While Nordic countries have similar proportions of full-time to part-time work as Australia, they have much more generous childcare policies and much higher rates of female participation in full-time work.

Compared to Nordic countries, Australia’s female participation rates fall significantly at the ages when the largest number of people are raising young families. Policies that make it easier for women to choose to go back to work, like the provision of free childcare, could mean that Australia reaps billions in benefits over the long run.

But the benefits of free childcare do not only accrue in the long term. The provision of free childcare provides a significant form of fiscal stimulus spending targeted towards families with young children. As such families tend to have a very high ‘marginal propensity to consume’ stimulus provided in the form of free childcare is likely to have a larger impact on consumer spending than many other forms of stimulus spending.

The Morrison Government’s decision to end free childcare will reduce the disposable income of young families, meaning they will reduce their consumer spending at a time when GDP is already shrinking, and unemployment is rising rapidly. This decision, combined with the decision to direct significant spending on construction projects is at odds with the Prime Minister’s statement that his number one priority is getting people back into jobs.

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