Tony Abbott's 'Rolls-Royce' paid parental leave scheme not helping his perception with women - Women's Agenda

Tony Abbott’s ‘Rolls-Royce’ paid parental leave scheme not helping his perception with women

An odd result emerged from recent polling on gender issues, Tony Abbott and Julia Gillard.

Asked by Essential Research whether each leader has good paid parental leave policies, 53% of voters thought Julia Gillard did, compared to 44% of voters who thought Tony Abbott did.

The result was curious for two reasons. Firstly, Labor has a “branding” problem – even in areas where it has objectively performed strongly, like on the economy, voters rate the Coalition more highly. Only in a few core Labor areas, like industrial relations and superannuation, is the government seen as competitive. For Julia Gillard to have such a large margin over her opponent on any issue is rare.

Secondly, Tony Abbott’s paid parental leave policy is significantly more generous than the government’s. Labor’s scheme is providing 18 weeks’ paid leave at the national minimum wage (now around $606 a week) to women earning up to $150,000 a year (as well as, now, two weeks’ paid leave for partners). Abbott’s scheme, announced in March 2010, offers six months’ leave at full replacement wage, capped at $75,000 for six months.

In comparison to Labor’s policy, Abbott is truly offering, as one Coalition backbencher called it, a Rolls-Royce scheme.

The reason for this counterintuitive polling result probably goes back to the very reason Abbott proposed such a generous scheme in the first place: to address perceptions that he had a problem with women. He announced the policy at an International Women’s Day function in Sydney in 2010 and has stuck rigidly to it ever since, despite enormous controversy over its funding from a levy on large companies, although he blinked during the 2010 election campaign and cut the levy.

It also caused him plenty of grief in the Coalition party room, from three different kinds of critics. Traditionalists objected to the lack of assistance for at-home mothers – why should mothers be comparatively penalised when they choose to work at home, they argued; advocates of fiscal rigour and small government complained about the cost and levy on business; and both and more complained about Abbott’s lack of consultation with his colleagues.

The issue of support for at-home mothers continued to vex Abbott (later in 2010 he was rolled by shadow Cabinet when he proposed to give at-home mothers a $10,000 payment).

One of the reasons was that paid parental leave is neither a welfare measure nor a gender equity measure, but a workforce participation measure, aimed only at women who work outside the home.

The reason why paid parental leave increases women’s workforce participation (and extends their participation) is complex: the Productivity Commission devoted a chapter of its 2009 report on parental leave to it. The PC recognised that the decisions by (almost entirely) women about if and when to return to the workforce rather than work at home as caregivers are driven by a complex mix of incentives, not all of them economic. But a paid leave scheme increases economic incentives for women to remain in the workforce before giving birth, and to return to work following birth.

But it also increases incentives for women to remain on leave for the full duration of the leave period, rather than return to work sooner. From what evidence we can obtain, the impact of overseas parental leave schemes is an initial fall in female participation as women remain at home until their leave runs out, before a longer-term rise in participation.

That’s why the Productivity Commission recommended an 18 week scheme – any longer would start significantly increasing the short-term drop in female participation paid parental leave causes.

It also recommended that leave be paid at the National Minimum Wage, because the participation benefits of the scheme were maximized among lower income women who were less likely to have careers which might draw them back to employment after birth. Paying more to women would have less benefits in terms of participation.

The focus on participation reflects a long-standing concern among policymakers and economists that, as Joe Hockey once put it, we’re running out of workers: with a long period of near-full employment, skills shortages in crucial sectors of the economy like mining and an ageing population, Australia needs its best possible participation rate. Accordingly, there’s been a lot of focus on two areas – getting more women into the workforce and getting people working longer. Our overall workforce participation rate (which still lags that of a number of other western countries) appears to have peaked in 2011 at just below 66%, but the decline since then has mainly been in male participation: at 58.8%, female participation is still close to historical highs.

The PC also estimated that paid parental leave can keep women in the workforce longer – by around an average of six months over a career, which doesn’t sound much but every little bit counts given women end up with significantly lower superannuation and lower wages than men.

The issue leaves Tony Abbott in an invidious position. His paid parental leave policy is, according to the Productivity Commission, too generous for the purposes it is trying to achieve, and likely to temporarily decrease female participation rather than increase it compared to the government’s scheme. It has also drawn the wrath of those who don’t see the issue as an economic one, but as one of maintaining traditional values by rewarding women who choose to work in the home rather than in the paid workforce.

Worst of all, it hasn’t addressed Tony Abbott’s issue with women voters: two years on, he is battling perceptions of sexism more than ever, in the face of a brutally effective assault on his gender credentials by Julia Gillard. Labor takes every opportunity it can to remind voters of what Abbott said about paid parental leave in 2002, that it would be “over this government’s dead body”. Abbott is unabashed about changing his views on the issue since then (and good on him), but however out of date the quote might be, Labor will continue to hammer it.

Despite offering the working women of Australia a far more generous scheme than Labor, they’re looking askance at Abbott. And Labor wants to ensure that continues.

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