Why matched funding needs to account for gender

Last week I posed the question (paraphrased):

Is uniform matched funding for grants skewing the playing field against women?

I was met with ‘it’s not too much to ask’ for a woman to have the same amount of matched fundings saved as a man.

This is not an unusual sentiment.

It's common from people who don’t spend their days immersed in the world of personal finance.

I do spend my days that way, and have done for 13 years. On that basis, I consider myself well positioned to make a blanket statement about those sentiments:

They are wrong.

It is too much to ask for many people, women especially.

To illustrate, I've done some basic calculations. I’ve modelled the annual income, spend and net savings based on ABS data. You can find the details below, but here's the headline:

19 months versus 38 years

An average single working male can save a possible $12,741 per year.

An average single working female can save a possible $526 per year.

To save $20,000 for matched funding, it will take the average single male 19 months. It will take the average single woman 38 years.

I've picked $20,000 as a random number - but you get the idea. Scale accordingly.

Assumptions and data sources

Here's the baseline data I've used to arrive at those numbers, with links to sources for those who like to go deeper or want to understand the nuances, such as the difference between full-time and all employees:

Income by gender

(ABS, gender pay gap calculations, pre-income tax, May 2021)

Full time employees only, median:

• Male = $1,662 per week
• Female = $1,496 per week

All employees, median:

• Male = $1,390 per week
• Female = $1,092 per week.

Cost of living

(ABS, household spending and characteristics, FY16)

FY16 single person household spending = $712 per week

CPI adjustment:

• CPI June 2016 = 108.6
• CPI June 2023 = 133.7

June 2023 weekly household spend, CPI adjusted = $876.56 per week, $45,581 per year

Income tax

(Simple tax calculator at ATO)

FY23 income tax rates.

I chose single working people for simplicity. You could run these scenarios for households with children, or by age/profession. The story is uniformly the same - women earn less. It will just be the magnitude of the difference that changes.

I haven't added interest on savings. Even if it brings down the time for a woman to save from 38 years to 34 years, the gap is still enormous.

For the calculations, let's start with the lower gap...

Full-time employees

• Earning difference = $166 per week

Male scenario

• $1,662 per week * 52 weeks a year – tax = $67,869 net income per year
• $67,869 - $45,581 annual spend = $22,288 net possible savings

Female scenario

• $1,496 per week * 52 weeks a year – tax = $62,043 net income per year
• $62,043 - $45,581 annual spend = $16,461 net possible savings

Time to save $20,000 for matched funding:

• Male = 11 months
• Female = 15 months

...it takes the female 36% longer than the male.

Now, we'll look at the more broadly applicable scenario - all working people, including part-time employees:

All employees

• Earning difference = $348 per week

Male scenario

• $1,390 per week * 52 weeks a year – tax = $58,322 net income per year
• $58,322 - $45,581 annual spend = $12,741 net possible savings

Female scenario

• $1,092 per week * 52 weeks a year – tax = $46,107 net income per year
• $46,107 - $45,581 annual spend = $526 net possible savings

Time to save $20,000 for matched funding:

• Male = 19 months
• Female = 456 months

...it takes the female 24 times longer than the male.

What requiring uniform matched funding regardless of gender really means

To specify uniform matched funding regardless of gender skews the playing field towards men and financially stable households.

If grant funders believe those are the groups that have the most worthy ideas for funding, they should carry on as they are now.

If they agree with Minister Husic, that we need everyone contributing to innovation (per his comments at West Tech Fest in 2022), perhaps they'll consider fairer matched funding criteria that accounts for the vulva tax.