Speech by The Hon Jenny Macklin MP

Paid Parental Leave Bill 2010, summing up speech, second reading debate, House of Representatives

Location: House of Representatives, Canberra

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I would like to thank all of the members who have contributed. Some have made outstanding personal contributions, as you just have, Kerry. Congratulations to you and to your late mother as well. I really appreciate the contributions of all of the people who have participated in the debate on what is a very significant piece of legislation.

This debate has been about both the Paid Parental Leave Bill 2010 and the related Paid Parental Leave (Consequential Amendments) Bill 2010. In a moment I will go through some of the specific issues that have been raised during the course of the debate, but at the start I want to make some general remarks. These bills will introduce Australia’s first national government funded Paid Parental Leave scheme from 1 January 2011. This is landmark economic and social reform for Australian families and for Australian businesses. Our Paid Parental Leave scheme is fair to both businesses and families. It will provide 18 weeks parental leave pay at the national minimum wage to the primary carer of a newborn baby or adopted child. Our scheme will be transferable between parents who share the care of their child, allowing both mums and dads to spend time with their newborn babies. That is what this is all about: mums and dads having more time to spend with their newborn babies. Paid parental leave will give more babies in our country the best start that they can have in their lives, being cared for by their mums and dads. This scheme has been very carefully considered. It is practical, fully costed and will be fully funded out of consolidated revenue, not by imposing a new tax on Australian business, like the scheme proposed by the opposition.

Australia is one of only two OECD countries which has not had a comprehensive paid parental leave scheme. When this bill is passed and becomes law, for the first time we will catch up with the rest of the developed world and finally have a paid parental leave scheme that we can all be proud of. Our scheme has several complementary objectives. First and foremost is the objective to enhance child and maternal health and the development of the child by enabling mothers to spend longer caring for their newborn child. The Productivity Commission estimated that this scheme would increase the amount of time new mothers can spend with their babies to around six months.

Second, we want to facilitate women’s workforce participation. This will improve Australia’s productivity. Modelling by Econtech released last week by the Deputy Prime Minister says that the government’s Paid Parental Leave scheme could lead to an average increase of 1.9 per cent to baseline GDP to 2040. These are real economic benefits arising from paid parental leave.

The third objective of the scheme is to promote gender equity and encourage work and family life balance, especially for women, who for so long have been juggling family responsibilities with their careers and the challenges of working life. Taking time off work to look after a newborn child is now a normal part of a woman’s working life.

This Paid Parental Leave scheme has been developed after a report and recommendations from the Productivity Commission. Once again, I thank them for their very considerable efforts. The report followed extensive consideration and consultation with a range of groups over a two-year period. We have designed a scheme that balances the needs of all the different parties involved and also delivers very real benefits to families and real benefits to business.

I will now go to some of the specific issues that were raised during the debate. Opposition speakers have called this landmark reform inadequate. They say we should have gone further. This is extraordinary, coming from a party that had 12 years in government to introduce paid parental leave but did nothing. In fact, as we are all very familiar with now, the Leader of the Opposition was so against paid parental leave that he said it would happen over his dead body. So basically you just cannot believe anything that the opposition says on paid parental leave.

What we have heard is that the opposition wants to introduce a very big tax, a new tax, on business that will, of course, hurt families. By contrast, the government’s Paid Parental Leave scheme is fair for families and fair for business. It is fully costed, fully funded and affordable. It will cost around $260 million a year in net terms. The opposition, by contrast, has proposed a $3 billion a year alternative, funded by a very, very big new tax on business. And let us be clear: this is not just going to be a tax on business; this tax will flow through the economy and put up prices for families. Economic modelling by the Treasury has shown that the opposition’s proposed tax on business, which would fund their paid parental leave scheme, would reduce growth and investment while adding to inflation. So, far from helping families, the opposition’s scheme would increase the cost-of-living pressures on all Australians and hurt the economy.

The Leader of the Opposition, during the second reading debate, managed to make two completely contradictory arguments that seem to me to be at the heart of their position on paid parental leave. First he critiqued the government’s scheme as a social security measure rather than a workplace entitlement, and then he went on to criticise our scheme for involving businesses in making the payment of parental leave pay to eligible employees. It is precisely because we see paid parental leave as adding to the workplace entitlements for working parents that we are asking employers to provide parental leave pay to their eligible long-term employees in exactly the same way that they currently pay them other workplace entitlements.

