Parental leave cheat sheet

Kevin Rudd and Tony Abbott face off at the leaders' forum at the Broncos Leagues Club.
Kevin Rudd and Tony Abbott face off at the leaders' forum at the Broncos Leagues Club. Photo: Andrew Meares

In an election campaign characterised by big ideas and little detail, paid parental leave is shaping up as a push-button issue.

Before 2011, when the Labor government introduced Australia's first universal paid parental leave scheme, just over half of Australian working women had access to paid maternity leave. Now more than 95 per cent of Australian working women have the benefit of paid parental leave – and are still entitled to still receive an extra 34 weeks unpaid leave.

Tony Abbott believes the current scheme doesn’t go far enough. In the signature policy in his push to become the next prime minister, he has pledged $5.5 billion to offer women 26 weeks paid leave at replacement wage.

So which scheme is superior? We break down the pros and cons of the plans of both major parties. 

Current paid parental scheme (Labor)

What is it? 

18 weeks paid leave to the primary caregiver at the minimum wage, which can be taken on top of maternity leave entitlements.

Positives

  • Already funded via the current tax system
  • An attractive option for businesses, as they incur no extra cost
  • The scheme treats all women as equal by paying all women the same parental leave benefit regardless of household income
  • Women may be able to negotiate longer paid leave, possibly at a higher rate with their employers
  • The government recently announced that From September 30, 2013, businesses with fewer than 20 employees will no longer have to administer government-funded PPL payments for their long-term employees, which was one criticism of the scheme
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Negatives

  • Relatively short leave period (18 weeks) may make it difficult for women to continue breastfeeding exclusively to the recommended six months point. 
  • May not offer enough incentive for highly-paid women to financially justify the career pause and salary cut when they have a baby.
  • Employer negotiations for extra paid leave favour women in senior positions.

Coalition scheme

What is it?

Pays primary caregivers the greater of their replacement wage or the adult minimum wage for up to 26 weeks, capped at the replacement wage at those earning $150,000 a year.

Funded by a 1.5 per cent levy on businesses with a taxable income of more than $5 million per annum, as well as removal of current scheme

Positives

  • One of the most world's most generous parental leave policies
  • Tony Abbott says the scheme means you can have more kids and keep paying the mortgage
  • Praised by feminist academic Eva Cox for helping to reduce the disparity in the average life-time earnings of men and women
  • Preferred scheme of the Australian Breastfeeding Association
  • Includes superannuation, unlike Labor scheme

Negatives

  • Very expensive: The price tag is equivalent to the overseas aid budget and will put paid parental leave onto the Commonwealth's 20 most expensive programs list. The cost will be similar to what the government spends each year on all childcare subsidies to parents
  • Some say scheme is unequitable as already higher-earning women will receive hgher parental leave payments. Even billionaires are potentially eligible
  • Disliked by economists. Private sector economist Saul Eslake described it as a ''dreadful'' policy that would become a drag on a budget already under long-term stress, while doing little to improve workforce participation or boost productivity
  • The Productivity Commission found that that providing full replacement wages to highly educated, well-paid women would be costly and deliver ''few labour supply benefits''

What about childcare?

Both schemes have been criticised for womens’ groups for neglecting issues around the supply and high cost of childcare, both of which hamper the re-entry for women in to the workforce.

Marie Coleman, chairwoman of the National Foundation for Australian Women Social Policy Committee, and a member of a committee reviewing the government's parental leave scheme, believes that the extra money the Coalition is planning to spend on paid parental leave could be better directed into childcare.

''We don't think the level of female workforce attachment is going to be as much related to the level of their paid parental leave as it is to if a lot of extra money is pumped into childcare,'' she told Fairfax Media.

''An additional $5 billion a year would produce a hell of a lot of better childcare.''

Labor has committed $450 million to funding before and after-school care services around the country. But this won’t impact on the thousands of working families waiting up to two years for inner-city daycare places for their babies and toddlers.

Last year Tony Abbott suggested subsidising nannies as a means of addressing the childcare shortage.

Which scheme do you think is superior? Comment below.

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