Additional Comments by the Coalition
Senate Committee into Paid Parental Leave
Coalition members of the Community Affairs Committee thank
the organisations and individuals who made submissions and appeared as
witnesses before this Inquiry.
Whilst we support the recommendations in the Chair's report,
evidence from witnesses cited in that report supports our view that there are
numerous other shortcomings in the proposed implementation and administration
of the PPL scheme.
These lead us to consider that the scheme will increase
costs for employers and confuse both employees and employers, without
necessarily achieving what should be the objects of the scheme.
Superannuation concerns
The Government scheme offers 4½ months, or 18 weeks, leave
and will deny superannuation payments to those receiving parental payments.
This is despite evidence that older Australian women are comparatively poor
because their working lives are often interrupted by mothering and caring
roles, part-time work choices and lower pay. This erodes women’s capacity to
accumulate sufficient superannuation or savings to retire independently.
Australian households now often rely upon a second income to
help buy their home and meet other costs associated with raising a family. It
is no longer common to rely on a single breadwinner.
The Government's paymaster
The Coalition is concerned about the impost on business
created by the 'paymaster provision' of the Government’s scheme.
The Government’s requirement that employers act as
paymasters for eligible employees unnecessarily and unjustifiably imposes
administrative expenses, payroll and office systems changes, reporting
requirements and, potentially, increased liabilities for workers compensation,
payroll tax and superannuation. This is exacerbated by risks of exposure to
penalty for non-compliance or making mistakes.
We note that the FAO (Family Assistance Office) will
administer all paid parental leave payments for the first 6 months and then
permanently for an estimated 30% of eligible workers, primarily self-employed
and casual workers.
Coalition Senators question why, if it is good enough to put
in place initially the systems and the bureaucracy within the FAO needed to
administer 100% of the Government's PPL scheme, the FAO cannot continue this
role as paymaster permanently, thus relieving businesses of this burden.
New red-tape (and cost) burdens of employees remaining on
the payroll could encourage subtle discrimination against women of
child-bearing age, as they seek employment.
Requiring the Family Assistance Office (FAO) to administer
the government’s scheme for the start-up phase delays, but does not prevent,
the unjustified costs and unwarranted obligations ultimately forced on
businesses.
Uncertainty: interaction with existing employer-provided
parental leave
The public sector and some private sector businesses have
long provided various forms of paid parental leave. However, access to paid
parental leave in Australia can vary with pay rates, skill levels, hours
worked, industry or occupation and whether a person is in the public service or
the private sector.
The Bill's Explanatory Memorandum states the Bill is
intended to 'complement parents' entitlements to
unpaid leave such as unpaid parental leave under the National Employment
Standards'.[1]
While the Government promised that its Paid Parental Leave
scheme will be an additional entitlement on top of any existing
employer-provided schemes, the Inquiry heard evidence that the Bill doesn’t
compel this outcome.
Rather, the Government's scheme simply assumes that women
will be able to top up their leave with arrangements from their employers. In
some respects, this perpetuates perceptions of the "haves" and
"have-nots", exacerbating inequalities that have affected parents in
Australia for many years.
At best, it remains unclear whether an employer could
utilise a payment which an employer is compelled to make to a parent under the
Bill, in full or part-satisfaction of an obligation the employer already owes
the parent under another instrument (for example, a workplace agreement).
As noted by Professor Andrew Stewart, 'the point is simply that the Bill does not appear to
say one way or another whether employers can do this.'[2]
Coalition Senators note comments by DEEWR that "where an employee has an existing entitlement to
paid parental leave under an industrial instrument, it is enforceable in its
terms as provided for by the instrument." [3]
DEEWR's evidence begs the obvious question as to an
employer's obligation in the event that 'the terms as provided for by the
instrument' fail to expressly rule out satisfying obligations (whether in part
or in full) under that instrument by making a payment under the Bill. In
short, if such terms don't specifically preclude the offsetting of these
entitlements with the Government's proposed leave, then the situation remains,
at best, unclear. This uncertainty is unhelpful.
Uncertainty - entitlement to payment, but no entitlement to leave
Professor Andrew Stewart told the committee;
“A strong argument can be made that the title of the Bill is
a misnomer, since the proposed scheme does not confer any entitlement to paid
leave, as that concept would generally be understood.”
This means that some prospective recipients of payments under
the Bill will lack an accompanying right to take leave from work. Since a
person cannot receive payment under the Bill if they remain at work, some will
be faced with having to leave their employment in order to receive payment
under the Bill.
Professor Stewart agreed, suggesting some workers face
"the prospect of having to quit (their) job without any guarantee of a
return to work."[4]
Proposed Fair Work Amendments won't fix these uncertainties
Whilst DEEWR informed the committee that consequential
amendments would be made to the Fair Work Act 2009, none of the proposed
consequential amendments would address uncertainty over either the:
- Interaction with existing employer-provided parental leave, or
the,
- Entitlement to payment, but no entitlement to leave.
Payroll tax liabilities
Under the Government’s scheme, employees will receive
parental leave payments through their usual pay cycle. This is apparently
designed to keep women connected to their workplaces.
FAHCSIA has stated that it is negotiating with the States
and Territories to eliminate payroll tax liabilities for employers making these
payments to staff on leave.
The Department advised the Committee of its expectation that
these problems will be resolved. However the history of Commonwealth-State
negotiations does not give the Coalition Committee members heart that these
negotiations will be successfully completed in a timely way. In the interim,
employers may be forced to pay payroll tax in circumstances in which they have
not previously been required to do so.
This is not good practice. This unresolved set of issues
adds uncertainty for businesses and risks encouraging discrimination against
women of childbearing age.
Communication and consultation
While acknowledging the importance of informing Australian
employers and employees about the nature of the Government’s proposed Paid
Parental Leave scheme, Coalition members of the Committee are concerned about
the volume of information being promulgated before time. The material was
prepared prior to the introduction of the Paid Parental Leave (Consequential
Amendments) Bill 2010 which the Government introduced to the House on 26 May
2010. Nor has the Bill been passed by the Senate.
Given the well-publicised intention of minority parties to
seek to amend the Government’s Bill in the Senate, the Committee is concerned
that despite qualifications in the explanatory material issued by the
Department, much of the substance may be superseded, causing confusion, and
unnecessary remediation costs, for employees and employers.
Senator Judith Adams
Senator Sue Boyce
Senator Mary Jo Fisher
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