Leadership | Diversity | Inclusion

Change economic policy to create more inclusive economy

We don’t capture the full potential of our female talent pool compared to many of our developed world peers, Diane Smith-Gander has told a CEDA audience in Adelaide.

Speaking at a Women in Leadership event, Ms Smith-Gander said, “I think embracing diversity is one way of truly engaging all of our citizens in the Australian economy.

“We have been in the enviable position of growing GDP for more than a quarter of a century.

“What we have done less successfully is engage women in the Australian workforce

“The participation of women in the workforce of the United States, Singapore and France…drives more than 40 per cent of the GDP of those economies. 

“In Australia that number is only 35 per cent. Even though female participation in this country is as high if not higher than in those other economies.

“The driver of growing economies has been this flow of women into the workforce.

“In the 1970s, women made up a bit more than a third of the workforce, compared to almost half today. 

“The increase of participation of mothers in the workforce has been quite stark. Since the 1980s, it has gone up by more than 50 per cent. 

“Cultural norms are changing but one that hasn’t changed enough is that when it comes to the children penalty around work.

“This is very much a penalty.

“Mothers work a lot less than men, and a lot less than other women.

“Due to affordability issues…in most households, both parents have to find some sort of paid work.

“We also have to recognise we have a headline 15.3 per cent gender pay gap, which means that highly paid jobs are largely reserved for men. 

“And if you think about that situation, if you are an economically rational family unit, who are you going to send out to work, and who are you going to leave at home, doing perhaps part time work and looking after the children?”

Ms Smith-Gander also discussed data from the Workplace Gender Equality Agency which looks at the percentage of women in workplace roles from all employees up to key management personnel and CEO positions. The data showed the representation of women declined at every step of the pipeline.

“Why does the pipeline look like this? I absolutely reject the hypothesis that women are opting out,” she said.

“I think that women are economically rational people too, and I think that what we’re saying, we’re making it quite clear, is that we’re not going to play this game unless the business case, the value proposition for us, is positive. 

“Why would anyone work, for less money, for the same work, with less opportunity?

“Having a look at some really interesting estimates, and these are from the Productivity Commission…shows that the cumulative impact of being a mother, can be a startling $2 million over a life time of earnings. 

“There’s a pay gap in there, and there is also the impact of less superannuation and no superannuation during career breaks.”

Ms Smith-Gander discussed the importance of change starting at the ground level. For example in the Brownie and Girl-Guide programs in America, badges are now collected for negotiation and win-win outcomes.
“(This will make) people very different in the future,” she said.

“For me personally, what I found works is to ask for transparency.”

This can include asking a company:
  • How the compensation system works;
  • Where the pay would position within the company; and
  • Questioning why.
“There’s also a range of quite small investments that companies can make which…move the dial and that’s things like providing breastfeeding facilities in the workplace…and referrals to support facilities and so-forth,” she said.

“It’s very interesting that when this stuff gets put up, it often get challenged.

“I think there are a lot people that still don’t believe the business case for equal opportunity. 

“I think it’s intuitively obvious that allowing well-qualified female employees to leave the workforce during child-rearing, must have costs, and US studies show that the cost of replacing a worker is about 30 per cent of their salary.  

“I know that increasing female workforce participation is a thin edge of our economic wedge.

“If we can deliver equality to 51 per cent of the population, we can deliver equality to all…and it will lead to increasing prosperity in Australia.”

However, Ms Smith-Gander said that changes in the workplace would be lost if broader economic policies are not changed.

“All of this is going to be completely nought, if were unable to address some of our most important key economic settings,” she said. 

“I am first and foremost a business person. And as a business person I support the condention of much Australian business, that needed economic reforms in this country remain unfinished.

“I think we need a competitive company tax system, I think we need to provide the opportunity for Australia to have more profitable companies that will pay more tax, employ more Australians, have small business suppliers, be more successful and deliver for customers who rely on them to provide goods and services. 

“We need to move from transaction taxes on property to broad-based land tax to address housing affordability. I am totally anti-stamp duty. We won’t get labour mobility where it needs to be until we remove that. I know it’s going to be a very difficult transition path.

“Also GST reform…I think is something that needs to be high on the agenda.

“And then, the big one, the Australian company tax rate.

“Now the enterprise tax plan provides an example of a positive step forward in the area of corporate reform. If we could decrease all corporate tax rates from 30 per cent to 25 per cent, we would be much in line with the current OECD average of 24 per cent although the average in Asia is 21 per cent.

“We’re only going to get to 25 per cent by 2026-27, under current plans and I think that is going to make us an uncompetitive destination for foreign investment and impact the ability of Australian businesses to thrive, invest and create jobs.

“And that last bit is something that should really concern everyone.

“Saying we’re going to restrict tax cuts to companies with turnover of $250 million a year is just not a sensible compromise. Jobs in big business are just as valuable as jobs in small business. 

“What is the size of the prize that we’re putting at risk here?

“Treasury estimates reducing the company tax rate to 25 per cent will increase GDP permanently by a per cent. 

“Not so much? That’s $17 billion a year in today’s terms.

“Stronger investment will deliver a direct benefit to workers and government revenues are going to grow as the economy expands.

“I do want to increase the size of the nation’s economic pie by $17 billion every year, as long as women get their fair share of it.”