Paid parental leave and childcare belong together

Date  – June 18, 2014 – 12:15AM

Marie Coleman

What a time for the Minister for Social Services Kevin Andrews to finally release the report reviewing the operation of the existing Rudd-Macklin Paid Parental Leave (PPL) Scheme. 

Amid strong opposition to the Abbott government’s proposed parental leave extensions and the prospect of outright mutiny by National Party senators, it’s unsurprising that the beleaguered government has seized on this report to legitimise its controversial scheme.

Minister Andrews asserts that the report supports an extension of the PPL scheme from 18 to 26 weeks as well as an increase in the amount of the payment, consistent with his government’s proposals. It does no such thing.

It is also claimed the report was overseen by a steering committee comprising highly regarded business associations, employer and employee groups and policy-makers such as the Australian Industry Group, the ACTU, the Sex Discrimination Commissioner and the National Foundation for Australian Women. This claim is also wrong.

None of these independent organisations (originally appointed by Ms Macklin) had the opportunity to provide the direction needed to produce a robust report that could have served as a foundation for ongoing policy development.   Where we would expect to see recommendations drawn from solid evidence reviews, research and the public consultation process, there are none.

The data is nevertheless valuable in painting a picture of who has benefited from the existing scheme, how employers have responded, and the like.  However, it should be analysed with caution by all participants in the current debate over the proposed extensions to the PPL scheme.  And it certainly should not be selectively used to categorically support or reject any particular PPL formula.

To put things in perspective, the Rudd-Macklin PPL scheme resulted from a Productivity Commission recommendation to establish a PPL scheme where public and private funding would coexist.  The taxpayer-funded system would set a minimum payment but could be ”topped up” by additional amounts employers and employees agreed to separately.  The commission expressly rejected the option of a national PPL system predicated on income replacement believing that industry was not ready for such a move.

Take-up of PPL has been very strong. By early 2013 around 96 per cent of employed women were receiving paid parental leave.  Of these some 49 per cent received the government payment alone, while 51 per cent received both the basic payment, plus an additional contribution from their employers.

The review report makes some positive findings about the existing PPL scheme.  It has been successful in delaying mothers’ return to work in the critical first six months following the birth of their child and slightly increased their likelihood of returning to work within a year.  The effects were particularly pronounced for low-income earners and self-employed women for whom the period of predictable income gave them the confidence to remain at home.  PPL also increased employers’ retention of women when they returned to work.

What the report does, is reinforce the importance of a PPL scheme in any economy that values women’s workforce participation.  But its findings do not go so far as to endorse the current government’s proposed approach.

The Abbott government’s PPL proposal will see greatly increased PPL payments funded by a levy on big business.  Businesses’ concerns stem not just from the scheme’s cost, but also because they foresee a loss of their ”employer of choice” differentiation when Centrelink becomes the exclusive paymaster.

More importantly, since the Rudd-Macklin scheme was introduced, childcare affordability and availability, has overtaken PPL as the defining issue for women in the workforce. Many see improvements in childcare as a higher priority than increased PPL payments. Yet, in the recent budget, measures have been proposed that will raise the cost of childcare.

At present, the government is awaiting the interim report of the Productivity Commission on childcare.  Amid the controversy surrounding Abbott’s PPL scheme, influential groups including the National Foundation for Australian Women are urging the government to expand the Productivity Commission’s terms of reference and develop an integrated set of proposals covering improvements to both childcare and paid parental leave.

PPL, together with childcare, are essential drivers of parental workforce participation and should be considered in a related framework rather than in complete isolation.

Abbott’s PPL scheme has become a political liability and the government urgently needs to defuse the heat from its contentious measure.  It can do this through the sensible expedient of referring the issue to the independent experts at the Productivity Commission to come up with a comprehensive, ”big picture” solution to women’s workforce participation.

Marie Coleman  is Chair of the Social Policy Committee for the National Foundation for Australian Women, and was a member of the steering group for the review of the paid parental leave scheme.

For an electronic copy click here – http://www.canberratimes.com.au/comment/paid-parental-leave-and-childcare-belong-together-20140617-zsahv.html