What will Abbott’s scaled-back paid parental leave scheme look like?

What will Abbott’s scaled-back paid parental leave scheme look like?
What will Abbott’s scaled-back paid parental leave scheme look like?

As the Abbott government inches closer to delivering its first budget on 13 May, the Prime Minister has today signalled some changes to his proposed paid parental leave scheme.

The scheme, first proposed by the Coalition when it was in opposition, is expected to take a $5.5 billion chunk out of the government’s coffers each year, with the aim of encouraging more Australian women to return to work after having children.

While Abbott and Treasurer Joe Hockey have continued to defend the controversial policy, some members of the Coalition have been signalling their unease over the policy to the media and the Greens have raised concerns about the cost of the policy in light of the government’s slated plans to cut welfare payments in next month’s budget.

So what will the new scheme look like? And who will be affected by the changes? We’ve pulled together a SmartCompany Q&A to provide some answers.

What has the Prime Minister actually said?

According to The Australian, the Prime Minister will cut the threshold for the scheme from $150,000 to $100,000.

The change does not introduce a means-test for the scheme, but instead caps the amount of money that women can receive at a lower level.

The $100,000 threshold is in line with Abbott’s recent comments about the income limit at which families should stop receiving welfare payments.

And how is this different to what was on the table before?

The scheme will continue to pay six months or 26 weeks parental leave based on the recipient’s full-time salary, but the maximum payouts from the scheme will now be capped at $50,000 instead of $75,000.

The government has not proposed any other changes to the scheme, with existing features such as the payment of superannuation still included.

How many new parents will be affected?

Diversity strategy and compliance consultant Prue Gilbert told SmartCompany that less than 2% of Australian women of childbearing age earn above $100,000 and so the change would only affect a small percentage of workers.

“It’s a pretty minimal change and is more symbolic than anything else,” said Gilbert.

And if the government is making the change to save money, does it mean other measures rumoured to be included in the budget such as the “debt levy” will be scrapped?

Probably not. Gilbert says the change will have a “negligible impact on the budget bottom line” and so the government will proceed with its plans to reduce the current budget deficit by dramatically reducing its spending and potentially introducing a temporary increase to personal income tax levels.

So if the change is minimal, what’s Abbott thinking?

Gilbert says the change is “aimed at getting more support” for the scheme, which is now attracting criticism from within the Coalition’s own ranks.

“The Greens have previously said that they will support the scheme at $100,000,” said Gilbert, who believes the change will mean that the scheme will almost certainly gain the Senate’s tick of approval.

Would the government be better off spending more on affordable and accessible childcare?

Media reports this week have focused on the paid parental leave versus childcare debate: that is, that women would be more likely to return to work if they have better access to more affordable and higher quality childcare.

However, Gilbert says that on average, Australian women take a mixture of 32 weeks in paid and unpaid leave from their jobs after having a child, and a paid parental leave scheme that allows mothers to spend the first year of their child’s life at home is in the best health interests of the mother.

It’s also much more expensive for childcare centres to care for children under the age of one, says Gilbert, who will be looking at the legislative detail of the government’s policy to see if it will be possible for women to take 12 months leave at half-pay under the scheme. “It would be a very positive thing,” she says.

This article first appeared on SmartCompany.

Economy Budget

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