Could the changes to Paid Parental Leave lead to better outcomes for women?
I’ve been contemplating the government’s proposed changes to paid parental leave (PPL), primarily because I will soon be an employer, but also because Happy Hubbub exists (well, will very soon exist) to support working women and women in business.
Let’s assume the Fairer Paid Parental Leave Bill 2015 passes into law.* What then?
Annabel Crabb noted the new rules could see an increase in fathers accessing the government scheme:
‘[The] government's new rules on the Commonwealth paid parental leave scheme dictate that a parent cannot receive it if he or she is also getting equivalent paid leave from their employer… But…there is nothing stopping…mum taking paid leave from her employer for the first three months, then dad taking the government-funded leave for the next three…’
I would encourage couples to consider sharing the primary carer role in this way. But I suspect for many families, even if Dad is keen and his employer supportive, it won’t be the ideal solution (for a start, it will make breastfeeding beyond three months very difficult for Mum); for single-parent families, it’s not even an option.
Employers shifting their benefit schemes is a much more likely outcome, despite the suggestion that companies engaging in such re-jiggery and pokery would be ‘scamming the government’:
‘We’re turning your PPL scheme into a kind of voluntary company tax. Your employees will be worse off. It will undermine your workplace retention strategies. But if you don’t keep paying it we’ll call you a scammer. Because budget repair.’ (Not an actual quote from the government)
Why would companies keep paying PPL? What incentive is there, aside from not being called names by politicians? For many employers, maintaining PPL schemes will be of no financial benefit to their employees (and the more generous schemes will be effectively devalued to the tune of $11,500). A PPL scheme will no longer set a company apart as an ‘employer of choice’, will no longer be an effective measure to attract and retain employees of choice.
(The irony that it is companies that do support employees in this way and wish to continue to do so who are the ‘scammers’. Where’s the name calling of companies who don’t have existing PPL schemes? What’s their incentive to start one?)
The government’s insistence that businesses will keep paying PPL and it will result in $1 billion in savings is wishful thinking at best.
A number of companies already have Return to Work (RTW) incentives as part of their existing PPL schemes. For example, Bunnings Hardware provides:
‘8 weeks [PPL]...for 12 months service split in to 2 payments, 4 on commencement of leave and 4 RTW bonus upon completion of 6 months service after return.’
Will RTW entitlements count as employer-paid parental leave under the proposed changes? I emailed and phoned the Department of Social Services to find out but am yet to receive an answer. The Australian Chamber of Commerce and Industry (ACCI) argues:
‘it is important that payments linked to a primary carer's return to work should not be considered primary carer's pay for the purposes of determining eligibility to access the PPL scheme.'
If RTW schemes do not affect access to the government scheme, I believe they are the way forward.
How a Return to Work scheme could work:
An employee is entitled to up to 12 months’ unpaid parental leave (primary carer) after 12 months’ continuous employment.
An employee returning to work from parental leave may access X weeks’ RTW leave.
RTW leave is a debt that is ‘repaid’ when the employee has completed X months’ continuous employment after returning to work.
RTW leave may be taken all at once or used flexibly. For example, an employee can use the leave to ‘ramp-up’ back to work, returning one day a week at first, using RTW leave to supplement their income; then two days a week; then three; and so on until they are back to their full contracted working hours.
Return to Work schemes adopted on a large scale, in both the private and public sectors, would likely see an increase in workforce participation.
This is not just good for women; it’s good for the economy.
According to the Grattan Institute, an extra 6% of women in the workforce would grow Australia’s GDP by $25 billion. The latest ABS statistics show taxation revenue as a proportion of GDP was 26% in 2011–12. Doing the math, a 6% increase in female workforce participation rates would yield the government $6.5 billion in tax revenue – that right there is a healthy dose of ‘budget repair’.
Also consider the government’s projected savings of $1 billion (over the forward estimates) come about by ripping money out of the economy, out of the bank accounts of women on maternity leave. Any business that relies on the discretionary spending of everyday Australians risks seeing a loss in business as new parents tighten their belts in an attempt to remain at home as long as possible with their baby. Lower profits leading to a reduction in tax revenue, undermining any budgetary savings.
Once you consider all of that, companies that choose to move towards RTW schemes – remember, schemes paid for by employers – are hardly ‘scammers’. On the contrary, they’re helping to:
increase workforce participation rates;
put more money in the pockets of their employees;
support new parents taking extended time at home with the baby;
stand out as an ‘employer of choice’;
While the government may be unwilling to scrap the Fairer Paid Parental Leave Bill, I’m hopeful that with the latest change of PM, maybe, just maybe, the rhetoric can change, too.
Could Malcolm Turnbull’s love of innovation extend beyond technology to include initiatives that support working parents and women in particular? Could Scott Morrison, in his new role as Federal Treasurer, come to see that supporting such moves by businesses, rather than dismissing policy concerns as a First World problem, is the better course of action for the economy in the long run?
*It’s a big IF as to whether the legislation will even pass, as Labor and the Greens currently oppose it. With any luck this thought exercise has been for naught.
Erin Richards is co-founder and managing director of Happy Hubbub, a coworking space with on-site childcare. Founding memberships are available via its Pozible campaign.
