Paid parental leave is an important benefit, both private and public.
It shows that it’s normal and desirable to take time away from the workforce when you have kids.
It helps families bond.
It helps people afford to take the time away from work.
And it helps society, if it’s administered so as to let people better participate in our workforce, and if it leads to stronger families.
But, as Prof Pocock has said:
“…work and family policy is about much more than paid parental leave. The body of existing research about good work and family regimes around the world supports a balanced policy approach: one that walks on more than one leg – responding to the intensive demands of early childhood that reach beyond the moment of birth – to ensure quality care for children and flexibility in workplaces.”
In Australia, there is much to be done to make workplaces flexible enough to enable people with kids to fully participate, for their own benefit and for the nation’s.
And there’s also much to be done to make quality childcare, that meets parents’ and children’s needs, accessible and affordable.
When there’s so much to be done, the Prime Minister’s expensive and inequitable paid parental leave scheme seems unfair and indulgent.
It’s inequitable because people who are more well-off will receive greater government support – up to $75,000 – than people who are less well-off, because it fully replaces wages of up to $150,000 per annum for six months.
The scheme’s expected to cost $5.5bn and Mr Abbott intends it to be funded by a 1.5% levy on big business. But it’s far from clear that that levy will be enough.
It’s been said that the Commission of Audit report, that Mr Abbott has already received but we’ve not yet seen, that it: “Supports the concept but feels the price tag is too high given the pressure on the budget.”
The 2009 productivity commission report into paid parental leave expressly disapproved of a scheme like Mr Abbott’s, instead recommending for the option that Labor implemented – parental leave at the minimum wage. The report said:
“Payment at a flat rate would mean that labour supply effects would be greatest for lower income, less skilled women — precisely those who are most responsive to wage subsidies and who are least likely to have privately negotiated paid parental leave.
Full replacement wages for highly educated, well paid women would be very costly for taxpayers, the report said, and given their high level of attachment to the labour force and a high level of private provision of paid parental leave, would have few incremental labour supply benefits.”
The report also noted that high earners, “Usually have better access to resources to self-finance leave.”
And the report said: “Our approach takes into account the balance between the needs of parents and the burdens on taxpayers — especially those who would not receive any direct benefits, such as those without children.”
The report cautioned against an over-generous policy.
It indicated that if there was a need to top-up the scheme, a future government could consider higher-education style loans, where repayment depended on income:
“Income contingent loans used to supplement a base taxpayer-funded scheme would give families the choice of extending the time spent with young children beyond that needed to meet the primary objectives of the Commission’s proposed scheme. Should the Government consider increasing the generosity of the scheme in the future, income contingent loans would provide an appropriate low cost option for doing so.”
That option would recognise that paid parental leave has both public and private benefits.
But the government has not heeded the Productivity Commission’s report.
Instead it is going ahead and doing exactly what the Commission said not to do.
It is seeking to extend the scheme already. It is not going to use the Commission’s suggested option of loans, it is going to pay replacement wages.
Public policy experts, economists and businesspeople have criticised the scheme. It is against the Productivity Commission’s recommendations. Coalition MPs have been openly – as well as less openly — breaking ranks on the Government’s expensive paid parental leave scheme.
In the face of all of this criticism one would think the Prime Minister would reconsider the scheme.
If it is possible to raise sufficient monies for a $5.5b scheme, then why not use those monies on the other ‘legs’ of work and family policy – like making paid work more compatible with family demands, by introducing genuine flexibility, flexibility that meets parents’ and childrens’ needs and that helps integrate family demands into working life or, making quality childcare, that meets parents’ and childrens’ needs, more available, more affordable, more accessible. Why not those policies instead of this expensive, unfair, inequitable paid parental leave scheme.
This is an edited extract of a speech by Terri Butler in the House of Representatives, Parliament House, Canberra, 19 March.