Key Point
- The Productivity Commission's draft report highlights the need for a paid parental leave scheme, focusing on the sharing of parental caring responsibilities, Government-funded paid leave and long-term engagement and attachment to the workforce over the life cycle.
The issue of paid parental leave has reached new levels of prominence as a result of the increasing role of women as simultaneous carers, workers and providers of income, coupled with the changes in men's roles in caring for and rearing children. With this in mind, the Federal Government, in delivering its election commitment asked the Productivity Commission to examine the ways the Government may be able to provide support to parents with newborn children.
According to ABS statistics, 53 percent of female employees and 50 percent of male employees have access to employer-provided paid parental leave. This leaves around half of working females and males without any access to paid leave. Paid maternity leave aims to overcome discrimination against working women by equalising their opportunity of employment and strengthening their attachment to the labour market.
Draft Findings
On 29 September 2008, the Productivity Commission released its draft inquiry report, which made a number of recommendations, the key ones of which include:
- the establishment of a taxpayer-funded paid parental leave scheme which would provide postnatal leave for a total of 18 weeks at payment of the adult minimum wage for each week of leave subject to normal taxation rates;
- an additional two weeks of paternity leave reserved for the father or same sex partner;
- a scheme to be fully taxpayer-funded, but with employers funding capped superannuation entitlements for long-term employees;
- the sharing of postnatal leave between parents, but not to be used concurrently;
- the scheme to be available to all employees with "a reasonable degree of attachment" to the labour force and a broad range of family types, including conventional couples, lone parents, adoptive couples and same sex couples.
Why A Paid Parental Leave Scheme?
According to the Productivity Commission the three main driving forces behind a push for a paid parental leave scheme are as follows:
- to foster the improvement of wellbeing for families, child and maternal health having regard to the effect of an extended period of absence from work around the birth of the child and the financial hardship that may result;
- to encourage women to maintain their lifetime attachment to the workforce, despite any incentives to do otherwise as provided by the social welfare system;
- to create a scheme in line with emerging community norms that taking time away from the paid workforce to care for an infant is a normal part of life for both mothers and fathers which should be recognised.
The Commission has also proposed there be certain conditions on eligibility for the scheme, namely, that:
- it be available only for an employed person who is the parent and primary carer;
- the employee must have an average of at least ten hours a week with continuous employment for the 12 months prior to the date of expected birth.
The draft report also provides that so long as an employee meets the employment test above, he/she could access the scheme, including part-time, full-time and casual employees; and eligible mothers may transfer paid parental leave rights to fathers or other eligible partners provided they also meet the requirements of the employment test.
Who Pays?
Under the scheme, it is contemplated that businesses would participate as paymasters for the scheme by initially paying their employees' statutory parental leave entitlements, but only:
- for employees entitled to unpaid parental leave under the National Employment Standards;
- where there is "an efficient and timely way for Government to fully reimburse that employer" through a credit pay-as-you-go system and by withholding payments to the Australian Tax Office for those employees making at least monthly payments.
All other employees would be paid directly by the Government.
The Commission also proposes that employers provide capped superannuation contributions for long-term employees (having been employed for 12 months or more) for the period of leave taken. This would only be available for employees who are eligible for the benefits before taking leave and entitled to unpaid leave.
It is proposed that the costs of the Scheme would be partially offset by proposed changes to the baby bonus and family tax benefit B. Parents who are ineligible under the Scheme would be entitled to a new "maternity allowance" of $5,000, equal to the current baby bonus, and other support.
What Next?
Sex Discrimination Commissioner Elizabeth Broderick has been reported as saying that a national paid maternity leave scheme should be funded by the Federal Government to ensure women are not discriminated against by employers. Whether or not this will be a viable option is unclear, according to Finance Minister Lindsay Tanner, who has reportedly Stated that the Government will "weigh up its options" but that the decision whether or not to implement the scheme will have be taken in light of budgetary considerations.
The new scheme would cut tax and welfare spending by $307 million and save $607 million in baby bonus payments. The Productivity Commission estimates that the proposal will cost taxpayers around $450 million, and businesses $75 million in net terms. If the scheme is implemented, an important advantage for employers will be an increase in retention rates of female employees for businesses and a deduction in costs for training and recruitment. Moreover, it is suggested that a scheme of paid maternity leave will boost lifetime employment rates for women.
The right to parental leave is one of job security, that is, the right to return to one's job back at the end of the leave the same way that employees return to work after sick leave, annual leave and long service leave. Whether or not the scheme proposed by the Productivity Commission will be implemented remains to be seen, however it is clear that employers should take note of their proposed involvement in the scheme, particularly in relation to employees who have been employed for 12 months or longer.
It is anticipated that the Commission's final report will be provided to the Government in February 2009.
Thanks to Millen Lo and Sophia Gerakios for their help in writing this article.
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