Australian Labor Party Senator's Dissenting Report
Introduction
1.1
The Labor Senators on this Committee hold grave concerns about the
unfair and unwarranted changes contained in the Fairer Paid Parental Leave Bill 2015 (the Bill).
1.2
The Bill seeks to cut around $1 billion in Paid Parental Leave (PPL)
payments to new parents. The evidence presented to the Committee shows that
these cuts will come at the expense of the family budget. They will undermine
valuable workplace retention strategies and employment engagements tools, and
as such run contrary to both the design and purpose of the current Paid
Parental Leave (PPL) Scheme.
1.3
Labor Senators are of the view that these cuts to PPL will be
devastating for new parents, who will be forced to
spend less time with their newborn babies in those precious early months of
their child's life. Labor Senators oppose the Bill and recommend that it
be rejected by the Senate.
The Current PPL Scheme
1.4
In 2011, Labor introduced Australia’s first ever national PPL Scheme.
The current PPL scheme provides 18 weeks leave at the minimum wage. This amounts
to a total of around $11 800 in support for new parents, to assist them to
spend time out of the workforce in the early months of their children's life.
1.5
In addition to the national, government-funded scheme, many parents have
negotiated paid or unpaid leave with their employers, which have the effect of 'topping
up' the national, government-funded PPL scheme, allowing them to extend their
period of leave beyond 18 weeks.
1.6
Since it was introduced, more than 550 000 Australian parents have
accessed Labor's scheme. During this time, Labor's PPL scheme has been the
subject of extensive evaluation. The final report of that evaluation found
clear benefits of Labor's PPL scheme, particularly in extending the period of
time new mothers are spending with their children. The final report said:
One of the key findings of the evaluation was that PPL had a
clear effect of delaying mothers’ return to work up to about six months after
the birth of their baby.[1]
1.7
The evaluation found that Labor's PPL scheme was particularly important
for low and middle income families, many of whom lacked any PPL prior to the
introduction of the Scheme. Is short, the national, government-funded PPL scheme
designed by Labor is doing exactly what it was intended to do.
Impact of the Proposed Changes
1.8
The Labor Senators on this Committee are concerned that the changes
proposed in this Bill will undermine the positive impact that PPL is having on
families in the early months of a child's life. As Marion Baird from the Women
and Work Research group made clear in evidence presented to the Committee:
The proposed changes have the potential to reverse the
positive impacts of the current scheme on women and their infants' health
outcomes; that the changes will reduce income and may force women to return to
work earlier than desired and therefore may impose increased demand on a
childcare system already under pressure.[2]
1.9
The changes proposed in the Bill will result in 80 000 new parents
losing access to the national, government-funded PPL scheme. Around 34 000 will
lose all of the $11 800 government-funded scheme and a further 45 000 will lose
part of their entitlement.
1.10
According to the submission from the Parenthood:
It is expected that the proposed changes will result in
almost half of all of new parents currently entitled to PPL losing a substantial
amount of their paid leave.[3]
1.11
Whilst the Government has sought to argue that the impacts of this Bill
will only be felt by public servants on high incomes, data from the Department
of Social Services has shown that new parents earning less than $10 000 a year
will also be impacted by the proposed changes.[4]
1.12
The Government’s own modelling estimates that 45 000 new mums with a
median income of just $43 000 will lose part of the 18 week government
entitlement, receiving around $4 300 less than they otherwise would have under
the current government funded PPL scheme.[5]
1.13
The same figures also show that some new parents earning less than $30 000
a year will lose $11 800 in PPL. A total of 34 000 mums with a median income of
$73 000 will lose all 18 weeks of the taxpayer funded parental leave scheme if
the changes go through the Senate.[6]
1.14
These changes will impact new parents employed in a range of different
sectors, including retail, cleaning, administration, hospitality and public
servants like nurses, teachers and police. The Labor Senators on this Committee
reject the assertion that this measure will only impact high income earners.
Rather, it will significantly impact families on lower incomes, to the
detriment of parents and children. As the submission from the Parenthood makes
clear:
Very few of these parents are "well paid public
servants" they include ordinary women working in retail, hospitality, and
community services whose employer entitlements rarely extend beyond a few
weeks. These hard working, low to middle income women starting or extending
their families are the ones expected to be worst hit by the proposed changes.[7]
Graph 1: Estimated impact on Parental Leave Pay customers
SOURCE:
Department of Social Services, Submission 52, page 5.
1.15
Similarly, the Labor Senators reject the implication in the majority
report that the changes in the Bill will not impact the period of parental
leave taken by new parents.
1.16
This position is drawn from a selective reading of the evaluation of the
PPL scheme, which found that new parents on higher incomes did not change the
amount of parental leave they took as a result of the government-funded scheme.
