Paid Parental Leave Bill 2010 – Second Reading Speech, Parliament House
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This Bill will introduce Australia’s first national Paid Parental Leave scheme to begin on 1 January 2011.
Eligible working parents of babies born or adopted from 1 January next year will receive 18 weeks’ parental leave pay at the Federal Minimum Wage.
The scheme is fully costed and funded by the Government. It is fair to business and fair for families.
This historic reform is a major win for working families who have been waiting decades for a national Paid Parental Leave scheme.
Australia is currently one of only two OECD countries without a national Paid Parental Leave scheme.
Today, with this legislation, we catch up with the rest of the developed world.
Paid Parental Leave will give babies the best start in life. It means one parent has the financial security to take time off work to care for their baby at home during the vital early months of their baby’s life. It will give mothers time to recover from birth, and bond with their baby.
The Government’s scheme meets the challenges and realities of modern family life – giving parents more time at home with their new baby and helping them balance their work and family responsibilities.
It supports women to maintain their connection with the workforce and boosts workforce participation.
Our scheme also lets families make their own work and family choices. Parents can transfer the leave so mums and dads have more options for balancing work and family.
And now, under our scheme, women in seasonal, casual and contract work, and the self-employed, will have access to Paid Parental Leave – most of them for the first time.
The scheme will prepare Australia for the challenges of the future. Business will benefit from the retention of skilled and experienced female staff but won’t have to fund the parental leave payments.
And because the Government respects the work and family choices that each family makes, we will continue to support mothers whether they are in a paid job or at home. Families not eligible for Paid Parental Leave, or who choose not to participate in the scheme, will be able to continue to access the Baby Bonus and Family Tax Benefit if they are eligible.
This has been a long campaign for so many people and I would like to acknowledge the many, many women and men who’ve campaigned for paid parental leave in Australia. This day belongs to them.
I would particularly like to acknowledge Sharan Burrow and the trade union movement for their tireless campaigning for Australian families, Marie Coleman and others from the National Foundation of Australian Women, as well as the current and previous Sex Discrimination Commissioners – Elizabeth Broderick and Pru Goward.
I’d also like to acknowledge the leadership of Heather Ridout from the Australian Industry Group, Katie Leahy from the Business Council of Australia, and those best practice employers who are already providing Paid Parental Leave because they know it’s good for business.
It really has been a campaign that is in the best interests of Australian families and we now, finally, have a Government that will deliver a Paid Parental Leave scheme to Australian families.
The Paid Parental Leave scheme outlined in this Bill is based closely on the expert recommendations of the Productivity Commission. It is the culmination of over two years of policy development and public consultation to develop a scheme to respond to Australia’s current social and economic circumstances as well as to help us to prepare for the future.
Around a third of mothers return to work within six months of the birth of their child. Two-thirds of these mothers return to work because they need the money.
Even so, Australian women’s workforce participation during the peak child bearing years is lower than for women in other leading industrialised countries. As a nation, we cannot continue to ignore the barriers to greater participation by women, who now make up 45 per cent of the paid workforce.
This is why we committed before the 2007 election to explore ways to make it as easy as possible for working mums to balance their work with the important job of adjusting to parenthood, and bonding with their children.
In February 2008, we asked the Productivity Commission to look at the economic, productivity and social costs and benefits of paid maternity, paternity and parental leave. The Commission was also asked to consider the health and developmental benefits of any scheme for babies and their parents.
The Commission analysed the evidence from Australian longitudinal surveys and international research. It undertook extensive public consultation on proposals for the scheme. It sought public submissions and conducted public hearings.
The Productivity Commission recommended the introduction of a government funded statutory scheme of Paid Parental Leave, paid at the level of the National Minimum Wage for up to 18 weeks. It was a scheme based on sound evidence and rigorous analysis.
In last year’s Budget, the Government committed more than $250 million a year to Australia’s first Paid Parental Leave scheme, based closely on the Productivity Commission’s recommendations.
This was a commitment to Australian working families that redressed more than a decade of inaction when those opposite were in government.
We knew the scheme was needed, we knew it was affordable and that it balanced the interests of business and families.
