Chapter 1
Introduction
Referral
1.1
On 25 June 2015, the Senate referred the provisions of the Fairer Paid
Parental Leave Bill 2015 to the Community Affairs Legislation
Committee for inquiry and report by 15 September 2015.[1]
1.2
The proposal to refer the Bill requests that the committee 'scrutinise
the impact of proposed changes to paid parental leave through this legislation'.[2]
Background
Paid Parental Leave Act 2010
1.3
In February 2008, the Assistant Treasurer, the Hon Chris Bowen MP asked
the Productivity Commission (PC) to undertake an inquiry to consider the design
and impacts of a paid maternity, paternity and parental leave scheme in
Australia. In February 2009, the PC concluded its inquiry and released a report
entitled Paid Parental Leave: Support for Parents with Newborn Children.[3]
1.4
This report found that:
Around 280 000 mothers gave birth in Australia in 2007. Of
these, around 175 000 were born to mothers who were in the workforce prior to
giving birth, with at least 80 per cent of those mothers intending to return to
work. Accordingly, there is a large number of employed mothers who need to take
leave from work. There have been enduring calls for many years in Australia to
introduce a statutory scheme that would provide broad paid parental
particularly maternity leave to such parents. Only around half of employed
mothers (and a somewhat smaller share of fathers) are currently eligible for
paid parental leave as part of arrangements privately negotiated with their
employers. Given the recent slowing pace of private provision, it is not clear
that the proportion of the workforce covered by paid parental leave will change
much over the next decade.[4]
1.5
At this time, the only government provisions with regard to the parental
leave period related to a 'legislated unpaid maternity [and paternity] leave
guarantee of 52 weeks that gives a parent the right to return to [their] job'.[5]
These provisions still exist under the National Employment Standards and the Fair
Work Act 2009.[6]
1.6
The PC identified a number of reasons as to why a statutory paid
parental leave (PPL) scheme should be introduced:
-
the improved wellbeing of families, and in particular child and
maternal health, associated with an extended period of absence from work around
the birth of the baby and secure financial support during this period (see
below). For a variety of reasons such as financial constraints parents cannot
always take sufficient time off from work;
-
in the face of the incentives against work provided by the social welfare and
tax system, encouragement of women of reproductive ages to maintain their
lifetime attachment to the workforce; and
-
the expression of community norms. This includes the view that
having a child and taking time out for family reasons is part of the usual
course of work and life for many people in the paid workforce, including
fathers. It also encompasses the importance of valuing children. These
rationales for paid leave are more contentious than others, because while
survey evidence suggests most Australians would like to see the introduction of
statutory paid parental leave, many also oppose it, especially when it is made
clear that someone must pay for the scheme. Nevertheless, social policy
provides an important rationale for a government-mandated scheme.[7]
1.7
In response to this inquiry, the Australian Government introduced and
passed the Paid Parental Leave Act 2010 through the parliament.[8]
1.8
The PPL scheme established under this act provided for 'financial
support for up to 18 weeks to help eligible parents take time off work to care
for a newborn or recently adopted child'.[9]
This financial support is calculated as the minimum wage (before tax) which
currently equates to $657.00 per week (before tax).[10]
This can currently be accessed in conjunction with or in addition to any other
forms of leave provided by an employer:
If you are eligible, you can access up to 18 weeks of
government funded Parental Leave Pay as well as any of your existing employer
provided paid or unpaid leave.
You can take your payment before, during or after any paid or
unpaid maternity or parental leave or other employer funded leave entitlements
such as annual leave or long service leave.
If your employer currently provides paid maternity or
parental leave through an industrial agreement or law, they cannot withdraw
your entitlement to that leave for the life of the agreement or law. The scheme
does not change any existing employer provided leave entitlements.[11]
1.9
Although the PPL payment is wholly funded by the Australian Government,
it is disbursed by the employer under certain criteria. The employer will
manage the payment if the PPL recipient has worked for that employer for 12
months or more; the recipient will continue working for the employer after the
period of PPL; and the recipient expects to receive at least eight weeks of
PPL. If the employer administers the PPL payment they will also withhold tax
and other authorised deductions as appropriate.[12]
1.10
To be eligible for the paid parental leave scheme established under this
act, a range of eligibility and work test criteria must be met. These include
(but are not limited to) being the primary carer of the child, having an income
of $150 000 or less, and having been in paid employment for:
-
10 of the 13 months before the birth or adoption of your child;
and
-
[worked] 330 hours in that 10 month period, which is just over 1
day a week, and had no more than an 8 week gap between 2 consecutive working
days.[13]
1.11
Qualification for paid parental leave may also entitle a family to other
government benefits such as Dad and Partner Pay (covered by the 2010 Act), in
addition to Family Tax Benefits and Parenting Payment.[14]
Paid Parental Leave Amendment Bill
2014
1.12
On 19 March 2014, the Paid Parental Leave Amendment Bill 2014 was
introduced into the House of Representatives by the Minister for Small
Business, the Hon Bruce Billson MP. This Bill is consistent with the
Government's commitment to 'reduce the red tape burden and compliance costs on
business by ensuring they are not required to be the paymaster for the
government's paid parental leave scheme', this Bill will seek to 'remove the
mandatory requirement for employers to administer government-funded parental
leave pay to their eligible long-term employees'.[15]
This Bill has passed the House of Representatives, and was introduced into the
Senate where a second reading has been moved. This Bill is currently listed as
Government Business on the most recent notice paper.[16]
Fairer Paid Parental Leave Bill 2015 [Provisions]
1.13
On 25 June 2015, the Fairer Paid Parental Leave Bill 2015 was
introduced into the House of Representatives by the Minister for Social
Services, the Hon Scott Morrison MP.[17]
Key provisions and purpose of Bill
1.14
This Bill seeks to amend the Paid Parental Leave Act 2010 to
'ensure that Government funded payments under the scheme are more fairly
targeted to parents who do not also have sufficient access to employer-provided
parental leave or similar payments'.[18]
1.15
The Bill also contains a number of minor amendments that provide more
time than is available under the act for parents to lodge claims for PPL.
