Since before the Rudd Government was elected, the issue of whether or not to introduce a national paid maternity leave scheme in Australia, has been widely debated. Currently, women are entitled to 52 weeks of unpaid leave under section 266(3) of the Workplace Relations Act 1996 (Cth). Parents also receive a payment of the ‘Baby Bonus’ for the new birth or adoption of every child.
This is administered by the “A New Tax System (Family Assistance) (Administration) Act 1999.” The bonus includes an indexed lump sum payment of $4248, which will be increased to $5000 (indexed) on 1 July 2008. It is not currently means tested. However, after the Federal Budget 2008/2009, a cap on this payment will be introduced for families with a combined income of over $150 000 from 1 January 2009. Consequently, families with a combined income of over $150 000 will not be awarded the ‘Baby Bonus.’
After much public discussion, in 2008, the Government instigated an “Inquiry into Paid Maternity, Paternity and Parental Leave,” by the Productivity Commission (the Commission). According to the Productivity Commission Issues Paper, released in April 2008, the Commission was asked to inquire into the economic and social costs and benefits of paid maternity, paternity and parental leave (‘paid parental leave’).
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This includes: exploring the extent of parental leave which is currently provided by employers; and identifying models of paid parental leave that could be used in Australia. The Commission was also asked to assess the cost-effectiveness of these models, their interaction with the social security and family assistance systems, and their impacts and applicability across the full range of employment forms.
The Commission must also take into consideration the financing options of the scheme. It was questioned whether the government, employers or employees should bear the cost or whether the cost should be shared amongst them (such as employers topping up a base pay of minimum wage from the Government). Furthermore, it should also look into the impacts on business’ (large and small) of having a paid maternity scheme.
A number of models for the scheme have been proposed by unions, employer groups, academics etc. Unions NSW has been campaigning for a paid two weeks before the birth, then a paid 26 weeks after. Overall, their scheme would include 28 weeks paid parental leave with a publicly-funded base payment covering the cost.
The Family Policy Roundtable, is an academic group which began in 2004, comprises 11 researchers from seven Australian universities – including Barbara Pocock, Elizabeth Hill, Eva Cox and John Buchanan. In its Benchmarks for Work and Family Policies in Election 2007, the group states that the Government should fund 14 weeks paid maternity leave and two weeks paid paternity leave and introduce strong rights to request part-time employment and work from home.
The National Foundation for Australian Women, has supported proposal for a “social insurance” model, under which employers would be levied 0.5% of payroll, employees would also pay 0.5% (about $5 a week for employees earning $50,000 and $10 for those earning $100,000, according to calculations). The federal government would contribute to the universal maternity payment.
In return, mothers would receive full wage replacement for 28 weeks (this will include two weeks before birth and 26 weeks after) while their partners would receive four weeks full earnings replacement. Women who had worked 40 of the 52 weeks before the birth, casual or permanent, would be eligible.
The Australian Democrats support a scheme of a Government funded 14 weeks paid maternity leave at the federal minimum wage for all working women at or around the birth or adoption of a child. Meanwhile, the Greens support 18 weeks public-funded paid parental leave. A number of people support the Government’s measure to inquire into a paid maternity leave scheme, including Federal Sex Discrimination Commissioner Elizabeth Broderick, who recognised the Inquiry as a “significant development,” and ACTU president Sharon Burrow, who described the inquiry as a “fantastic step in the right direction” and a welcome first step towards a national paid maternity leave scheme.
Various entities seem to be introducing paid parental leave schemes in order to attract and retain their employees. However, this does not cover a vast majority in Australia’s workforce. Furthermore the numbers are decreasing. New data from the Australian Bureau of Statistics, demonstrates that a smaller proportion of employees were entitled to paid parental leave in October last year than a year earlier. The Bureau’s Forms of Employment survey reveals that 42.1% of employees reported in October last year that they were entitled to paid parental leave, down from 42.7% in October 2006. 45.4% of women said they were entitled to paid parental leave, down from 46.9% in 2006. Interestingly, the proportion of men who reported they were entitled to paid parental leave increased slightly, from 38.9% in 2006 to 39% in 2007.
Examples of such entities recently providing paid parental leave schemes include grocery retailer, Aldi Stores, which now provides 14 weeks maternity leave on half pay to its 3, 300 permanent employees, 60% of whom are women.
This entitlement will be available for full time employees with 12 months service. Additionally, department store Myer, introduced six weeks paid maternity leave for its 10,000 permanent employees 81%, are women. The entitlement will be available to those who have a minimum of 18 months service. Myer staff will be able to take the benefit in one of three ways: as a lump sum payment when parental leave commences; as a payment in line with existing payroll cycles during the leave period; or at a half rate over a 12 week period.
Domino’s pizza chain became Australia’s first fast food retailer to introduce paid maternity leave. It offered the benefit – in addition to paid partner leave – to 200 permanent employees at its head office. Under its new policy, full-time and part-time employees who have worked at the Brisbane office for a minimum of 18 months will be entitled to eight weeks paid maternity leave. They also will have the option of taking the entitlement over 16 weeks at half pay. This increases to 10 weeks (or 20 at half pay) after three to four years service; 12 weeks (24 at half pay) after four to five years; and 14 weeks (28 at half pay) for employees with five years or more service. Domino’s will also provide two weeks paid leave to partners, including same-sex partners, on the birth or adoption of their child.
The, OECD Employment Outlook 2007, OECD, 2007 maintains that countries could improve their multi factor productivity by adopting paid parental leave. According to the report, the productivity benefit of paid maternity leave is greater than it is for unpaid maternity leave. Should a paid parental leave scheme be introduced, a major beneficial impact for the labour market would be that a parent with access to paid parental leave may be less likely to resign from work and more likely to return to work with the same employer. This would have numerous implications on possible beneficial impacts for the labour market, which include: avoiding the costs incurred in looking for a new job; maintaining the usefulness of the employee’s firm specific knowledge – such as knowing the procedures of the employer, its people and customers.
Finally, an entitlement to paid parental leave may increase the attractiveness of employment, which may encourage more people to enter the labour market. A draft report will be released by the Commission in September 2008, with a final report due by 28 February 2009. Finally, it should also be noted that Australia remains the only OECD country (with the exception of the United States of America), that has not implemented a paid maternity scheme of some form.