Paid parental leave
Dale Daniels
A scheme of paid parental leave (PPL) was announced in the
Budget. It will begin on 1 January 2011. The scheme to be
introduced is essentially the same as the model developed by the
Productivity Commission after the Rudd Government commissioned them
to inquire into the form a PPL scheme should take in 2008.[1]
The changes made to the Productivity Commission model are:
- primary carers who earn more than $150 000 in the full
financial year prior to the birth will not be eligible
- two weeks parental leave for the partner of the primary carer
was not included in the scheme announced in the Budget but will be
reconsidered in a review of the scheme in 2013and
- employers will not be required to pay superannuation guarantee
contributions while employees are receiving PPL. This and related
superannuation issues will be re-examined in
the 2013 review of the scheme.
A booklet setting out the scheme details is available on the
Department of Families, Housing, Community Services and Indigenous
Affairs (FaHCSIA) website.[2]
The introduction of PPL in Australia has been delayed over the
last fifteen years by the difficulties associated with designing a
scheme that works in the Australian setting. Unlike most OECD
countries, Australia does not have a social insurance based welfare
system that requires contributions from workers towards a range of
benefits provided. Without these contributions from people in
employment it has been difficult, on equity grounds, to justify
setting up a scheme that basically pays benefits to new mothers in
employment, but not to other new mothers.
As a substitute for PPL the Keating Government introduced a
means tested lump sum Maternity Allowance in 1996. However,
pressure for PPL continued and the Howard Government tried another
substitute for PPL—the First Child Tax Offset or Baby Bonus
introduced for births after 1 July 2001. It was designed as a
refund of tax paid by new mothers in the year before the birth of
their first child. This tax refund feature was used to justify the
payment of up to $2500 per annum for up to five years to mothers in
employment. Mothers with no income could get a minimum payment of
$500 per annum for up to five years.
This Baby Bonus proved unsustainable due to an overly complex
design and the community’s inability to accept the
proposition that new mothers with jobs and higher incomes deserved
more assistance than mothers not in the workforce. In response, the
Howard Government settled in the end for an enhanced Maternity
Allowance. It was a simple, larger, un-means tested, lump sum
payment called Maternity Payment (later renamed Baby Bonus). The
designers of the PPL scheme announced in the Budget appear to have
tried to avoid this equity issue by ensuring that stay at home
mothers receive only a bit less than PPL mothers. How successful
they have been, is yet to be seen.
[1].
Productivity Commission, Paid parental leave: support for
parents with newborn children, Productivity Commission Inquiry
Report, no. 47, Canberra, 28 February 2009, viewed 19 May 2009,
http://www.pc.gov.au/projects/inquiry/parentalsupport/report
[2].
Department of Family, Housing, Community Services and Indigenous
Affairs (FAHCSIA), Australia’s paid parental leave
scheme, FAHCSIA, Canberra, 2009, viewed 19 May 2009,
http://www.fahcsia.gov.au/about/publicationsarticles/corp/
BudgetPAES/budget09_10/parental_leave/Pages/AustraliasPaidParentalLeaveScheme.aspx
Back to top