With unemployment low it’s no surprise that lifting women’s labour force participation and economic opportunities is a central theme in the budget. Women face persistent barriers to workforce participation – including unaffordable childcare, lack of family-friendly work arrangements and workplace discrimination. These barriers are acknowledged in Labor’s “family friendly” Budget, with increases in the childcare subsidy, paid parental leave (PPL) and an attempt to tackle the gender pay gap.

The government has announced a new Women’s Economic Equality Taskforce in combination with other measures in the forthcoming industrial relations legislation will aim to close the gap in earnings between Australian men and women.

The changes to childcare were widely expected. From July 2023 the Child Care Subsidy rate will increase for families earning less than $530,000 – benefiting an estimated 1.26 million families. The subsidy will increase from 85% to 90% for households with a combined income of $80,000, with the rate tapering down by 1% with each additional $5,000 in income.

Australia has some of the highest childcare costs in the OECD, so price relief is important, but increasing the subsidy isn’t enough. Once the new rates are in place, it will be important to ensure providers are not able to simply increase prices in response. This will hopefully be addressed in the government’s review into the sector which will specifically examine affordability issues.

The Budget includes plans to increase Australia’s PPL scheme by six weeks, bringing the total paid leave period up to 26 weeks (albeit in increments between 2024 to 2026). This is an important step forward for PPL in Australia which has remained largely unchanged for around a decade.

Australian PPL is, however, still well behind international standards. The OECD average is 60.1 weeks in total, with 24.5 weeks reserved for mothers, 9.4 weeks for fathers and 26.1 weeks that can be flexibly distributed. It will not come as a surprise then that Australia ranks 30th out of 38 in the OECD for public expenditure on parental leave per live birth.

Another key feature of a PPL scheme is the distribution of leave between primary carers (usually mothers) and secondary carers (usually fathers). In the name of flexibility, under Labor’s new plan all 26 weeks can be distributed in any way between parents. This is good in theory, but the evidence is clear – a “use it or lose it” approach that assigns fathers non-transferable leave results in higher take up among dads. Labor’s changes to PPL are a good start but there is certainly still room for improvement.