1.16
In addition, this Bill also seeks to remove the obligation of employers
to act as a paymaster and administer the Paid Parental Leave scheme to their
employees.[19]
1.17
The Bill is comprised of two schedules.
Schedule 1—Adjustment for primary
carer pay, etc
1.18
This schedule proposes to modify the current universal statutory PPL
scheme to one that instead targets parents and families that do not receive any
employer-provided PPL. The effect of this schedule is that:
Parents will no longer be able to receive employer-provided
primary carer leave payments (or other like payments) as well as the full
amount of parental leave pay under the Paid Parental Leave scheme.
Parents who are entitled to receive employer-provided
payments in excess of the total amount of parental leave pay under the Paid
Parental Leave scheme will not receive any parental leave pay under the Paid
Parental Leave scheme.
Parents who are entitled to receive employer-provided
payments of less than the total amount of parental leave pay under the Paid
Parental Leave scheme will receive a top-up to ensure they can access the
maximum rate.[20]
1.19
In addition, this schedule seeks to 'provide more generous backdating
provisions so parents have more time to lodge a claim in certain
circumstances'.[21]
1.20
The Australian Government foreshadows savings over the forward estimates
of $967.7 million if this Bill is passed.[22]
1.21
These changes are intended to commence from 1 July 2016.[23]
Schedule 2—Employer opt-in
1.22
This schedule proposes to remove the obligation on employers to
administer the payment of statutory PPL to their employees:
[E]mployees will be paid directly by the Department of Human
Services, unless an employer opts in to provide parental leave pay to its
employees and an employee agrees to their employer paying them.[24]
1.23
This Bill duplicates provisions in the Paid Parental Leave Amendment
Bill 2014.
1.24
The Australian Government foreshadows an increased cost of $7.0 million
over 5 years if this Bill is passed.[25]
The increased cost is due to the Department of Human Services assuming the
paymaster responsibilities of PPL payments from employers.
1.25
These changes are intended to commence from 1 April 2016.[26]
Conduct of Inquiry
1.26
Details of the inquiry, including a link to the Bill and associated
documents, were placed on the committee's website.[27]
The committee also wrote to 39 organisations and individuals, inviting
submissions by 30 July 2015. Submissions continued to be submitted after that
date.
1.27
The committee received 55 submissions to the inquiry.
1.28
The committee conducted a public hearing on 1 September 2015 at
Parliament House in Canberra.
1.29
A petition was tabled on 19 August 2015 by Senator Anne McEwen requesting
'that the Senate oppose cuts to the Paid Parental Leave Scheme'.[28]
Consideration of the Bill by other committees
Scrutiny of Bills
1.30
The Senate Standing Committee for the Scrutiny of Bills made no comment
on this Bill.[29]
Human Rights
1.31
The Parliamentary Joint Committee on Human Rights (PJCHR) considered
that the Bill appears to give rise to human rights concerns. The PJCHR noted in
respect to schedule 1 of this Bill that it may engage and limit:
-
the right to social security;[30]
-
rights at work and the right to maternity leave;[31]
and
-
the right to equality and non-discrimination (indirect
discrimination).[32]
1.32
The PJCHR noted in respect to schedule 2 of this Bill that the committee
has 'previously considered these measures as part of its consideration of the [Paid
Parental Leave Amendment Bill 2014]'. In its eighth report, the PJCHR
'concluded its consideration of these matters as being compatible with
Australia's international human rights obligations on the basis of the further
information provided by the minister.[33]
Acknowledgement
1.33
The committee thanks those organisations who made submissions and who
gave evidence at the hearing.
Note on References
1.34
Reference to the committee Hansard is to the proof Hansard.
Page numbers may vary between the proof and the official Hansard transcript.
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