Australia’s Paid Parental Leave Scheme
11. Government changes to the Productivity Commission’s scheme
The Government made two key changes to the scheme proposed by the Productivity Commission. These changes target support to people most in need and recognise the current economic environment.
The Government decided to defer introduction of the two-week paternity leave component proposed by the Productivity Commission. This reduced the cost to Government and employers of the scheme. The paternity leave component will be considered as part of the proposed review of the scheme.
The Government also decided the scheme should have an income test. Payments under the scheme will be limited to working mothers (and other primary carers) who had an income of $150,000 or less in the previous financial year. This income level is consistent with the Government’s decision in the 2008-09 Budget to target Family Tax Benefit Part B to those families whose primary earner had an income of $150,000 per annum or less and to target the Baby Bonus to families with an income equivalent to $150,000 per annum or less.
Income testing of PPL maintains fairness in the support the Government provides to families and recognises that high income women (and other primary carers) are in a strong position to obtain Paid Parental Leave and other family friendly benefits as part of their conditions of employment.
Jasmin and Luke have been employed full-time for over five years. They both received salaries of around $50,000 a year before starting their family. On 1 January, Jasmin has twins.
Jasmin is eligible for PPL and receives taxable payments of $543.78 per week for 18 weeks, a total of $9788. These begin from her first full pay period after the birth. She is not eligible for the Baby Bonus for the first baby but is eligible for the Baby Bonus for the second baby.
Jasmin cares full-time for her children and does not return to work before 30 June.
In the financial year of the birth of the twins, the family will receive around $2900 more in net family assistance and PPL, than they would have without PPL.
Generally calculated using 2008-09 rates.
See Appendix, Worked Example 4 for details.
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