First published by The Australian on 13 August 2013
By Judith Sloan
HERE’S a confidential memo sent from Families Minister Jenny Macklin to Chris Bowen just before Kevin Rudd called the election.
Confidential: Budget Savings Measure – Parental Leave
To save money and in the name of fairness, the commonwealth government should cease paying replacement earnings-related parental leave to public servants. This will save hundreds of millions over the forward estimates. I suggest you ask the Public Service Commission to calculate the precise figures.
I refer you to the speech I gave last month in which I said: “I don’t believe it is fair that a woman earning more than $150,000 a year will receive $75,000 on government assistance, while a cleaner will get just $16,000 from the government.”
On this basis, all commonwealth public servants taking parental leave will only be entitled to the basic paid parental leave payment. All earnings-related parental leave entitlements should cease. This change can be effected by simply rescinding the Maternity Leave (Commonwealth Employees) Act.
We should announce this policy during the election campaign, citing the twin advantages of budget savings and fairness.
OK, I made it up. But there is a serious point to be made.
Labor is really getting itself tied in knots criticising Tony Abbott’s proposed replacement earnings paid parental leave scheme – of which I am no fan, incidentally.
Normally, Macklin, Bill Shorten and their colleagues would be falling over themselves to support such a scheme. After all, annual leave is paid at replacement wages. Long service leave is paid at replacement wages. In fact, all industrial entitlements are paid at replacement wages.
But because Abbott has dreamed this one up, logic flies out the window.
Last month Macklin gave a speech to the fifth International Community, Work and Family conference, held in Sydney. There were some very curious elements in her speech. Take this one: “A woman who isn’t working before the birth of their child would be left behind even further (under Abbott).”
What she didn’t say was that her government had whittled away the Baby Bonus and will abolish it from March 1 next year. So her argument is that, in relative terms, Abbott will be meaner to non-working women than her government because his scheme is more generous to working women.
And what about this howler from Macklin? “The majority of high-income women – who will get the highest benefits under a replacement wage scheme – are concentrated in the wealthy suburbs of our major cities and in the big firms found there. Meaning the woman working in the local chemist in Gippsland in regional Victoria would be subsidising the paid parental leave of the woman working in the bank headquarters in Collins Street in Melbourne.”
In what possible sense does the low-paid assistant working in the chemist subsidise high-paid women taking parental leave? After all, Abbott’s scheme is to be funded by a levy on large companies and low-paid workers pay no net tax; indeed, they receive substantial handouts from the government in the form of family tax benefits, childcare subsidies and other benefits.
One of the problems for Macklin defending her PPL scheme is that it is riddled with inconsistencies and unfair elements. In particular, the scope for double dipping means that many high-paid women – at least those with an annual income below $150,000 – can do very well indeed.
Take a commonwealth public servant on $100,000 a year. She has a baby and receives at least four months’ paid parental leave on full replacement earnings, depending on the enterprise agreement in place. She can elect to be paid at half her salary and double the time of paid leave. In addition, she will receive the full amount from the government’s paid parental leave scheme. This is all courtesy of the taxpayer.
The arrangement applicable to commonwealth public servants has all the hallmarks of Abbott’s proposed scheme that Macklin says is so unfair.
It should also be noted that, on the latest figures, most (56 per cent) new mothers actually do not receive any PPL benefit because they are not working or not working enough. From next year, all that these mothers will receive from the taxpayer is $2000 for a first child and $1000 for a second or subsequent child.
A part-time working woman for whom the weekly minimum wage is more than full replacement will receive more than $11,000 after the birth of a child. Is this gap fair?
But the real problem for the government’s paid parental leave scheme is that it was always a solution in search of a problem. Most women always took three months off work after the birth of a child and many took more than six months off. And the scheme is now costing a bomb: $1.4 billion in 2011-12 and rising.
Whether the scheme has had the slightest impact on women’s participation in the workforce is unclear. There is very little in the participation figures to indicate any tick-up associated with the introduction of the PPL scheme.
The bottom line is that the government’s paid parental leave scheme is badly targeted, too expensive and unfair. The treatment of non-working new mothers is an issue. At best, government-provided PPL should be available only to low-paid workers (say, under $40,000 a year full time) for whom the private provision of paid parental leave is always likely to be uncommon. Double dipping should not be countenanced.
The government needs to retreat from this space, not become more involved. And this advice applies with equal strength to the opposition. Having a child is a wonderful private choice and the government should stay away as much as possible.