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
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