2009 Women’s Budget Statement

Paid Parental Leave

The Government will provide $731 million over five years for a comprehensive paid parental leave scheme. Paid parental leave will help parents spend time with their children, leading to improved health and wellbeing for parents and children. It will promote women’s continued engagement in the workforce, which is of vital importance to women in securing their long term economic outcomes. Paid parental leave is also important to building equality between women and men. The Government-funded paid parental leave scheme will apply to births and adoptions after 1 January 2011.

The Productivity Commission found that access to employer-funded parental leave in Australia is highly uneven. In 2007, approximately half of employed women were eligible for paid parental leave as part of arrangements negotiated with their employers. However, less than one quarter of women on very low wages, compared with three quarters of women on high wages, had access to paid parental leave. Comparatively high rates of paid parental leave are reached at gross wages of around $73,000-$93,000. The industries with the lowest level of access to paid parental leave are female dominated, highly casualised and low skilled. Women in these jobs are more likely to return to work early and this scheme will directly support these women and their families.⁶

Graph

Paid parental leave is also important to building equality between women and men.
The Productivity Commission also reports that in 2007, 74 per cent of female full-time employees had access to paid parental leave, compared with only 32 per cent of female part-time employees. Paid paternity leave was available to 58 per cent of male full-time workers compared with 12 per cent of male part-time workers.⁷

Paid parental leave will be available to self-employed parents, contractors and casual workers, many of whom currently have no access to employer-provided paid parental leave entitlements.

The scheme provides 18 weeks’ leave paid at the federal minimum wage (currently $543.78) which can be shared between both parents.

To be eligible for the scheme, the primary carer (usually the mother) must be in paid work and have:

been engaged in work continuously with one or more employers for at least 10 of the 13 months before the expected date of birth or adoption; and
undertaken at least 330 hours of paid work in the 10 month period (an average of around one day of work each week).

An income test of $150,000 will apply based on the primary carer’s adjusted taxable income in the previous financial year.

Employers will be responsible for making the parental leave payments on behalf of the Government to employees who have 12 months’ continuous service with the employer. The Government will provide employers with funds in advance of their payment to the employee as part of the usual payroll cycle. Parents who already access employer-funded paid parental leave will be able to access the Government’s scheme in addition to, or in conjunction with, these existing arrangements.

Eligible families can choose whether to participate in the scheme depending on their individual circumstances. Families electing to participate in the scheme will not receive the Baby Bonus (except in multiple birth cases) or Family Tax Benefit B during the 18 week paid parental leave period.

Parents not eligible for paid parental leave will continue to receive, if eligible, the current forms of family assistance (including the Baby Bonus). A review, commencing two years after the implementation will consider the introduction of a paternity leave component and employer-funded superannuation contributions for paid parental leave recipients.

Notes

⁶Productivity Commission, Paid Parental Leave: Support for Parents with Newborn Children, Report no. 47, Productivity Commission, Canberra, 2009.
⁷Productivity Commission, Paid Parental Leave: Support for Parents with Newborn Children, Report no. 47, Productivity Commission, Canberra, 2009.

[ top ]