We want paid parental leave to be considered a normal part of employers supporting women to take leave from work after birth to care for their child. We see parental leave as a benefit to the community, and ours is a government funded scheme as a result. The government is only requiring employers to be the paymaster for their long-term employees, and employers will of course reap the benefits through retention of skilled staff. The Family Assistance Office is making payments to other parents. There is no requirement for employers to pay people who will not return to work for them. This balances the interests of parents and employers. Our scheme is fair to all parties.

During the debate, members highlighted that women on low salaries do not generally have an entitlement to employer funded parental leave. It is true that low-income women are the big winners from this scheme, as the member for Bonner highlighted in her remarks. That is why passage of this legislation is so important. There are far too many Australian mothers missing out on parental leave.

In relation to superannuation and paid parental leave, the government has said that we will review the scheme in two years time, and the introduction of superannuation will be one of the matters considered. This is the approach to superannuation recommended by the Productivity Commission in its final report.

The Paid Parental Leave (Consequential Amendments) Bill introduces transitional provisions for employers who will have six months to adjust to the scheme. Business will not be required to pay parental leave until 1 July 2011, but they can choose to participate earlier if they wish to do so. To provide this transitional time for business to adjust to the scheme, the Family Assistance Office will provide parental leave pay during the first six months to claimants who are not paid by their employer. To make it easier for employers, we have designed the scheme so that the Family Assistance Office informs them of their role. They will not be required to work out if their employee is eligible. All of this will be done by the Family Assistance Office for employers. The Family Assistance Office will send sufficient funds to the employer before the payment date so that employers will not be out of pocket and payments will not affect their cash flow. There will be no need for business to change their payroll systems because full funding will be provided before the payment date so that payments can be made in line with their existing pay cycle.

Workers compensation premiums will not be payable on parental leave. I make it clear that employers cannot absorb parental leave pay into existing employer funded schemes and withhold parental leave pay owed to an employee. Where an employee has an existing entitlement to paid parental leave under an existing industrial instrument, it is enforceable as provided for under that instrument. The Paid Parental Leave Bill establishes a separate statutory obligation on an employer to pay an instalment where the relevant conditions are satisfied. An employer must pay an instalment of parental leave pay if required under this bill. Meeting this obligation under the Paid Parental Leave Bill does not offset an obligation under an existing industrial instrument.

Finally, we have had a number of speakers mention payroll tax. We have been working with the states and territories for some time now and they have all been given copies of the bill. The Deputy Prime Minister has written to them to obtain final advice about whether parental leave pay would already be exempt under existing legislation or whether they would need to amend their legislation before the scheme begins. They have been asked to come back to us with their final advice on the matter as soon as possible. Our intention is clear: paid parental leave will be exempt from payroll tax.

The Paid Parental Leave scheme introduced by these bills is landmark reform for Australian families. This Paid Parental Leave Scheme is based on sound evidence, rigorous analysis by the Productivity Commission and consultation with a wide range of stakeholders over two years. Of course, as a result of that, the scheme balances many interests and we do believe that we have these balances right. Women will get 18 weeks of parental leave pay to help them take more time off work. These payments are funded by the government, not by any new taxes or levies. Payments will generally be made by employers just like other leave entitlements. Any costs involved in paying employees will be tax deductible for businesses.

The Australian people get an affordable scheme which will help to increase women’s workforce participation and alleviate the impacts of an ageing population on the workforce. Australian families have waited too long for a national paid parental leave scheme and, with this bill, we are finally catching up with the rest of the developed world. It has been a long campaign for many, many people. I particularly take this opportunity to thank the hardworking staff of the Department of Families, Housing, Community Services and Indigenous Affairs along with their colleagues in the Department of Education, Employment and Workplace Relations, the Department of Human Services and Centrelink. Delivering this scheme would not have been possible without their considerable commitment.

It also has been very important to have the support of my parliamentary colleagues and I particularly thank the Deputy Prime Minister, especially in her role as the Minister for Employment and Workplace Relations. I also thank the Minister for the Status of Women. Both have had a long-term commitment to the development of paid parental leave. Their hard work, along with that of countless other women, has finally made this policy a reality. This is a scheme that is delivered for Australian families by a government that believes in paid parental leave, a government that wants to support Australian families and Australian business to make sure that the future is a better one for all the babies who are going to be born and benefit from this landmark development of paid parental leave in Australia.