1.17
As detailed above however, a broader reading of the report shows that across
the board, the government-funded scheme is working to extend the time new
mothers are staying at home. This finding was reinforced by the Secretary of
the Department of Social Services, who made clear in Budget Estimates that:
Certainty the high level evaluation finding is that PPL has
been successful in assisting mothers to stay home with their children longer.[8]
1.18
It is clear that if this Bill is passed, new parents will be forced to
return to work before they are ready. As ACTU President, Ged Kearney, stated in
her evidence to the Committee:
The cuts to the paid parental leave will increase financial
pressure on families with young children; it will force mothers to choose
between putting their baby in care at a young age, assuming of course that they
can find a childcare place, and quitting their job in order to stay at home and
care for their child.[9]
1.19
This was supported by the evidence of Ruth Mead from Women on Boards,
who told the Committee:
Women are most probably going to be forced back into the
workplace earlier than would otherwise be the case.[10]
1.20
This position was also supported by mothers who gave evidence to the Committee.
Anita Stirling from the Australian Nursery and Midwifery Federation, explained:
I am currently on maternity leave and utilising the 18 weeks
of parental leave money. Without this assistance, I would have been forced to
return to work when Angus was 2½ months old in order to make ends meet for our
family.[11]
1.21
The consequences of returning to work early are significant.
According to the Productivity Commission's Inquiry into PPL:
There is compelling evidence of child and maternal health and
welfare benefits from a period of absence from work for the primary caregiver
of around six months and a reasonable prospect that longer periods (nine to
twelve months) are beneficial.[12]
1.22
There are also likely to be significant increases in demand for child
care, if women are forced to return to work early. As Goodstart Early Learning
made clear in its submission:
The proposed changes to paid parental leave could have a
significant impact on the demand for child care for very young children. ...If
mothers of young children have access to less Paid Parental Leave and have to
return to work sooner, this is supply imbalance is likely to get worse.[13]
Undermines Operation of Government Funded PPL Scheme
1.23
The proposal to remove access to the government-funded PPL scheme for
those who have access to employer funded PPL schemes undermines a critical
design element of the government scheme.
1.24
The Federal Paid Parental Leave Act 2010 states that:
the financial support of this Act is intended to complement
and supplement existing entitlements to paid or unpaid leave in connection with
the birth or adoption of a child.[14]
1.25
A number of submissions to the inquiry highlighted that the government-funded
PPL scheme is designed, where possible, to work in combination with employer
funded schemes.
1.26
In her evidence to the Committee, Ged Kearney, ACTU, highlighted that
the scheme was designed this way to provide as close as possible to the 26
weeks which is recommended by the World Health Organisation as the most
appropriate period of time newborn babies should spend in exclusive parental
care to enable best health and emotional bonding outcomes for new parents and
babies. She said:
The scheme is designed to ensure that the government
contribution of 18 weeks at the minimum wage is supplemented by employer funded
entitlements that extend the period of paid leave to meet the international
standard of 26 weeks, which, as you know, is recommended by the World Health
Organisation.[15]
1.27
This was supported by the submission from the YWCA:
The current scheme is based on the principle that the minimum
entitlements provided by the Government would be complemented by employer
schemes. Together with family contributions the intention was to achieve the
optimal leave period recommended by the World Health Organisation of 26 weeks.[16]
1.28
Unfortunately, the Government has attempted to misconstrue the design of
the Scheme, labelling new parents who access both government and employer
funded PPL Schemes as 'double-dippers'. Labor strongly rejects this
characterisation.
1.29
As Unions NSW state in their submission to the Committee:
Employer provided schemes which supplement the Government
scheme are not an example of greedy parents. Instead they are representative of
an effective partnership between business and government seeking to maximise
outcomes for parents and children while achieving a significant economic
dividend through the increased participation of women in the workforce.[17]
1.30
Parents who have been using PPL as it was designed, to spend as close as
possible to the recommended 26 weeks with their newborn babies, have been
insulted and maligned by this Government in their search for savings measures.
1.31
Parents should not be subjected to this sort of language, simply for
wanting the best for their new babies.
1.32
Mothers who appeared before the Committee expressed their distress about
the language used by the Government in relation to the proposal in the Bill. In
her evidence to the committee Lieutenant Commander Sandra Croft said '[t]o
insult us by saying we’re double-dippers is very disappointing'.[18]
1.33
President of the Community and Public Sector Union, Nadine Flood,
conveyed a similar view in her evidence to the Committee, stating:
Particularly distressing was the notion that this was in some
way double-dipping or rorting. It simply is not the case. People saw that as a
very direct and personal attack on working parents and women in particular who
utilise those entitlements.[19]
Savings will not be realised
1.34
Labor Senators disagree with the conclusion reached in the majority
report, that the 'Bill will not directly influence the PPL payment that
employers currently offer or will offer in the future'.[20]
1.35
Evidence presented to the Committee shows that since the introduction of
a national, government-funded PPL scheme 'few employers have changed their
schemes and the majority of those which did so rearranged their scheme to
either or both extend the employee’s overall period of paid leave and/or top up
the replacement wage.'[21]
1.36
Similarly, the ACTU noted in their evidence that the survey data
collected as part of the review of PPL found that of those employers who
offered PPL prior to the introduction of the national, government-funded PPL,
none 'fully reduced or withdrew those entitlements'.[22]
1.37
Labor Senators are of the view that this is evidence of employers' acknowledgement
of the economic and commercial benefits of providing family friendly work
conditions and of engaging women in the workplace.
