Research by the Centre for Independent Studies, using data collected by the Australian Bureau of Statistics and the Household Income and Labour Dynamics in Australia, found only a weak relationship between the cost of childcare and the female labour supply.
It found that while government spending on childcare from 1974 to 2007 grew by 4,000 per cent, most of the increase in spending occurred from 1990 onwards. The proportion of working women aged 25 to 44 grew by 50 per cent over the same period. However, most of the increase occurred in the 1980s.
The report, 'Childcare and the Labour Supply', also suggested that government spending had failed to rein in the cost of childcare and may even have contributed to it.
It said, 'Each new injection of government funding has been followed by an escalation in the cost of childcare', suggesting that this could stem from an greater need for more childcare workers, which put 'upward pressure' on wages.
The researchers found that the increase in the use of formal care had been offset by a decline in the use of informal care, such as relatives and friends.
They also questioned the assumption that childcare is a public good and said studies found no evidence that formal childcare has lasting benefits for most children and that some studies found negative effects.
However, they conceded that separate studies had found that high quality childcare is beneficial for children from deprived families.
The study concluded that there is no justification for using taxpayers' funding to subsidise childcare for middle- or high-income families, and that funding for childcare should be reserved for low-income families and single mothers.
The study is available at http://www.cis.org.au/issue_analysis/IA97/ia97.pdf.
