The Albanese Government has today committed to paying superannuation on top of the government-funded paid parental leave scheme, commencing 1 July 2025.
This change is long overdue, but it will be celebrated this week, and gives the Government a valuable and actionable talking point for International Women’s Day tomorrow (8th March).
The inclusion of superannuation payments are, arguably, a small change. But it’s an adjustment that sends a powerful message, especially with women continuing to retire with a quarter less in superannuation than men.
It’s also a powerful national mindset shift around the penalty that comes with having a baby, with mothers typically paying the financial cost not only immediately but for the rest of their lives.
As my former colleague and now CEO of The Parenthood Georgie Dent said on the announcement, it “reinforces that paid parental leave is not a welfare payment, but a workplace entitlement just like annual leave or sick leave.”
Expected to cost $200 million annually – which is hardly significant compared to the more than $2.6 billion spent on the scheme annually – today’s announcment is set to benefit 180,000 families every year. The majority of the individual beneficiaries will be women, given women continue to take the overwhelming majority of this leave.
The Albanese Government has been making a number of small tweaks to the paid parental leave scheme since taking office, promising to expand the scheme out to 26 weeks by 2026, and adding “use it or lose it” provisions to entice fathers to take more leave.
These tweaks, at times, can feel small and even somewhat frustrating, given calls for the scheme to be dramatically overhauled to better support parents. But small and consistent changes now look like smart policymaking from the Albanese Government, enabling it to make a number of different announcements without going too far to stir up too much noise regarding the price of the scheme.
Emma Walsh from Family Friendly Workplaces says that Australia’s paid parental leave scheme still lags behind the rest of the world when compared to other OECD nations, but that “this modest, yet significant step forward” brings us closer to bridging the gap.
“We know inadequate funding of parental leave contributes to the gender pay gap, not only is this the right thing to be doing, it also makes economic sense,” Walsh said.
“Paying Super on parental leave will also help to address one of the financial barriers that discourages men from taking on their share of parental leave.”
Unions and advocates have long called for the changes, and the conversation ramped up after the Women’s Economic Equality Taskforce made such an adjustment a key recommendation in its report handed to the Federal Government in 2024.
The change is expected to cost around $200 million annually, a small amount when put up against other Commonwealth spending patterns, but one that will bolster the superannuation balances of women, and sends a symbolic message on the value of such payments for parents. Those accessing the scheme, currently paid at $852 per week for 24 weeks, will receive an additional 12 per cent superannuation payment. This amounts to around $2500 going into superannuation during this period, an investment that could grow to more than $30,000 at current average returns on super, according to The Parenthood.
Again, these changes come following significant, consistent advocacy work from various individual and organisations – work that has been ongoing since the scheme was introduced, and for years and decades prior to get such a scheme in place in the first place.
These changes are a reminder that the wins do come, and that the persistent conversations are always worthwhile.