1.38
As Ms Alana Matheson, Deputy Director, Workplace Relations, Australian
Chamber of Commerce and Industry told the Committee:
Those employers who have made a financial commitment to
privately fund paid parental leave and other parental related benefits do so
for a variety of reasons, including being an employer of choice and to attract
and retain working parents.[23]
1.39
Labor Senators are persuaded by evidence that some employers may
redesign parental leave or related benefits within the conditions of employment
they offer to complement a changed government funded PPL scheme.
1.40
The evidence presented to the Committee was that employers may alter
employee benefits, specifically replacing an employer funded PPL scheme for
another benefit for new parents, with the aim of preserving the employee's
entitlement to the government funded payment.
1.41
In their evidence to the committee, the Australian Chamber of Commerce
and Industry, argued that the savings that the Government seeks to harvest from
this change to PPL will be eroded by changes to employer funded schemes. Ms
Matheson told the committee:
In this regard, the Australian Chamber believes that the cost
savings the government has predicted will not materialise as a result of this
measure. The changes proposed in the bill could disrupt existing schemes. The
Australian Chamber is concerned that the inability of employees to continue to
receive both the government-funded and employer-funded parental leave may
translate into pressure at the enterprise bargaining table, including for
government employees. Given budget repair is the motivation for the change and
that the cost savings forecast by the government may not materialise, these
considerations raise the question of what net benefits, if any, the change will
deliver and whether the risk of disruption or unintended consequences is
warranted.[24]
1.42
Labor Senators are convinced by the evidence that not only will this
Bill have a number of negative impacts on new parents and their babies and
undermine the design of the government funded paid parental leave, but it will
also fail to generate the savings identified in the budget.
1.43
As Chief Executive Officer, Australian Chamber of Commerce and Industry,
stated in her evidence to the committee:
The problem with the Bill is it won't achieve what it set out
to achieve and that's significant budget savings and at the same time could
have unintended consequences.[25]
The Employer Role
1.44
Schedule 2 of this Bill also seeks to remove the 'Employer Role' from
the current PPL scheme.
1.45
Under the current scheme, employers are required to administer payment
of PPL to their eligible employees whilst those employees are on leave. The
Employer Role was a recommendation of the Productivity Commission, and was
included in Labor’s PPL scheme to try and maintain a strong link between
employers and their employees. It was also a way of enabling women to remain
connected to work and their careers when they take time out of the workforce to
have a baby or adopt a child.
1.46
However, as the Scheme progressed, Labor listened to business,
particularly small business, and understood that some small business were
struggling with the administrative burden of the PPL Scheme.
1.47
In the 2013 election campaign, Labor adopted a position that would
enable businesses with fewer than 20 employees to streamline administration and
have Centrelink make PPL payments to their employees whilst they are on
maternity leave.
1.48
This was a sensible reform aimed at balancing the need for employers and
employees to maintain a relationship with their employers whilst they are on
maternity leave with the need to reduce red-tape for small business.
1.49
This legislation seeks to remove the employer role in its entirety. As
such, it does not strike the right balance. Rather, it severs the important
link between an employer and its employees. This is not good for women, and it
is not good for employers.
1.50
This is not the first time that the Government has attempted to make
these changes. In fact, there is already legislation before the Senate, the Paid
Parental Leave Amendment Bill 2014, which deals exclusively with this issue.
1.51
When that Bill was brought before the Senate for the first time, Labor
introduced amendments which would limit the applicability of the measure to
organisations with 20 employees or less. Those organisations will have a choice
as to whether they implement it, or Centrelink does. The Labor Senators believe
these amendments get the balance right.
1.52
It is not clear why the Government has chosen to introduce new
legislation dealing with a matter currently before the Senate. This matter
could properly be dealt with through that legislation. As such, the Labor
Senators recommend the provisions in this Bill which deal with the employer
role be opposed outright.
Conclusion
1.53
Labor Senators are of the view that the proposals in this Bill are
regressive, and will negatively affect labour market outcomes, including
workplace participation, gender pay equity and economic growth.
1.54
These changes will have a significant impact on the incomes of tens of
thousands of new parents, particularly new mothers when they are on parental
leave.
1.55
Labor is also concerned by the fact that the impact of the proposal will
be felt most significantly by low and middle income earners, with some of
Australia’s lowest paid female workers up to $11,800 worse off as a result on
the Bill’s changes to paid parental leave.
1.56
The changes in this Bill are predicated on the false accusation that new
parents who access both government and employer funded PPL schemes are ‘rorters’.
This is simply incorrect. These new parents are utilising the government scheme
as it was designed.
1.57
For these reasons Labor Senators recommend that the Senate reject the
Bill.
Recommendation 1
1.58
Labor members of the committee recommend that the Fairer Paid Parental
Leave Bill 2015 be opposed.
Senator
Carol Brown Senator Nova Peris OAM
Senator
Claire Moore Senator Jenny McAllister
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