Changes to paid parental leave: bad for business, women and families

Media releases

Diversity Council Australia is disappointed with the Federal Government’s announcement that many parents who receive employer-paid parental leave will be ineligible for the Government-paid parental leave scheme from July 2016. In addition, DCA believes the new childcare measures announced in the budget don’t really address access to and availability of childcare which are causing major difficulties for Australian employers.

Lisa Annese, DCA’s CEO, said the changes to paid parental leave will not assist women or their families and are a step backwards. 

“Any policy that reduces income to women and families during parental leave is a bad thing. It will put additional pressure on families and is likely to mean mothers will have to return to work earlier than they wanted to, reducing valuable time with their newborns.

“Importantly, this change will only add to the wage gap that women experience as a result of having children. And with some 47% of currently eligible mothers expected to lose all or part of the payment, it is going to affect a lot of people.

“The current scheme’s 18 weeks’ paid leave at the minimum wage provides the basic level of support new parents really need to adequately bond with their newborn and establish breastfeeding. It was always the intention that the existing scheme be topped up by employer-funded schemes, with 26 weeks’ paid leave the minimum standard recommended by the World Health Organisation.

“Indeed other countries offer much more generous paid parental leave schemes. This includes the U.K. which provides 39 weeks (at 90% of mother’s average weekly earnings for at least 6 weeks, then capped at GBP £137 for remaining 33 weeks), Canada which provides 50 weeks (at 55% of average insured earnings) and Sweden which provides 60 weeks (at 80% of earnings for 47 weeks; remaining 13 weeks at SEK kr1260 a week),” said Lisa.

The impact of the paid parental leave changes on employer-provided schemes is unclear, said Lisa.

“Employers are increasingly committed to providing paid parental leave; they see it as a vital tool to attract and retain talent. Any reduction in the amount of support for women and families from the Government-provided scheme may mean employers will need to increase their support to fill the gap,” said Lisa.

In terms of childcare, the government has announced it will roll multiple childcare payments into one means-tested Child Care Subsidy from July 2017 that will be linked to a benchmark price and paid directly to childcare providers.

“The new subsidy might simplify the payment system and improve affordability for some families, but it doesn’t comprehensively address issues of access to and quality of childcare, and is therefore unlikely to substantially change workforce participation of women,” said Lisa.

“In addition, there are no incentives to encourage organisations to offer more flexible work which is critical to parents being able to manage their caring responsibilities whilst remaining attached to the workplace,” concluded Lisa.