Chapter 1Introduction
1.1On 19 October 2023 the Senate referred the provisions of the Paid Parental Leave Amendment (More Support for Working Families) Bill 2023 (the bill) to the Senate Community Affairs Legislation Committee (the committee) for inquiry and report by 9 February 2024. The committee agreed to report by 5 February 2024.
Structure of this report
1.2This report contains two chapters. This chapter sets out:
the purpose of the bill;
background information relating to Australia’s paid parental leave (PPL) scheme;
an overview of the bill’s key provisions; and
general information outlining the conduct of the inquiry and other committees’ consideration of the bill.
1.3Chapter 2 outlines inquiry participants’ views on the bill and concludes with the committee’s view and recommendation.
Purpose of the bill
1.4The bill seeks to amend the Paid Parental Leave Act 2010 (the Act) to provide a ‘more generous [PPL] scheme that supports maternal health and wellbeing, encourages both parents to take leave, and gives families flexibility to choose how they share care’.
1.5The bill would expand the PPL scheme to 26 weeks by 1 July 2026; increase the amount of Parental Leave Pay reserved for each parent on a ‘use it or lose it’ basis; increase the amount of Parental Leave Pay that can be received concurrently by eligible claimants in relation to the same child; and make minor and technical amendments to eligibility rules.
1.6In her second reading speech, the Minister for Social Services, the Hon Amanda Rishworth MP (the Minister) explained that the bill’s expansion of the scheme reflects the Government’s ‘commitment to deliver better outcomes for families and advance economic equality for women’.
Background
1.7Since 2011, the Australian Government has provided Parental Leave Pay under the Act to support eligible working parents and carers to take leave from work following a birth or adoption.
1.8The PPL scheme aims to:
normalise the taking of leave from work to care for a child as a workplace entitlement;
promote gender equality;
provide flexibility for parents to balance work and family life;
enhance maternal and child health;
promote women’s continued participation in the workforce; and
enable fathers and partners to share caring responsibilities.
1.9In 2022–23, 171,282 claimants accessed Parental Leave Pay, representing 98.5 per cent of eligible families.
1.10The PPL scheme does not alter existing employer-provided paid or unpaid leave entitlements. Government-funded Parental Leave Pay is ‘a minimum entitlement designed to complement employer-provided leave’. According to the Department of Social Services (the department), 61.8 per cent of employers in Australia offer access to parental leave in addition to the government scheme.
Parental Leave Pay
1.11The PPL scheme provides payments to eligible working parents and carers at the rate of the national minimum wage (currently $176.55 per day or $882.75 per week before tax).
1.12Claimants have flexibility in how they take Parental Leave Pay — it can be taken as a single block, multiple smaller blocks, single days, or a combination of smaller blocks and single days. Parental Leave Pay must be taken within two years of a child’s birth or adoption.
1.13Currently an individual claimant can receive a maximum of 20 weeks of Parental Leave Pay (100 flexible PPL days) in relation to a child.
1.14Where a claimant is partnered at the time of their first effective claim, a reserved ‘use it or lose it’ period applies to encourage shared caring responsibilities. Two weeks of non-transferable Parental Leave Pay (10 flexible PPL days) are reserved for each partner, leaving 16 weeks (80 flexible PPL days) that can be shared flexibly between them. In other words, partnered claimants can each receive up to 18 weeks of Parental Leave Pay (90 flexible PPL days).
1.15A concurrency limit applies to restrict the amount of Parental Leave Pay that can be taken by eligible claimants at the same time in relation to the same child. Currently a maximum of two weeks Parental Leave Pay (10 flexible PPL days) can be taken concurrently.
Eligibility requirements
1.16Generally, a person must meet the following requirements to be eligible for Parental Leave Pay on a flexible PPL day for a child:
be a parent or partner of a parent;
satisfy the income test;
satisfy the work test;
satisfy the Australian residency requirements;
be caring for the child on that day; and
be undertaking no more than one hour of paid work on that day.
1.17A person is not eligible for Parental Leave Pay if they are serving a newly arrived resident’s waiting period (NARWP).
Administration of the scheme
1.18Generally, Services Australia transfers PPL funds to employers who are then required to provide Parental Leave Pay to eligible employees in accordance with normal pay cycles. In certain circumstances, such as where an eligible claimant is a contractor and therefore does not have an employer, PPL payments are made directly to the claimant by Services Australia.
1.19Employers are required to make PPL payments to eligible employees who have been employed by them for at least 12 months immediately prior to the expected or actual date of birth, and where PPL is likely to be payable to the employee for at least 40 continuous weekdays.
1.20Services Australia provides payment advices and guidance to assist employers to understand their obligations under the PPL scheme.
