How Far We've Come with NGS Super - Introducing Paid Parental Leave
Part 6: Introducing Paid Parental Leave
Squiz it to me
Let's start with the basics... What is paid parental leave?
Parents (after having a new baby or adopting a child) can take time off work to take care of their little one(s) and get some income from the government and/or their employers. It helps the primary caregiver to focus on their child without stressing too much about money.
And how does it work in Australia?
Under the national scheme, the government pays the recipient the minimum wage for 18 weeks. That's increasing to 20 weeks from July 2023. Depending on your workplace, your employer might top up the amount or extend the length of time you receive it for.
How does that compare with other countries?
So-so. For example, in Sweden, new parents can receive up to 480 days of paid parental leave per child to be shared between the parents, and they get paid 80% of their wage. Meanwhile, our Kiwi cousins get 26 weeks of paid parental leave.
And on the other end of the scale?
There's the US. Their law requires companies with more than 50 employees to give full-time employees who have worked there for over a year 12 weeks of unpaid leave. However, many companies offer paid schemes as a way to attract and retain talent.
Gotcha. So what did new parents do in Australia before it was introduced?
It was up to each workplace to decide whether or not to offer support to parents. Many parents, especially mums, took unpaid leave or quit their jobs to care for their infants.
When did it change?
The ball started rolling when Kevin Rudd won the 2007 federal election for Labor. Unions had been lobbying for years for a government-funded paid parental leave scheme and saw it as the prime time to get campaigning.
And what happened?
They were successful... In 2009, Australia's first Paid Parental Leave scheme was announced, and it was voted on and passed by parliament in mid-2010.
And that was it?
Not quite... A week later, Julia Gillard replaced Kevin Rudd as PM, and Aussies got ready to head back to the polls. Note: in early 2010, Tony Abbott, the Coalition leader, proposed a parental leave scheme that offered 6 months of paid leave, as opposed to Labor's policy of 4 months.
I see. So it became a bit of an election issue?
Indeed it did. But Labor won that election by a hair, and on 1 January 2011, Labor's paid parental leave scheme was implemented. As it stands, the primary caregiver of a child can take up to 18 weeks of paid leave at the minimum wage, which is about $800/week before tax.
Were there any changes when Tony Abbott became PM in 2013?
His policy was scrapped in the face of internal and external opposition. And for the past 11 years, the scheme has remained relatively unchanged - until recent times...
Where are we today?
Recent changes to the scheme under the Albanese Government mean that parents will be able to access 26 weeks (aka 6 months) of paid parental leave.
The fine print: It will occur over a series of increases, with the final 26 weeks not available until 2026. The first increase of 2 weeks will come into effect in July this year, taking it to 20 weeks.
Why it matters: Currently, Aussie women face a decade-long reduction in their incomes, earning on average less than half of their pre-birth wage in the first 5 years after childbirth, even if they are the household's main breadwinner.
• 5% - the average % that a female's income falls after they've had children even when they keep working the exact same hours. It's not a problem faced by dads - their income keeps going up. Cue the chat about the gender pay gap...
• 3 in 5 - employers offer access to their own paid parental leave scheme. Of those, 92% offer it equally to men and women. On average, primary carers are offered 11 weeks, and secondary carers are offered 2 weeks.
• 20% - Aussie dads take 20% less parental leave on average than dads globally. In Australia, women account for 88% of all primary carer's leave taken, and men account for 12%.
Where to from here?
• A key recommendation to help close the gender pay gap is encouraging dads to take more leave when a baby is born. Countries with more generous paid leave schemes for fathers tend to have a narrower gender pay gap. Journalist Annabel Crabb has written a fair bit on the topic.
• As it currently stands, paid parental leave doesn't mandate super payments. Labor did have plans to introduce superannuation as part of the scheme, but this was dumped prior to last year's election. It remains on the table, but has been ruled out in this term of government.
• And how about those out-of-pocket childcare costs... It can be a significant barrier to parents' return to work. Starting in July, families earning under $350,000 will receive increased childcare subsidies. A Productivity Commission review is also underway to assess the effects of introducing a 90% subsidy for all families - that report will be released in mid-2024.
Get the Squiz Today newsletter
Quick, agenda-free news that doesn't take itself too seriously. Get on it.