Increased public funding for child care is nearly 20 times more effective at creating jobs than a tax cut of the same size according to new modelling released by The Australia Institute today.

The new report entitled ‘A comparison of the economic impacts of income tax cuts and childcare spending’ by Dr Janine Dixon, Senior Research Fellow at Victoria University’s Centre of Policy Studies, compares the cost, employment creation and impact on GDP of increased spending on child care and income tax cuts.

It has found almost 450,000 Australians with children under the age of 5 would like to work more hours and if these parents worked an extra 10 hours a week, by 2030 the GDP would be $15 billion a year bigger. So if the Government spent an extra $2.8 billion on childcare, this would create around 135,000 additional jobs per year by 2030, a similar spend on tax cuts would create less than 10,000 jobs.

Chief Economist at the Australia Institute Dr Richard Denniss told Oliver Peterson giving a high income earner tax cuts doesn’t really help the economy in the long term.

“Giving tax cuts to high income earners, most of who are blokes and most of who already work full time – that can’t really give them much incentive to work more because they already work full time.

“But spend the same money on childcare, create jobs directly, help a whole bunch of other people go and get more work and then those people go and spend their money in the economy as well.”

Peterson adds that childcare should be viewed as an extension of a child’s education.

Listen to the full interview: