, however, is borne by the family; and government documentation is sure to point out that if your subsidy is inaccurate due to changing circumstances, “you’ll have to pay the money back”. Miscalculations of time spent working or of income earned can result in subsidies being provided when the family was ineligible, or incorrect levels of subsidy being provided.

Moving Centrelink into the future of work

Current Centrelink systems are ill-equipped to recognise, record and respond to new ways of working and earning. This applies not only to the new Child Care Package, but all activity-tested benefits and payments that rely on reported income, including child support which affects 1.3 million parents and 1.1 million children in Australia. Centrelink’s outdated system of coding income and employment has far-reaching implications. As the recent robodebt fiasco demonstrated, Centrelink’s largely automated processes for calculating and administering payments are insensitive to the human cost of these calculations. For parents with young children who are trying to eke out a living in the increasingly precarious new economy, this is an additional stress they do not need.

The new Child Care Package provided the government an opportunity to rethink not only how care is subsidised, but also how the nature of work is changing and how Centrelink processes need to accommodate new realities. Unfortunately, however, this opportunity has been lost and so it will be the parents working in the new economy who must find ways to bend their reality into a system that prioritises the work experiences of the past and privileged.

This post is part of the Women's Policy Action Tank initiative to analyse government policy using a gendered lens. View our other policy analysis pieces here.