The Government’s commitment to consultation did not end when we announced the Paid Parental Leave scheme in the 2009-10 Budget.
During late 2009, 32 consultations sessions were held with over 200 key stakeholders, including major employer groups and trade unions, representatives of small business, family and community stakeholder groups, and tax professionals, payroll specialists and payroll software developers.
For two years, the Government has listened to what families have had to say about the scheme. For two years, the Government has listened to the concerns of employers, large and small, who have provided valuable feedback. We have listened to the community, gathered evidence and considered how to balance the interests of parents, employers and the wider community.
The scheme presented in this Bill today reflects this extensive consultation process and is fair, balanced and affordable.
The Government estimates that, each year, around 148,000 people will be eligible for Paid Parental Leave.
The scheme will provide eligible working mothers and initial primary carers of children born or adopted on or after 1 January 2011 with up to 18 weeks’ parental leave pay at the National Minimum Wage, while they stay at home to look after their baby or adopted child.
In addition to full-time workers, women working part-time, and in seasonal, casual or contract work, and the self-employed, may be able to access Paid Parental Leave – many for the first time.
A mother may be eligible if she has worked continuously for at least 10 of the 13 months before the birth or adoption of her child, and has worked for at least 330 hours in that 10-month period (around one day a week).
To meet the needs of contractors, seasonal and casual workers who have irregular work patterns, a person can have a break of up to eight weeks between working days and still be considered to have worked continuously.
Parental leave pay will also be available to parents who work in their own business or a family business, such as a farm.
Generally, it will be mothers who claim parental leave payments in the first instance as they usually provide the primary care of their child during the initial months of the child’s life.
However, it is becoming increasingly common for men to spend some time being the primary carer of the child during its first year. Our Paid Parental Leave scheme is flexible and will allow parents to make their own work and family choices.
The legislation allows all or part of the parental leave pay to be transferred to the child’s other parent, provided they also meet the eligibility requirements and are the primary carer of the child.
Paid Parental Leave must be taken in one continuous 18-week block within 12 months of the child’s birth or adoption, including in cases where the payment is transferred. A person cannot work during the Paid Parental Leave period, although they can stay connected with their workplace through ‘keeping in touch’ provisions.
Paid Parental Leave can be taken before, after, or at the same time as other leave entitlements such as annual leave or employer-funded maternity leave to best suit a family’s circumstances.
A person will be eligible if they have individual income of $150,000 or less in the financial year before the claim or birth of the baby, whichever is the earlier. This is a generous income test, but consistent with the principle of targeting Government support to those most in need.
A person must also be living in Australia and generally be an Australian citizen or permanent resident to be eligible. Some non-residents are able to receive the payment, as is the case with family assistance.
Families receiving parental leave pay will not be able to receive the Baby Bonus, and Family Tax Benefit Part B will also not be payable for the duration of the parental leave pay.
Eligible families will be able to choose whether to take Paid Parental Leave or the Baby Bonus, according to their individual circumstances.
The Government estimates that more than 85 per cent of families will be better off taking Paid Parental Leave. These families will, on average, receive around $2,000 more than if they chose the Baby Bonus. This is after tax has been paid and all interactions with other family assistance have been taken into account.
To help families make the choice that is best for them, an online estimator will be available from September 2010.
The Government values the hard work of all mothers, regardless of whether they are in paid work.
We know that all mothers ‘work’ regardless of whether they are at home or in a paid job, and that most mothers will spend time in and out of the workforce depending on their circumstances.
We will continue to support mothers whether they are in a paid job or at home. The Baby Bonus and Family Tax Benefit will remain available for families not eligible for the scheme, and for those who choose not to participate in the scheme.
Casual workers are set to be big winners from Australia’s first Paid Parental Leave scheme.
Women are more likely to be casual workers and make up almost 57 per cent of all casual employees in Australia.
Almost 25 per cent of employed women work in casual jobs and receive no paid leave entitlements.
To help seasonal, contract and casual workers access Paid Parental Leave, parents who are not employed at the time of the birth of their child but have satisfied the work test will be eligible.
