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Editor's Agenda

The government’s bold new plan for paid parental leave

/ Jan 22, 2014 9:56AM / Print / ()

Paid parental leave was the coalition's signature policy for women during the election campaign and the government is considering bold measures to implement it. Today the Australian Financial Review reports that the government is exploring the possibility of invoking its constitutional powers to override all existing employment arrangements that provide paid parental leave to roll out its proposed scheme.

It is virtually unprecedented in Australia's employment law history.

"Bargaining is generally left to employers and employees and this is, in a sense, the government saying 'You made that agreement and we're going to displace it'," Professor Marian Baird from Sydney University told Women's Agenda. "It is unexpected and it's not entirely clear what the implications are."

Baird is one of the independent experts who has been briefed by federal officers on the implementation of Abbott's paid parental leave policy.

Australian women are currently entitled to 18 weeks' parental leave, at the minimum wage, from the government, in addition to receiving paid parental leave from their own employer.

The government's plan is to replace this hybrid arrangement with a uniform federal scheme under which all women would receive 26 weeks' parental leave paid at their salary, up to a maximum of $75,000 for the period.

"We have all heard the big policy idea but the issue is in the detail -- how will the scheme run?" Baird says. "Particularly how will it fit with existing provisions? This is only starting to come to light now."

Under the scrutiny of stakeholder consultation it is clear there are obstacles – big and small – to overcome.

"We are being asked what problems we can foresee. It is very open and conversational but in the process of conversation other parts have emerged," Baird says. "The public servants involved are very knowledgeable because they were involved in the previous scheme. But this is different because it brings in Treasury, Prime Minister and Cabinet, Tax and Social Services – it cuts across a lot of portfolios."

Baird says it is too early to say with clarity what the impact of overhauling the current system under which the government pays a baseline which employers are free to top up, in favour of a uniform proposal.

"The advantages of the hybrid model is that it continues the pattern of industrial relations we have in Australia. It allows employers to brand themselves as employers of choice and allows employees and employers to tailor provisions to fit their workplace," she says. "The disadvantage is that not everyone can afford it. The advantage of the government's scheme is it's longer and paid at higher rate and it spreads the cost. And all women benefit."

What the broad economic benefit of a more generous PPL scheme will be shown in time. Research shows that individuals have a greater workforce attachment with paid parental leave but Baird says the degree to which it increases with a longer and more generous scheme is "unclear".

A potential argument in favour of the government's proposal is that it would leave employers open to tackle other issues which affect women returning to work.

"It would open up space for employers to do something different but how that's achieved and whether it's required is another question," Baird says. "Because of the attention this policy has attracted it has decoupled the conversation about paid parental leave from childcare. It's the suite of policies and how they interact that really impacts how they assist women returning to work."

If the government seeks to use its constitutional "social welfare" power to override existing employment contracts, collective agreements and awards, it seems inevitable that stakeholders will question the legality of doing so.

"I'd be surprised if it's not legally challenged," Baird says. "How will the union movement, and even employers, respond to this process?"

The stakeholder consultation will continue and it's likely we can expect much more discussion to emerge from these conversations.

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