Recent changes to the scheme
1.21As part of the 2022–23 October Budget, the Australian Government announced a range of changes to expand and improve the PPL scheme, including a commitment to expand the scheme to 26 weeks by 1 July 2026.
1.22The first tranche of changes was enacted under the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Act 2023 to apply to births and adoptions on or after 1 July 2023. Key changes included:
expanding the Parental Leave Pay maximum entitlement from 18 weeks to 20 weeks by absorbing Dad and Partner Pay (which previously provided up to two weeks of pay to eligible working fathers or partners at the rate of the national minimum wage);
replacing the requirement for the birth parent to claim Parental Leave Pay first, with gender neutral claiming to make it easier for the partner to claim and both parents to share the entitlement;
removing the requirement for 12 weeks of Parental Leave Pay to be taken in one continuous block, to increase the flexibility of how claimants receive Parental Leave Pay;
introducing a reserved ‘use it or lose it’ period of two weeks of Parental Leave Pay for each parent;
allowing eligible claimants to take up to two weeks of Parental Leave Pay concurrently in relation to the same child (‘concurrency limit’); and
expanding scheme eligibility by introducing a family income limit of $350,000 which can apply if a person does not meet the individual income limit.
1.23The bill seeks to implement the second tranche of changes committed by the Australian Government in the 2022–23 October Budget. Key changes include:
expanding the Parental Leave Pay maximum entitlement from 20 weeks to 26 weeks by 1 July 2026;
increasing the reserved ‘use it or lose it’ period for each parent from two weeks to four weeks of Parental Leave Pay by 1 July 2026; and
increasing the concurrency limit from two weeks to four weeks by 1 July 2025.
Government consultations on the proposed amendments
Advice of the Women’s Economic Equality Taskforce
1.24The Government requested advice from the Women’s Economic Equality Taskforce (the Taskforce) on the expansion of the PPL scheme to 26 weeks, especially in relation to the reserved period.
1.25In preparing its advice, the Taskforce was informed by ‘broad consultation across member networks, briefings from relevant government departments, and the commissioning of research from Professor Marian Baird and Associate Professor Elizabeth Hill, University of Sydney’.
1.26Assuming a 26-week scheme, the Taskforce proposed that four weeks should be reserved for each parent, with 18 weeks unreserved for either parent to use. The Taskforce also proposed that parents should be able to take four weeks of Parental Leave Pay concurrently.
1.27The bill’s proposed amendments to the reserved period and concurrency limit therefore reflect the Taskforce’s advice regarding the optimal settings for a 26-week PPL scheme.
1.28The Taskforce noted, however, that it would like to see ‘a much more generous and holistic Paid Parental Leave scheme introduced in Australia to meet international best practice’. The Taskforce recommended that the expansion of the scheme to 26 weeks be ‘fast tracked to maximise the impacts for women’s economic participation’, and that the Government should consider the costs and benefits of a potential further expansion to 52 weeks.
The committee’s inquiry into the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022
1.29The Explanatory Memorandum to the bill states that the department considered the evidence received throughout the committee’s inquiry into the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022. The Explanatory Memorandum notes that the committee heard ‘broad support for a reserved period, and that it should increase as the overall entitlement expands to 26 weeks’.
Key provisions
1.30The bill is comprised of one schedule which is divided into two parts:
Part 1 — Amendments
Part 2 — Application of amendments.
1.31Key provisions of each part are outlined below.
Part 1 — Amendments
Increase to the maximum PPL period
1.32The bill would increase the maximum PPL entitlement from 20 weeks (100 flexible PPL days) to 26 weeks (130 flexible PPL days) from 1 July 2026. The increase would occur in stages, with the scheme expanding to:
22 weeks of Parental Leave Pay (110 flexible PPL days) from 1 July 2024;
24 weeks of Parental Leave Pay (120 flexible PPL days) from 1 July 2025; and
the full 26 weeks of Parental Leave Pay (130 flexible PPL days) from 1 July 2026.
Increase to the reserved period for partnered claimants
1.33The bill would increase the reserved period for certain partnered claimants from two weeks (10 flexible PPL days) to four weeks (20 flexible PPL days) from 1 July 2026. The increase would occur in stages, first expanding to three weeks (15 flexible PPL days) from 1 July 2025, then to the full four weeks (20 flexible PPL days) from 1 July 2026.
1.34This means that each partnered claimant could receive up to:
20 weeks of Parental Leave Pay (100 flexible PPL days) from 1 July 2024;
21 weeks of Parental Leave Pay (105 flexible PPL days) from 1 July 2025; and
22 weeks of Parental Leave Pay (110 flexible PPL days) from 1 July 2026.
1.35Claimants who are single at the time of their first effective claim would be able to access the full entitlement (up to 130 flexible PPL days by 2026).
