The paid parental leave scheme being proposed by the Abbott Government runs the risk of becoming the next Minerals Resource Rent Tax (MRRT) if a more strategic long-term view does not prevail within the Liberal Party.
The MRRT was initially introduced as the Resource Super Profits Tax by the first Rudd Labor Government as a part-response to the Henry Tax Review. It was then modified to its current form by the Gillard Government, but has always been a divisive tax used by all political parties to wage war on each other at various times since 2010. It was ill-thought through, poorly handled and appeared a knee-jerk response to the broad totality of Henry’s excellent and comprehensive tax review.
Do we really need or want paid parental leave (PPL) to go down the same path?
Instead of a one-off policy for PPL, the Government could take advantage of the opportunity to develop an integrated approach to policies impacting men and women’s ability to work and have children. This includes reforms to the childcare system and workplace flexibility.
The current PPL that pays primary carers up to 18 weeks pay at the rate of the national minimum wage (currently $622.20 per 38 hours a week before tax) is delivering for many families, but unfortunately the child care regime is not. A Women on Boards’ survey to which close to 1,200 women responded in September 2013, rated pay equity and childcare as the top level issues impacting women. PPL was rated the lowest order issue.
By broadening the terms of reference of the current Productivity Commission Inquiry into Childcare & Early Childhood Learning to include PPL, the Government could look at an integrated suite of policies impacting children from birth to high-school age. Business needs to step up to the plate by looking at changing work practices to become more agile and flexible and addressing predominantly male workforce cultures which reduce the likelihood of men and women sharing caring responsibilities.
Those in favour of the Abbott PPL scheme argue it is better to get the money than to see it go elsewhere. However, this ignores the potential long-term economic and social consequences of the Abbott scheme, which could remove employer involvement and connection with PPL, provide an incentive for employers to keep female employee income below the $100,000 threshold and encourage women to stay at home and disengage with the workforce – in particular those on salaries just below the threshold. Another risk is that in administering PPL directly from Centrelink this sends a message that this is a benefit or a welfare payment rather than an employee entitlement or business process.
The need to improve productivity is a constant rallying cry from business and government. The EY report, Untapped opportunity: The role of women in unlocking Australia’s productivity (July 2013), outlined how our relatively low rate of women’s workforce participation (65%) is costing the nation “billions of dollars in the form of an unrealised productivity potential and high government benefit payments.” We need therefore to be careful about policies that have the potential to keep women out of the workforce for longer, thereby exacerbating disadvantage around gender income gaps and retirement savings.
In broadening the scope of the Productivity Commission Inquiry to include PPL the Government has the opportunity to start the slow process of changing community attitudes around work and family. We need a bigger policy framework than one that looks in isolation at PPL and runs the risk of it being seen as another MRRT in later years by future governments. Creating integrated solutions to enable men and women to both work and have families – which after all, is what government and business want us all to do – seems too good an opportunity to pass up.