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outdated gender roles and called for changes to the income test.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.
All online articles accessed April 2022
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