Monday, 31 May 2010
Paid Parental Leave Bill 2010; Paid Parental Leave (Consequential Amendments) Bill 2010
In rising to speak on the Paid Parental Leave Bill 2010, the Paid Parental Leave (Consequential Amendments) Bill 2010 and the amendment moved by the opposition, I highlight the fact that we actually have competing policies in the way paid parental leave should be tackled. Clearly the participation of women in the workforce is a key issue in discussing the way in which the best policy development is made. If we simply look at what is on offer, we see that both the coalition’s scheme and Labor’s scheme are opt-in schemes subject to eligibility, and the default is the baby bonus. After that, the two schemes part company quite dramatically.
The coalition is offering 26 weeks of paid maternity leave; Labor is offering 18 weeks. The coalition is offering a replacement wage or federal minimum wage, whichever is the greater, with a cap of $150,000 per annum; the Labor Party is offering only the minimum wage of $543.78 per week. The minimum payment for 26 weeks under the coalition’s scheme would be $14,138 gross; under Labor’s scheme, $9,788 gross for 18 weeks. There is a cap, as I said, under the coalition’s scheme. The replacement wage would be paid up to an annual salary of $150,000. A carer earning over this amount would be limited to the cap. Under the Labor Party’s scheme, there is no paid parental leave if the primary carer’s annual salary exceeds $150,000. Quite clearly, the Labor Party is biased against women who are in any way successful or indeed who may be the primary income earner for their family. There is no consideration of the fact that things have changed. Labor still thinks that it is just men who are the dominant earners and that women can get by on part-time work. The coalition has a totally different consideration of the way the world has changed and knows that there are more and more women who are in fact the dominant earner.
Under the coalition’s proposal superannuation would be paid in full at nine per cent; under the Labour Party’s proposal there is no superannuation payment at all. Under the coalition’s scheme, full-time, part-time and casual workers would be eligible if they worked at least one day a week for at least 10 months of the 13 months prior to the expected date of birth or adoption—and I was very pleased to see adoption feature in both policies, because it was a strong recommendation of a committee that I chaired in the last parliament. Under the Labor Party’s scheme, full-time, part-time and casual workers who work one day a week for at least 10 months of the 13 months prior to the expected date of the birth or adoption will be subject to a similar requirement. Under the coalition’s scheme there would be paternity leave of up to two weeks of the 26 weeks, subject to consultation; under Labor’s scheme, none.
The net cost of the scheme proposed by the coalition would be funded by a 1.7 per cent levy on companies, based on taxable income above $5 million. Under Labor, the entire scheme would be funded by the taxpayer from consolidated revenue. The coalition’s scheme would be administered by the federal government through the Family Assistance Office, which would be responsible for the administration of paid parental leave. The importance of that is it would not add to the costs of businesses, who would have to make those payments. However, under Labor’s scheme, the employer would be responsible for the administration of those payments, with some exceptions.
The cost of the scheme under the coalition would be $2,700 million and under Labor a paltry $260 million. It is a case of getting what you pay for. Labor’s scheme really is nothing more than a slight extension of the baby bonus scheme introduced by the coalition. That was introduced at the $5,000 mark, representing then the equivalent of some 12 to 14 weeks of paid maternity leave but without discriminating between women who were in the paid workforce and those who were not. But it has become quite clear, with the dependence on productivity in this country resting on the participation of women, that it is about time that we had a serious paid parental leave scheme.
Again, during the last parliament I chaired an inquiry into balancing work and family, and it produced an excellent report, which I can still recommend. We highlighted certain facts in that report that are pertinent to this debate. For instance, one chapter in the report covered financial disincentives to starting a family in terms of loss of salary and wages. The evidence we took showed that if a woman loses salary—if she leaves the workforce for a period or reduces the hours that she works—that can be a disincentive. People who leave the workforce or decrease their hours either stop accruing on-the-job skills and experience or accrue them at a reduced rate, which affects the hourly wage rate. If they are absent from the labour market, that leads to an atrophy in their skills and experience, reducing the employee’s hourly wage rate. It was found that the simple fact of having a child can reduce a woman’s lifetime chance of being employed by seven per cent. The authors of the report that made that finding, Matthew Gray and Professor Bruce Chapman, also found that on average a woman would lose 37 per cent of her lifetime earnings by having one child.
