An option for improving Australia's Paid Parental Leave scheme that doesn't attack 'double dippers'

28/10/2016

The Coalition Government is pushing legislation through the Senate to end "double dipping" by new mothers who receive paid maternity leave from their employers as well as from the government through the Paid Parental Leave scheme, with the changes to potentially take effect as early as January 2017.

The move has come up against significant public backlash, with the Opposition predicting around 80,000 new mothers could lose up to $12,000 in such payments every year, including thousands who are already pregnant.

Earlier this week Women's Agenda published a proposal WOB took to the Federal Government on paid parental leave in 2015. WOB believes it's a solution that's fairer across the long term and will ultimately provide more mothers with the 26 weeks paid leave that will help them bond with their babies and return to work. It also aims to give fathers and partners access to more paid leave, AND to achieve some of the significant savings needed.

The current PPL system is a hybrid scheme with both employers and government participating to more or lesser degrees. In the view of Women on Boards this is by far the best approach as it:

Frames PPL as an employee entitlement rather than a welfare payment;
Provides incentive to employers to recruit and retain employees via improved PPL schemes for men and women; and
Shares the administrative burden of the scheme.

WOB therefore proposes the Government take a pragmatic view and looks to amending the current arrangements to ensure Australia as a leading world economy moves towards the top of the rankings when it comes to the provision of high quality PPL.

Specifically, WoB proposes that the Government:

Commit to a long-term target of 26 weeks PPL to be reached incrementally over three years commencing in 2017.
Once the 26 weeks is achieved, a minimum of four weeks to be set aside for partner leave on a use it or lose it basis.
Where employees have access to employer schemes, these be topped up by the government to the maximum weeks allowed.

For example, a person receiving 10 weeks PPL from their employer would receive a further eight weeks at the minimum wage paid by the Government in 2016 rising to 16 weeks (with four to be taken by the partner or foregone). We believe they should also receive superannuation benefits on this amount – paid by the employer and Government respectively.

The benefits of this system are:

It alleviates the concurrence provisions issue whereby some parents are accessing both employer and Government schemes beyond agreed 18 weeks. While this is perfectly legal, it is not in line with the intention of a fairer system for all employees, including those in lower paid, casual and part-time work and those whose employers do not provide PPL.
As the proportion of employers with a PPL scheme increases from the current 48%, primarily due to increased labour market pressures, the cost to Government will either fall or remain stable in line with increments in the minimum wage. The percentage of companies providing employer funded PPL schemes has increased significantly in the past 10 years as statistics from the Workplace Gender Equality Agency show, and there is no indication this will not continue.
Our estimate is that this approach reduces forecast savings by about 25% on the estimated $967.7m savings over four years.

To conclude, WoB appreciates the constrained fiscal circumstances of the Government, but contends that PPL and associated childcare reforms will lead to greater retention of female workers in particular, more options for partners to be involved in child rearing and improved business and economic outcomes in the long-term.

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