Tax reform needed to combat lifetime earnings gap, advocates say

In the June quarter, the gender pay gap fell to a record low of 11.5 per cent, but the lifetime earnings gap remains a stubborn issue, gender equality advocacy group Financy says.

Financy CEO Bianca Hartge-Hazelman welcomed the June quarter gender pay gap progress, but warned that tackling the lifetime earnings gap would remain a large challenge due to the disproportionate unpaid care burdens that women face.

The advocacy group called for tax reforms to address the lifetime earnings gap, including tax credits for additional super contributions in women-dominated industries, and incentives for spousal super contributions for primary caregivers.

“While we celebrate the record-low pay gap, it's a point-in-time measure. The real challenge is the accumulated lifetime retirement savings gap that women face, particularly after taking career breaks for care. Our report models practical superannuation strategies, like early contributions and super splitting, that can help women close the super gender gap,” Hartge-Hazelman said.

“But individual effort isn't enough. We are calling for systemic tax reform to properly reward unpaid care, and for gender equality to be considered as part of economic strategy to boost national productivity.”

At a time of stagnating productivity growth, economists have said that boosting gender equality in Australia’s workforce could unlock significant economic gains.

“The underrepresentation of women in the workforce has a great impact on the Australian economy,” the Department of Prime Minister and Cabinet wrote in a discussion paper.

“If women’s participation matched men’s, Australia’s GDP would increase by $30.7 billion, or 8.7 per cent to $353 billion by 2050 and create an additional 1 million full-time equivalent workers with post-school qualifications.”

Financy argued that reforms were necessary to further “unlock the economic potential of women” and close lifetime financial inequalities driven by unequal caregiving expectations. Their modelling predicted that it would take 17.7 years to close the gender superannuation gap, as things currently stand.

The group found that two superannuation strategies – ‘early savings’ and super splitting – could reduce lifetime earnings disparities by ensuring that unpaid care work was better recognised and compensated for within heterosexual couples.

A woman who started her career with a lower salary than her partner could virtually eliminate the retirement superannuation gap by contributing an extra 5 per cent to her super fund in the first decade of her career, modelling by Financy found.

It also found that ‘superannuation splitting,’ where a breadwinning partner would split 85 per cent of their super contributions with their primary caregiving partner during a five-year career break for childcare, could close the superannuation gap by retirement.

The advocacy group warned that the most significant barriers to gender equality were in areas shaped by deep societal norms, such as the division of unpaid labour. The timeframe to equality in unpaid work remained stubbornly high, at 42.4 years.

According to the Australian government’s Status of Women Report Card 2025, on average, Australian women did 32 hours a week of unpaid and care work per week, nine more hours than men.

Of the Australian women who wanted to work but couldn’t, nearly six in 10 (59 per cent) said that caring responsibilities were the primary barrier preventing them from working, data from the Australian Bureau of Statistics (ABS) showed. Only 7 per cent of men said the same.

Outside of tax reform, Financy’s wishlist for productivity-boosting economic reform included calls for universal childcare and better alignment between school hours and modern work schedules, changes it claims would address barriers for working parents.

It also said that gender-balanced flexible work should be made standard, to support the dismantling of social norms that “anchor women to unpaid care [and] part-time work.”

University of Adelaide economist Duygu Yengin told Accounting Times that inefficient and outdated social structures, such as the mismatch between schooling and working hours, held back women’s productivity.

“After-school and before-school care is not available everywhere. So a woman [with children] cannot work until 5pm easily,” Yengin said.

“They have to match their hours to school hours, and that means they generally choose part-time work. But you cannot go for the high skill, high paying jobs if you are part-time, and that's a big issue of not utilising the skills of women.”

Financy’s survey also found that gender equality progress in corporate boards had stalled in the June quarter. The number of women on ASX 200 boards slipped to 38.1 per cent in the June quarter, down from 38.4 per cent in March.

Mary Wooldridge, chief executive of the Women’s Gender Equality Agency, said that a culture of inflexibility in high-powered roles held working mothers back.

“We get a lot of feedback from women who say, ‘I'm working at a much lower level than I'm capable of because my organisation doesn't have a culture that supports being able to work in a way that's flexible at the more senior level,” Wooldridge told Accounting Times in May.

“Sometimes women are not able to work full-time, but most of the senior roles are full-time roles.”