Set out below are excerpts from a recent analysis of Turnbull's latest version of the paid parental leave scheme.
University of Sydney Business School, Women and Work Research Group, January 2016, Prof. Marian Baird & Dr. Andreea Constantin, Analysis Of The Impact Of The Government’s Myefo Cuts To Paid Parental Leave, excerpts:
The current paid parental leave (PPL) scheme commenced operation in January 2011, after the Productivity Commission recommended a system that combined government and employer leave. In making their recommendations, the Productivity Commission highlighted the importance of new parents attaining 26 weeks or more post-natal paid leave - a period considered important for health and welfare reasons for both a baby and new mother.
The current PPL system provides 18 weeks government pay at the minimum wage, to be used in combination with any leave in employment agreements or policies. It was specifically designed to enable more women to reach 26 weeks or more of paid parental leave by adding their employer paid leave on top of the 18 weeks of government provided pay.
Under the proposed cuts to this system announced in the Mid-year Economic and Financial Outlook (MYEFO), a new parent’s access to government provided PPL support would be cut where the new parent has also secured any employer provided leave, thus reducing the overall period of paid time at home that parents can access.
Approximately 160,000 families accessed PPL last year, and approximately 50 per cent of women receive some employer PPL. As 99% of those who currently access paid parental leave are women, we can then expect approximately 79,000 women would be adversely affected by this proposed cut.
Further, the analysis of impacts on different workers outlined below shows that, among others, we can expect that nurses, teachers, ambulance service workers and retail workers will be hit hard by the proposed changes. Under the government’s proposed cuts, the families modelled in the below scenarios would be left with just 7 – 13 weeks of living costs covered by the Government system. That’s less than half of the 26 weeks experts recommend.
The financial loss suffered by these families would range from $3,942 to $10,512. Given this modelling and based on what we know about how women in Australia use paid parental leave, we expect the changes will:
* prevent more women from spending critical time at home with their newborn baby;
* lead to financial duress;
* reduce the number of women able to afford to stay at home for 26 weeks and thus adversely impact on the health and welfare outcomes of new babies and mothers; and
* increase demand for childcare for the very young, in a system that is already struggling to keep up with demand.
As a result of the cuts to their income which will occur if these changes to the Paid Parental Leave system are introduced, we can also anticipate negative flow on impacts for new families and the communities in which they live.
Under the proposed changes announced - unexpectedly and without consultation - in the Mid-year Economic and Financial Outlook (MYEFO), for eligible workers whose children are born or adopted on or after 1 July 2016, the number of weeks of PPL entitlements paid under the Commonwealth Paid Parental Leave model will be cut where a parent also receives employer provided paid leave.
The number of weeks of any paid leave provided by the employer will be deducted from the Government’s 18 weeks.
The main difference between this new proposed cut, and the cut previously proposed by Treasurer Joe Hockey and former Prime Minister Abbott, is that this new proposed cut is calculated on the basis of weeks of government paid parental leave (capped to 18 weeks of income), rather than the dollar amount of income received (capped to the equivalent of 18 weeks income at the national minimum wage).
Under the government’s proposed changes to the PPL model, the eligibility rule for a break in work will also be changed - from 8 to 12 weeks, allowing some women who are currently ineligible for paid parental leave because they have breaks in work longer than 8 weeks, to access the government parental leave pay, for example jockeys. The proposed changes will also affect income assessed for Family Tax Benefits, potentially further reducing the family income. According to MYEFO, the Government plans to save $105 million over 4 years in Family Tax Benefits, or just over $26 million per year. Thus somewhere between 4,000 to 6,000 families are likely to have their benefits reduced.
The first Scenario models the expected impact of the government’s proposed changes on the situation of a retail worker. She works as a cashier for Woolworths and is expecting her first child.
The second Scenario models the impact of the government’s changes on a part-time teacher who works 3 days a week.
The third Scenario models the impact of the government’s proposed changes on a mother working full-time as an ambulance service worker in Queensland. She lives with her partner, their 5 year old daughter and their newborn baby.
The fourth Scenario models the impact of the government’s proposed cuts on a mother who works part-time (3 eight-hour shifts a week) as a nurse. She lives with her partner and their newborn in Victoria.
Conclusion
The Federal Government’s proposed changes will result in fewer weeks of paid parental leave for women who receive some PPL from their employer. The more weeks of paid parental leave a new mother receives from their employer, the less they will receive from the government.
The outcome is regressive and the analysis shows it will have a negative impact on lower paid women. Women who are in normal, but low paid jobs or part-time work with slight benefits from employers will lose government financial support, and therefore their ability to afford to spend time with their newborns in these critical first months will be compromised.
These scenarios show that the loss to women in these critical jobs ranges from 6 weeks to 16 weeks of income and amounts to a range of $3,942 and $10,512. This represents a significant loss of resources to the primary carer and their family during this key time when they will already be financially under-pressure.
A reduction in available paid parental leave can be expected to increase the costs and time pressures on women, and this in turn may be expected to force more women to return to work earlier than desired and to seek childcare for their babies in a system that is already failing to meet demand amongst infants.
As a result of the cuts to their income which will occur if these changes to the Paid Parental Leave model are introduced, we can also anticipate negative flow on impacts for new families and the communities in which they live.
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