Many seasonal, contract and casual workers have irregular work patterns and may not be in work immediately before the birth of their child.
Under our scheme, an eligible mother who is a contract worker but whose contract finishes before her baby is born will still receive parental leave pay, providing she meets the work test.
Eligible parents not employed at the time of the birth of their child will be paid directly by the Family Assistance Office.
Our scheme recognises that taking time off to have a baby is a normal part of working life.
Our scheme is fair to business. The parental leave pay is fully funded by the Government. And it does not involve any new taxes on business. It will help employers enhance the family-friendly workplace conditions many already offer.
The Government’s Paid Parental Leave scheme is fair, balanced and economically responsible. The scheme will benefit employers by assisting them to retain skilled and valuable staff, without having to fund the parental leave pay.
Employers are integral to the rollout of Australia’s first national Paid Parental Leave scheme. Most women will receive government-funded parental leave pay from their employers.
By receiving parental leave pay through their usual pay cycle just as other workplace entitlements are paid, women will remain connected to their workplaces and be more likely to return to work.
Employers will provide parental leave pay for their long-term employees – those with at least 12 months of continuous service. Other women will receive parental leave pay from the Family Assistance Office.
The Paid Parental Leave scheme has been designed to minimise its impact on employers required to provide parental leave pay to long-term employees.
We understand that it is important to make arrangements simple and consistent with existing employer practices and obligations.
In any one year, nine per cent of all businesses will be involved in the Paid Parental Leave scheme, and only three per cent of small businesses.
Employers will not have to work out if their employee is eligible. This will be done by the Family Assistance Office.
The Family Assistance Office will also ensure that employers have the required funds before they need to make parental leave payments to their employee. An employer can choose to have these funding amounts advanced in three instalments, if this would be more convenient than fortnightly payments.
It will be ‘business as usual’ for a company’s payroll – employers do not have to change their employee’s usual pay cycle, set up any special bank accounts or report back to the Family Assistance Office. They just have to pay the parental leave pay to their employee with the usual tax deducted.
The participation of employers in the scheme is being phased in to help employers transition to the new arrangements and align with the start of the new financial year.
Employers may opt to provide an employee with parental leave pay from the beginning of the scheme on 1 January 2011. From 1 July 2011, employers will be required to provide government-funded parental leave pay to their eligible long-term employees whose babies are born or adopted after this date. This transitional arrangement will be given effect in a Bill containing consequential amendments, to be introduced separately.
Parental leave pay will not result in the accrual of any additional paid leave entitlements by employees, nor will it affect the calculation of notice periods or severance payments, or workers’ compensation or accident insurance premiums. The Government is also working with State and Territory governments to ensure paid parental leave is not subject to payroll tax.
This Bill provides employers with a right of appeal if the employer believes that the Family Assistance Office has incorrectly determined that they must provide government-funded parental leave pay to an employee.
Similarly, the Bill includes appropriate compliance arrangements to make sure that parental leave pay is paid to eligible parents in a timely manner. Any delays in payment, disputes or debts that may arise in the payment process will be managed appropriately by the Family Assistance Office and the Fair Work Ombudsman.
The Government’s Paid Parental Leave can be taken in addition to existing employer-funded schemes, either at the same time or consecutively. The Government’s scheme has been designed to complement and enhance the existing family-friendly arrangements that many employers already offer.
The Government understands the importance of monitoring and evaluating the Paid Parental Leave scheme, allocating almost $3 million for this purpose.
The Government is also committed to a review of the scheme commencing two years after the scheme starts. Both the review and the evaluation will be completed by the end of 2014.
Two issues the Government has committed to look at in the review are paid paternity leave and superannuation contributions for the period of Paid Parental Leave.
Australian families have waited too long for a national Paid Parental Leave scheme and, with this Bill, we are catching up with the rest of the developed world.
This has been a long campaign for so many people. This is a Government that is finally delivering a Paid Parental Leave scheme to Australian families.
Our scheme meets the challenges and realities of modern family life – giving parents more time at home with their new baby, helping them maintain their connection with their job and helping employers retain valuable and skilled staff.
Today is a major win for Australian families and babies.