Increase to the concurrency limit
1.36The bill would increase the amount of Parental Leave Pay that may be taken concurrently by multiple claimants in relation to the same child from two weeks (10 flexible PPL days) to four weeks (20 flexible PPL days) from 1 July 2025.
Eligibility changes
1.37 The Explanatory Memorandum to the bill explains that the bill ‘makes minor and technical amendments to the eligibility criteria in Part 2–3 of the Act’.
When a person is eligible
1.38The bill would clarify the eligibility criteria that apply to PPL claimants generally, and the criteria that apply to special PPL claimants in exceptional circumstances (such as claimants who are gaining parents in a surrogacy arrangement).
1.39The bill would clarify that all claimants except special PPL claimants in exceptional circumstances would be required to satisfy the work test and income test on a particular day to be eligible for PPL on that day.
Work test
1.40As noted above, a person must generally satisfy the work test under the Act to be eligible for Parental Leave Pay on a flexible PPL day for a child. The Act currently provides for an exception to the work test for birth mothers whose child(ren) was/were born prematurely and/or whose pregnancy involved complications or illness which prevented them from undertaking paid work.
1.41The bill would broaden the exception in circumstances of premature birth or pregnancy-related complications or illness to encompass not only birth mothers, but also partners of birth mothers and parents who are not birth mothers.
When a person is not eligible
1.42The bill would clarify the circumstances in which a person is not eligible for Parental Leave Pay on a flexible PPL day for a child. This would include, for example, circumstances where the maximum number of flexible PPL days for a child has been reached; where the claimant is deceased on that day; or where that day falls within a newly arrived resident’s waiting period for the claimant.
Part 2 — Application of amendments
1.43This part establishes 26 March 2024 as the ‘commencement day’ and the period from 26 March 2024 to 30 June 2024 as the ‘transition period’. These dates take into consideration section 60 of the Act which enables a person to make a PPL claim up to 97 days before the child’s expected date of birth.
1.44The bill sets out which legislative provisions would apply to different PPL claims depending on the date the claim is made as well as the child’s expected and actual date of birth. For example, claims for Parental Leave Pay made before the commencement day for a child born before the commencement day would continue to be covered by the previous legislative provisions, whereas claims made on or after 1 July 2024 for a child born at the time of the claim and who was born on or after 1 July 2024 would be covered by the new legislative provisions.
1.45The bill would empower the Minister to make rules prescribing matters of a transitional nature relating to the amendments made by the bill.
Financial impact statement
1.46The Explanatory Memorandum to the bill states that the bill fulfils the expansion of the PPL scheme that was announced in the October 2022–23 Budget at an estimated cost of $531.6 million over the forward estimates and $619.3 million per year ongoing. The measures in Schedule 1 to the bill have a financial impact of $1.2 billion from 2022–23 to 2026–27.
Compatibility with human rights
1.47 The Statement of Compatibility with Human Rights (the statement) notes that the bill engages the following human rights:
the right to social security;
the right to protection and assistance for families;
the right to just and favourable conditions of work;
the right to maternity leave;
the right to equal treatment;
the right to respect for the family; and
the rights of the child.
1.48The statement advises that the bill is compatible with human rights as it ‘promotes the protection of human rights’.
Consideration by other committees
1.49The Parliamentary Joint Committee on Human Rights (Human Rights Committee) stated in its Report 12 of 2023 that the bill ‘promotes the right to social security, rights of the child, rights of women, and right to protection of the family’.
1.50However, the Human Rights Committee noted that the bill ‘prevent[s] new arrivals [to Australia] from accessing parenting payments for two years’ because it continues to disqualify persons who are subject to a NARWP from receiving Parental Leave Pay (with some exceptions). The Human Rights Committee drew attention to comments it has previously made on proposed legislation to increase the NARWP for social security payments such as PPL. The comments identified that the proposed measure would:
… restrict access to social security payments to potentially vulnerable groups who may not be able to financially support themselves. For example, newly arrived migrant women subject to the waiting period, who earn a low income, will not have access to paid parental leave (unless an exemption applies), whereas other women in Australia earning up to $151,350 will have access to paid parental leave. This … suggests that the measure may not necessarily target those most in need.
1.51The Senate Standing Committee for the Scrutiny of Bills made no comment on the bill.
Conduct of the inquiry
1.52Details of the inquiry were made available on the committee’s website. The committee also contacted a number of organisations and individuals to invite written submissions by 17 November 2023. The due date for submissions was subsequently extended to 15 December 2023.
1.53The committee received 24 submissions, as listed at Appendix 1.
1.54The committee held a public hearing in Canberra on 23 January 2024. A list of witnesses who gave evidence is included at Appendix 2.
Acknowledgement
1.55The committee thanks the organisations and individuals who contributed to the inquiry by making written submissions and giving evidence at the public hearing.