Is there such a thing as a fair and viable Paid Parental Leave Scheme?

Paid parental leave is a hot topic this week. Tony Abbott is proposing a new policy. It may look good on the outside to many working parents but what does it really mean?

We’ve put together this blog to collate a few thoughts and collect a few more from those who are affected most – you, our readers. It’s an issue we all need to be aware of because whether you’re a business owner, single worker or stay-at-home parent you will be impacted by the scheme.


What the Coalition’s Selling 

• Based on a replacement wage, rather than the minimum wage.
• Mothers are entitled to six months (26 weeks) leave based on their actual wage or the national minimum wage (whichever is greater).
• Includes superannuation payments.
• Payment amounts are capped (revised this week) at the $100,000 salary level meaning women earning over this amount would receive no more than $50,000 in their 6 month maternity leave. 
• Fathers will be eligible for two out of the 26 weeks for dedicated paternity leave at their actual wage or the national minimum wage (whichever is greater) plus superannuation. 
• Fathers can also be nominated as the primary carers meaning the 26 weeks can be divided by both parents. 
• Employees will be paid directly by the Commonwealth Government (Family Assistance Office) not via their employer. 
• Estimated to cost $5.5 billion.
• It will be funded by a 1.5 per cent levy on companies with taxable incomes in excess of $5 million 
• Commences 1 July 2015

The Risks

The policy has been viewed by some as having an “anti-working-women sentiment”.

Why is this? There are some potential long-term economic risks and social consequences we need to think about. These are:

• It removes employer involvement with paid parental leave.
• Provides incentive for employers to keep female employee income below the $100,000 threshold. 
• Encourages women to stay at home and disengage with the workforce (especially those on salaries just below the threshold). 
• Administering paid parental leave directly from Centrelink sends a message that this is a welfare payment rather than an employee entitlement or business process.

“Many PPL 'dissenters' don't object to paid parental leave in general. They disagree that this particular scheme is the most cost-effective way to meet the objective of helping more women return to work after they have children. The Productivity Commission here, and similar bodies around the world, determined that once a minimum paid parental leave policy is in place, childcare is the real lever in terms of facilitating the return of mothers to the workforce. A more generous PPL, like the Coalition's, will not increase women's participation at work, and thus national productivity, the same way that an investment in childcare would.” Georgina Dent, Editor, Women’s Agenda.

The Latest News (as of May 2, 2014)

Tony Abbott has confirmed he has decided to lower the cap from his preferred $150,000 annual wage to $100,000.

The Federal Government’s Commission of Audit made 86 recommendations to reign in the budget – one of these being to lower the Coalition’s paid parental leave scheme salary cap to average week earnings (currently $57,460) rather than pay the actual or minimum wage (whichever is higher). The idea is to use savings for expanded childcare payments. 

Tell us what you think?

Do you forsee any other fallouts or risks?

What are your suggestions for a fair and viable Paid Parental Leave Scheme?

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References:

ABC News, COAG: Premiers, chief ministers meet in Canberra following Commission of Audit release, viewed, 2.5.14 http://www.abc.net.au/news/2014-05-02/premiers-to-attend-coag-meeting-in-canberra/5424964?WT.mc_id=newsmail

Liberal Party Website, The Coalition’s Policy for Paid Parental Leave, Payment amounts are capped at the $150,000 salary level, viewed 2.5.14 http://lpaweb-static.s3.amazonaws.com/The%20Coalition’s%20Policy%20for%20Paid%20Parental%20Leave.pdf

Women’s Agenda, Parental leave could become the Liberal's Mining Tax, viewed 2.5.14 http://www.womensagenda.com.au/talking-about/opinions/parental-leave-could-become-the-liberal-s-mining-tax/201405023950#.U2L1c_21wpE

Women’s Agenda, We need to talk about paid parental leave in detail, viewed 2.5.14, http://www.womensagenda.com.au/talking-about/opinions/we-need-to-talk-about-paid-parental-leave-in-detail/201404293938#.U2L2lv21wpE