Superannuation will be a crucial part of the paid parental leave scheme:Mark Bouris

The Coalition’s new paid parental leave (PPL) scheme – starting from July 1 2015 - will pay a replacement wage up to an annual salary of $150,000, funded by a levy on the 3,000 biggest employers.

No policy is perfect, and the Coalition’s PPL scheme is no exception, but I think this is a good move for a number of reasons.

Firstly, we need women to be involved in our economy where possible and we need our policy settings to encourage and support that. The good news is that female participation in the labour force is rising – from 60.3% in 2000, to 65.3% in 2011. That’s a 5% rise in just 11 years while the male participation rate was flat.

The problems for women are many: as the cost of living increases, they are compelled to work; when working women have children and stop working, it puts stress on household finances; when they do go back to work, women still absorb most of the home duties meaning their extra income often goes on child care costs; when women take time off to have children, they usually lose their superannuation contributions; and when women with kids do go back into the workforce their preference for part time and casual work reduces their income and their superannuation.

Therefore we are faced with this conundrum: women earn less than men during their working lives, meaning they have less superannuation. Yet women live longer and therefore have longer retirements to fund.

The government needs to be congratulated for ensuring that the new PPL scheme will keep the superannuation guarantee contributions going during the paid leave.

More still needs to be done to lift the average super balances of women to parity with men’s – in 2010 the average female super balance was around $40,400, compared to the average male balance of $71,600. But allowing women to take 26 weeks off to care for their baby, with no discontinuation of their super, is a really good start.

Small business owners are also going to benefit from the PPL scheme. Many women choose to work at large companies or government departments, attracted to maternity policies and benefits.

With paid parental leave being funded from Canberra, smaller business owners will be on a more level playing field with the big employers, because they’ll be able to attract and retain female employees of child-bearing age.

And women will be able to make employment decisions based on criteria other than maternity benefits.

In the end, superannuation could be the crucial part of this policy. But also watch women of child bearing age giving up long commutes to the CBD as they realise that working for a small business does not penalise them for having a baby.

You can contact Mark on Twitter.