The Productivity Commission today released its Draft Inquiry Report into paid parental leave. The Report was undertaken to inform the Government on improving support for parents with newborn children.
The Report proposes that Australia introduce a taxpayer-funded paid parental leave scheme, based on evidence that providing such a benefit to parents would improve the wellbeing of families, in particular child and maternal health, decrease financial hardship and help women to maintain their attachment to the workforce.
The Draft Inquiry Report recommends that:
- 18 weeks of paid parental leave be available to the parent who is the primary carer (generally this will be the mother). The period of leave can be shared by eligible parents.
- An additional 2 weeks of paid paternity leave would also be available to eligible fathers, or, in same-sex couples, to the other eligible partner, even if the mother was not eligible for statutory paid parental leave.
- The payment would be the adult minimum wage (which is currently $543.78) for each week of leave, generally paid regardless of income and subject to taxation.
- All employees with a reasonable degree of attachment to the labour force would be eligible, including the self-employed, contractors and casual employees.
- To be eligible, the employee must have worked for an average of at least ten hours per week (with one or more employers) with continuous employment for the 12 months before the date of the expected birth.
- Employers would fund capped superannuation entitlements for those long-term employees (12 months) who were eligible for these before the period of statutory paid parental leave commenced.
- Families not eligible for paid parental leave would be entitled to the equivalent of the baby bonus ($5000) through a new maternity allowance and to other financial support through the social transfer system (e.g. Tax/welfare benefits).
- Adoptive parents would have access to leave for children of any age.
- There would be provision for primary carers to adjust leave to ‘keep in touch’ with the business (e.g. Participating in training days).
- Parents giving birth to twins or more would get one leave entitlement, but receive the new maternity allowance for the additional children.
Importantly, the report suggests that the scheme be taxpayer-financed. The Commission estimates that its proposal will have total cost of around $530 million annually in net terms, with taxpayers contributing around $450 million directly and businesses $75 million indirectly (principally for ongoing but capped superannuation entitlements). These estimates take into account the significant offsets from reduced social welfare payments (including removal of the baby bonus for employed parents using the scheme) and the tax revenue from paid leave.
Written submissions to the Productivity Commission on the Draft Inquiry Report will be accepted before 14 November 2008. The final report will provided to the Government by the end of February 2009.
Further details on the Paid Parental Leave: Support for Parents with Newborn Children Draft Inquiry Report are available here.
