BUDGET 2015: Bad for business, women & families

| May 14, 2015

How do businesses, women and families fair in the 2015 Budget? Lisa Annese, CEO of Diversity Council of Australia shares her thoughts.

It was with some dismay that I heard the Federal Government’s announcement, in the lead up to the 2015 Budget, that many parents who receive employer-paid parental leave will be ineligible for the Government-paid parental leave scheme from July 2016.

This seemed so inconsistent with the Government’s previous proposal that primary carers would be provided with 26 weeks of paid parental leave at their full replacement wage up to $100,000 a year.

The turnaround is not easy to understand. Even the language being used is unhelpful. Terms such as “double-dipping” imply a person is somehow taking advantage of the system. Not only is this description wrong as they are simply doing what the system had intended, it is language that regresses the debate around the positive impact of paid parental leave – an outcome that took many years to achieve.

And while we had welcomed the fact that the Government eventually shelved an expanded Paid Parental Leave scheme in favour of reforms focusing on improving access to and affordability of childcare, we could never have predicted it would be at the cost of the existing paid parental leave for many parents.

These changes will not assist parents or their families and I believe they are a step backwards. Any policy that reduces income to women and families during parental leave is a bad thing. It will put additional pressure on families and is likely to mean mothers may have to return to work earlier than they wanted to. It is not as if the majority of women are in the luxurious position of ‘choosing’ between paid and unpaid work. For many families, this is their economic reality and an important one for the future of Australia’s economy as well.

Importantly, this change will only add to the yawning wage gap that women experience as a result of having children. And with some 47% of currently eligible mothers expected to lose all or part of the payment, it is going to affect a lot of people.

The current scheme’s 18 weeks’ paid leave at the minimum wage provides the basic level of support new parents really need. It was always the intention that the existing scheme be topped up by employer-funded schemes, with 26 weeks’ paid leave the minimum standard recommended by the World Health Organisation to establish breastfeeding and give adequate time for bonding and recovery from childbirth.

Indeed other countries offer much more generous paid parental leave schemes. This includes the U.K. which provides 39 weeks (at 90% of mother’s average weekly earnings for at least 6 weeks, then capped at GBP £137 for remaining 33 weeks), Canada which provides 50 weeks (at 55% of average insured earnings) and Sweden which provides 60 weeks (at 80% of earnings for 47 weeks; remaining 13 weeks at SEK kr1260 a week).

So what will employers do in the wake of the Government’s changes? At this stage, it’s hard to know, although I do know that employers are increasingly committed to providing paid parental leave; they see it as a vital tool to attract and retain talent. Any reduction in the amount of support for women and families from the Government-provided scheme may mean employers will need to increase their support to fill the gap.

In terms of childcare, the Government announced it will roll multiple childcare payments into one means-tested Child Care Subsidy from July 2017 that will be linked to a benchmark price and paid directly to childcare providers. The new subsidy will help simplify the payment system and improve affordability for some families. In addition, the Government has introduced a Nannies Trial that will support care for around 10,000 children whose families find it difficult to access regular childcare services.

These are positive moves but I don’t believe they comprehensively address issues of access to and quality of childcare. They certainly don’t address the shortage of affordable and flexible childcare places and will provide no help at all to those families who simply can’t access a childcare place.

Critically, there are no incentives to encourage organisations to offer more flexible work which is vital to parents having the capacity to manage their caring responsibilities whilst remaining attached to the workplace.

The current scheme was introduced on the back of Productivity Commission research which showed that Australia could realise enormous productivity gains though a national paid maternity leave scheme which improved the labour market participation of mothers.

Economic modelling shows that increasing the labour market participation of women, particularly mothers, offers one of the greatest opportunities to increase our nation’s productivity – to the tune of around $25 billion per year.

The strides Australia has made in recent years in providing a universal paid parental leave scheme – as well as the positive public debate about the need to support women and families during and after parental leave – have been very encouraging.

It seemed that the contribution of mothers in the workplace was finally starting to be recognised and valued.

I fear the scaling back of paid parental leave is a real step backwards – not only for women, men and their families, but for business too.

This blog first appeared on Women’s Agenda and is republished on First 5000 with the kind permission of the author.