Australian Financial Review

Australian Financial Review
22 January 2014 Joanna Mather:

The Abbott government plans to use its constitutional powers to override all existing parental leave schemes, according to briefings given to independent experts.

The move would ensure all working women get 26 weeks of leave at full pay from 2015, capped at $75,000, regardless of current contracts, collective agreements or award  conditions.

The present paid parental leave (PPL) scheme guarantees 18 weeks at the minimum wage.

University of Sydney academic Marian Baird, who has been briefed on the scheme by federal officials, said the government planned to use the “social welfare” powers in the constitution to ensure all women received the same leave entitlement.

“As I understand it, the government wants to use what is called the social welfare powers of the constitution to displace existing paid parental leave entitlements,” she said.

“This is an unexpected development because the power, to my knowledge, has not been used in industrial arrangements before.”

Big businesses would no longer be able to “top up” minimum parental leave entitlements to attract staff.

Prime Minister Tony Abbott’s scheme, widely perceived as having wooed female voters at the last election, will require the nation’s 3000 largest companies to pay a new 1.5 per cent levy. However, the extra impost on business will be offset by a cut in the company tax rate from 30 per cent to 28.5 per cent. The PPL is forecast to cost $5.5 billion a year when fully operating.

The relevant section of the constitution is 51 23(a), which covers the provision of maternity allowances, family allowances and child endowment. Professor Baird said the government would seek to use the power to override all other existing paid parental leave entitlements in enterprise agreements, awards and employment contracts.

“I’m sure the union movement will oppose it, as might some employers, because they would see their existing enterprise agreements having the force of law,” she said.

“The ability for employers to use parental leave as a competitive advantage in the labour market will be taken away. The argument [from the government] might be that employers can turn their attention to other policies – childcare being the most obvious.”

Many collective agreements contain nuanced paid parental leave policies.

“Within agreements there are often other parts of the clause which talk about when you can take it, [and] the way in which the payment might be made,” she said.

“Certainly in the public sector, including teaching for example, those agreements allow employees to take their parental leave at half-pay for double the time. That has a tax advantage, which is why people do it, but the government is not allowing that.” Some will miss out/

Three other sources confirmed the details of the plan, including Marie Coleman, a women’s rights activist who advised the former Labor government
on its paid parental leave scheme.

She said the use of constitutional powers to intervene in existing arrangements was worrisome. “I am concerned about what is going to happen where we have good schemes which were designed to be employer of choice and they suddenly no longer apply,” she said.

Ms Coleman said the growing number of women who worked on short-term contracts were set to miss out altogether.

“Under the work-test requirements, if you haven’t worked in the past eight weeks, you will no longer have access to the baby bonus after March or the
Abbott government’s paid parental leave scheme,” she said.

Participation of state and territory employees in the national scheme appears to be assured.

At a December meeting of the Coalition of Australian Governments, it was decided that “officials will work together closely on implementation arrangements and funding for the proposed Commonwealth national scheme.”

“The Commonwealth’s intention is that states will not be financially disadvantaged and the scheme will be administratively simple,” a communiqué issued after the December 13 ­meeting said.

Social Services Minister Kevin Andrew’s office declined to comment on the briefings. “We are keeping our election promises,” a spokesperson said. “This is a productivity boosting measure that will strengthen the economy. The legislation we will introduce into the Parliament will reflect the mandate we’ve received from the Australian people. Australians want and deserve a fair dinkum PPL scheme, and its time has come.”

Australian Council of Trade Unions president Ged Kearney said the proposal had yet to be formally canvassed with her but she was due to be briefed
on Wednesday. Two other sources who met with departmental officials on Tuesday have confirmed the government’s thinking.

Ms Kearney said unions were wary. “We would be very concerned it would undermine employers to value-add and number two it would undermine the hard work by employers who have successfully negotiated paid parental leave conditions,” she said.

With the budget situation tight, the Coalition is under pressure to scale back the scheme.

Discussions were held with the Greens late last year about the structure of the parental leave scheme. The Greens want lower payments than the generous
rates preferred by Mr Abbott.

“If you are a mother on minimum award wages you will be $5,000 better off under this policy,” Mr Abbott said in August.

“If you are a mother on average earnings you will be $21,000 better off under this policy. No business will be worse off, certainly no business will face an increased tax burden under our policy.”