How To Make Our Economy $25 Billion Bigger

06/01/2016 6:55 AM AEDT | Updated 15/07/2016 12:51 PM AEST
A woman walks past the electronic stock board of a securities firm in Tokyo Wednesday, June 6, 2012. Asian stock markets perked up Wednesday after U.S. service companies, which employ most of the American workforce, grew at a slightly faster pace in May. (AP Photo/Itsuo Inouye)

2016 should be the year Australia's economic reform malaise is brought to an end with a tax-reform election.

We should capitalise on this promising year to reset the rationale for cultural change on women and the workforce. Without establishing the economic necessity for change, it will be harder to make changes to childcare, parental leave and flexible working policies needed in our cities and towns.

A three-pronged approach is required.

Firstly, we need to remind the community of the significant economic loss and social cost that Australia suffers when women do not reach their full potential.

Secondly, the term "female workforce participation" must be spoken about as often as "tax reform" and "innovation".

Thirdly, a renewed effort on the cultural change is required to ensure we enable women to participate and reach their full potential.

We have spent five years arguing about parental leave schemes, childcare and middle-class welfare. This has swamped the discussion on the economic and social contribution we are not receiving with existing participation rates.

We have put the cart before the horse, as there does not appear to be a strongly accepted link between the economic value of women working and our general economic prosperity. The best shot at making the economic case for women and work is the twice-a-decade Intergenerational Report.

The sales job on last year's IGR fell flat. It contains statistics which show Australia will be poorer if we do not provide better opportunities for our people, especially women. This should appeal to our collective hip pockets -- always the best way to instigate change.

The first key 2015 IGR statistic is the "dependency ratio", which indicates the number of working-aged people for every person aged 65 and over. This has fallen from 7.3 percent in 1975 to 4.5 percent in 2015. The ratio will be just 2.7 per cent by 2055.

This tells us that over the next 40 years, Australia's tax base will heavily erode and will not be able to fund our future expenditure needs. Other than higher taxes, our options for redress are based on the three "Ps" -- higher participation, productivity and population.

The most obvious participation lever to pull is to get more women working. The IGR statistic of "female workforce participation" barely increases from 66 percent for women aged 15-64 over the next 40 years. This is 14 percent lower than the male participation rate. This is the gap we need to close.

This gap was widely noted at the time of the release of the IGR last year. The Young Women's Christian Association stated:

'The Treasurers' IGR speech described women as "the second underutilised workforce army." However, this 'army' requires clear policies and programs that boost women's workforce participation, such as paid parental leave, affordable and accessible childcare, flexible work practices and measures to address discrimination in the workplace.'

"Clear policies" usually follow after the economic necessity of doing something has been widely established. This takes us to the numbers: lifting our female workforce participation to Canadian levels of 76 percent would boost our economy by $25 billion per annum, according to Treasury. These are the figures we must establish in the public's mind as the economic necessity.

Terminology is equally important. Japan has been creative with its even bigger gap between male and female participation of 20 percent. The Japanese Prime Minister, Shinzo Abe, has named a plank of his economic reforms "womenomics".

Womenomics involves getting women into the workforce by legislating targets for female participation generally and within company leadership. The dividend for closing the Japanese gap would be a boost to GDP of 13 percent.

While Australia doesn't need to adopt Abe's exact language, "womenomics" has provided a framework to usher in cultural change in Japan. Accordingly, once we've sized the opportunity and the issue has clear terminology, fostering cultural change should be easier.

When it comes to the required cultural change, one issue is on top of the list: the need to end discrimination against women taking time away from the workforce to have children.

I have been staggered by the instances of discrimination I have been made aware of throughout my career. Too many times, I have seen discussions on career potential and development cease with a newly pregnant woman as colleagues immediately seek out likely replacements.

This impacts confidence (at a time when it needs to be nurtured) and the mindset on returning to work, ultimately influencing progression to senior leadership.

This is just one reason why just five percent of CEOs in the ASX200 are women. There are many others. Our Parliaments have similar challenges with a lack of female representation at the highest levels.

As a father of a newborn girl, I can only hope her generation are not only participating at higher levels, but reaching their full potential -- whatever her chosen path.

It is time to get hard-nosed about this agenda. Our economy is $25 billion smaller as a result. The economic consequences of discrimination and bias are not widely understood and they must be. We should use the year of change in 2016 to re-establish the economic basis for female workforce participation and advance cultural change.

Relaunching the Intergenerational Report would be a good start.

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