Changes to the Paid Parental Leave Scheme

Budget Review 2022–23 Index

Don Arthur

The Government has committed $346.1 million over 5 years to an ‘Enhanced Paid Parental Leave’ scheme that combines currently separate payments for principal carers and for fathers and partners.

How the scheme currently works

The Paid Parental Leave scheme helps parents take time off work to care for a newborn or newly adopted child by providing them with an income while away from work. The scheme currently includes 2 payments—Parental Leave Pay and, Dad and Partner Pay. Both are government-funded and paid at the full-time National Minimum Wage (currently $772.60 per week).

Parental Leave Pay (PLP) is usually paid to birth mothers, but in some circumstances other primary carers may also be eligible. It provides eligible working parents with up to 18 weeks of payments (comprising a 12 week continuous Paid Parental Leave Period and 6 weeks of Flexible Paid Parental Leave Days which can be used within 2 years of the birth or adoption). PLP can be received at the same time as employer-provided paid leave.

Dad and Partner Pay (DAPP) provides eligible working fathers or partners with up to 2 weeks of payments. DAPP cannot be paid at the same time as employer-provided paid leave, only at the same time as unpaid leave.

Both payments are subject to an income test. Claimants are not eligible if their annual adjusted taxable income is greater than $151,350.

According to the Department of Social Services Annual report 2020–21, 169,029 individuals received Parental Leave Pay and 89,784 received Dad and Partner Pay in 2020–21 (pp. 99 & 101).

Calls for changes to the current scheme

Advocates for change have criticised the Paid Parental Leave scheme for reinforcing outdated gender roles and called for changes to the income test. Where a birth mother earns under the $151,350 per year threshold and her partner earns more, the mother can access 18 weeks of PLP. However, if the mother earns more than the threshold and her partner less, the partner is not able to access PLP.

Advocates have also called for changes that would encourage fathers to take more responsibility for providing care. In a 2021 report developed with the Business Council of Australia’s Women’s Participation Taskforce, KPMG argued that PLP and DAPP should be combined into a new scheme giving 20 weeks of pay to both parents. This would allow parents to decide how many weeks each takes with a maximum of 18 weeks for either parent. The total number of weeks would increase to 26 over 6 years. According to the report, this ‘mechanism would allow movement towards more equal parental leave without taking away any existing benefit’ (p. 12). The report also proposed providing 2 additional weeks for parents who allocated weeks of care equally.

A report by Danielle Wood and Owain Emslie of the Grattan Institute made a similar proposal arguing that a new scheme should include a 6-week ‘use it or lose it’ provision for each parent, and 12 weeks that parents could share as they choose. The authors argued: ‘As more fathers take up the leave, the idea that dads can and should play an active role in care will become normalised, releasing both men and women from heavily gendered norms that box in their choices’ (p. 3). According to Wood and Emslie, the new scheme would cost an extra $600 million a year, but increase GDP by $900 million a year due to increased workforce participation by mothers.

Enhanced Paid Parental Leave

As part of the Budget and outlined in the 2022–23 Women’s Budget statement, the Government announced ‘Enhanced Paid Parental Leave’ (p. 39). Under this measure the Government will combine PLP and DAPP and allow eligible working parents to share up to 20 weeks of payments. This means, for example, a mother could receive payments for the full 20 weeks entitlement period or a couple could divide the 20 weeks of payments between them.

The measure also replaces the current income test. Under the new arrangements there will be a household income threshold of $350,000 per year.

The changes will also allow fathers and partners to receive payments under the scheme at the same time as they receive employer-funded leave.

The measure will cost $346.1 million over 5 years and be introduced by March 2023.

Response to the changes

Responses to the changes have been mixed. A headline in the Herald Sun declared the new scheme ‘a win for dads’; however, some critics argued it will discourage fathers from sharing caring responsibilities.

KPMG welcomed the changes to the Paid Parental Leave scheme with Geopolitics Hub director Merriden Varrall commenting, ‘We hope to see the government continue to build on this approach’.

Australian Council of Social Service CEO, Dr Cassandra Goldie, also welcomed the changes saying: ‘We’re pleased that single parents will be able to access 20 weeks of Paid Parental Leave. This is long overdue, and there is no extension otherwise to the number of weeks or an increase to the payment’.

The Grattan Institute’s Danielle Wood warned that the enhanced scheme’s increased flexibility may lead to mothers taking the full 20 weeks of payments. Quoted in an article for the Australian Financial Review, she said: ‘It is done under the guise of flexibility, but sadly, it might be a step backwards in terms of sharing care’.

According to an article by Paul Karp in the Guardian, Dr Leonora Risse, an economist at RMIT University, said: ‘International research clearly shows that removing the leave allowance earmarked for fathers results in mothers taking more leave, with little response from fathers’. Risse argues instead for a scheme that extends the amount of ‘use-it-or-lose-it’ paid parental leave for fathers. Also quoted in the Guardian, Michele O’Neil, president of the Australian Council of Trade Unions (ACTU), argued that the changes were unlikely to encourage men to take parental leave because the rate of payment was too low.


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