By having paid parental leave which is at the same salary that you are receiving, and by being able to have that for six months and to readjust your family circumstances, your chance of returning to the workforce at your full capacity increases dramatically. To have a sort of subsistence payment where you will stay out for just 18 weeks is more likely to have the effects that were found in the report as lessening the skills of women and their capacity to earn.
It was interesting taking evidence from the Association of Professional Engineers, Scientists and Managers Australia, who noted of their female membership that 69 per cent did not have children. By comparison, the current estimate for the Australian population generally is that 16 per cent of women are likely to remain without children. They concluded that the very high proportion of childless female professionals found in the association’s surveys reflects the reality that professional women with children are leaving the workforce or reducing their level of workforce participation due to family responsibilities. This is clearly a loss of women of that calibre to the nation as a whole, let alone for their own personal use of their skills and their qualifications.
In this inquiry we also commissioned Access Economics to do some research for us about the importance of the participation of women in the paid workforce. They found that GDP in Australia could increase by 4.4 per cent more than that estimated by the government in the Intergenerational report. As a reform initiative, increased women’s participation would be placed above the 2000 tax reform at a 2.5 per cent increase in GDP and below national competition policy of 5.5 per cent. In their analysis, Access Economics commented that women’s employment had risen more quickly than predicted in the 2002 Intergenerational report, but they found that, if women’s participation only grew through part-time work, the increase and benefit to the nation as a whole would be far less than if it was an increase in full-time work.
For anybody who has had a child, coming home with that child is a fair shock to the system. We are not really very well prepared for what it means, but you have to learn quickly. To be able to have full remuneration at your proper salary through that period and adjust your life and get it ready so that you can utilise the skills that you have acquired and not lose them is a very, very important fact for women.
When we talk about the impact that policy has on the participation rate, it cannot be stressed too much. OECD research has shown that women are very sensitive to policy initiatives. They do make an analysis and consider the impact that a policy will have on them personally. In other countries in the OECD where they have paid parental leave there is a much higher return to full-time work than there is in Australia. We rate very poorly. I think this initiative by the coalition to give true parental paid leave is a huge step forward.
I have heard many cynical comments from those opposite—they get repeated ad nauseam, so presumably they were put out in their speaking notes—saying that Tony Abbott has said previously that he was not in favour of paid paternal leave. They find quotes from the past, but when Tony Abbott stood at this dispatch box and spoke to this bill he said quite clearly he had listened to his wife and his now grown-up children on this question. To me, that shows someone who is prepared to see that life has changed, and all the snide comments from across the other side will not make a dent in the fact that here is a man who is prepared to listen to a female point of view. And the female point of view is quite clearly that we are sensitive to policy and, if the policy is a good policy and enables women to benefit from it, we will respond in a positive way. The coalition’s paid parental leave scheme means that there is a real chance for women to organise their lives and have children as well.
The baby bonus—which, as I said, was initiated as a start to paid parental leave—has had a desired effect. Our birth rate was below replacement levels. As a result of the baby bonus, our birth rate has risen. You can try to find arguments to the contrary, but empirically that is just the case. The result is that we have made a start. The Labor Party is merely extending those weeks and the pay rate is at the minimalist rate. We have been criticised by those on the other side for saying we want the cap to be $150,000 but that people who earn above that can have up to that $150,000 because we would like women who are successful to have children as well. I would put to you that the women who gave evidence that I referred to earlier—who are engineers and scientists and managers—are just the sorts of people we would like to have children as well as others. We do not want them to be discriminated against so that they are forced into not choosing to have a family as well as having their professional life.
I simply say that, in speaking to this bill, we are in the position where we have two competing policies. One is worth $260 million, which makes not one iota of a difference to the decision-making ability of women to say, ‘This is good for me.’ But what is on offer from the coalition at $2.7 billion in cost means that women will have a real choice to have a family, to have a good bonding time, to prepare themselves during the six months to return to the paid workforce and to add to the productivity of the nation.
As I said before, you cannot have productivity gains in this country unless women are participating in the workforce. We are dependent on that participation. And in the future it will be the case that more women will have tertiary education qualifications than men. We cannot afford to force them out of the workforce by treating paid parental leave as some sort of tokenistic gesture. The time has come to be really sensible and serious about it, and by making this announcement Tony Abbott has done just that.
The legislation that is before us has had an amendment to it moved. We said we will not deny the bill a second reading. But, clearly, come the election, the people will have a real choice and they will be able to decide that the only way they can get a decent paid parental leave scheme is to change the government.