SCRAP ABBOTT’S UNFAIR PAID PARENTAL LEAVE SCHEME

Media Release

Jenny Macklin MP

Shadow Minister for Families and Payments
 Shadow Minister for Disability Reform

Friday, 2 May 2014

This week, Tony Abbott announced he would reduce the cap on his paid parental leave scheme from $75,000 to $50,000. He said the changes were "fair" and "reasonable". The reality is that they are neither.

 

At exactly the same time as the Prime Minister announced these changes, he also confirmed two things about the scheme that would not change: it will not be means tested, and the savings stemming from the changes would not be "vast". For these two reasons alone the scheme remains fundamentally flawed. It is both unfair and economically irresponsible. It doesn't need amending, it needs to be dumped.

 

The unfairness of Tony Abbott's scheme is staggering. Under his proposed scheme, women on $100,000 or more will receive $50,000 in taxpayer money while a woman on the minimum wage gets $16,000. Even millionaires will be given $50,000 for six months leave to have a baby.

 

This huge gap in support between high and low income women is fundamentally unfair. This is taxpayer's money.

 

Australia's current paid parental leave scheme was designed on the recommendation of the Productivity Commission. In 2008, when the Productivity Commission reported, it made clear that a flat rate, minimum wage payment was the fairest and most effective way to design a paid parental leave scheme.

 

The experts concluded that a full wage replacement scheme in the Australian context would be very costly to taxpayers and have "few incremental benefits".

 

The Productivity Commission argued for a flat rate payment because "the 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."

 

According to ABS statistics, more than 80 per cent of high-income earners already have access to employee-funded paid parental leave.

 

It has now been just over three years since the scheme began - in some ways, it's hard to believe it wasn't always there. But we mustn't forget the hard battle that was fought. We mustn't forget the 12 years of inaction by the previous Coalition government, during which Tony Abbott said Australia would have a paid parental leave scheme "over his dead body".

 

This was because Tony Abbott and John Howard had a very old fashioned view on the role of women in our society.

 

Already, more than 340,000 families have benefitted from Labor's paid parental leave scheme. An additional 40,000 dads and partners have benefited from Dad and Partner Pay since it began in January last year.

 

It's not just about the number of families benefitting, but the types of families. Labor's scheme was designed to benefit all Australian families, but in particular those on low and middle incomes, many of whom are in casual and part-time work. And the scheme is doing exactly that.

 

Only about 55 per cent of working mothers had access to paid parental leave before Labor's scheme was introduced. And the mothers missing out were generally those in lower paid and insecure jobs. The only choice available to these women was to take unpaid leave. Too often, mothers were forced to leave the workforce altogether when they had a baby. This was bad for women and bad for the country.

 

According to departmental advice provided to the former Labor government, access to paid parental leave now stands at about 95 per cent of all working mothers. The median income of these women is about $45,000. This is no accident. It's hard to think of a reform that better encapsulates Labor values. Labor's scheme ensures the majority of taxpayers' money goes to those who need it most.

 

The reality is that in 2010 Tony Abbott made a snap decision and announced a poorly thought through policy that he hoped would fix a personal political weakness - that he had a problem with women. But Abbott's paid parental leave scheme is fundamentally flawed.

It is fundamentally unfair, and it is economically irresponsible. Yesterday's changes are little more than tinkering. The only way to fix this scheme is to scrap it, and that is what the Prime Minister should do.

The article was first published onThe Drum on Friday, 2 May 2014.