Additional Comments - Coalition Senators

1.1The Coalition supports the implementation of a 26 week Paid Parental Leave scheme (PPL) and will support the passage of this Bill.However, Coalition Senators diverge from the committee view over concerns regarding the degree of administrative burden placed upon small businesses, and the impact that having small businesses administer the scheme has on employee-employer relationships.

Concerns over the impact to small business

1.2Coalition Senators have significant concerns over the impact of Paid Parental Leave (PPL) to small businesses, defined as businesses employing fewer than 20 employees.

1.3During the hearing, evidence was heard that there is a significant administrative burden in the administration of Paid Parental Leave which disproportionately impacts small businesses.

1.4During the hearing, Ms Heazlewood from the Australian Chamber of Commerce and Industry (ACCI) spoke about the additional burden that the current PPL scheme places on small businesses. She stated:

We have heard from our small-business members that having them as the middlemen in the payments process creates a significant administrative burden on payroll processing time. When problems arise with payments, not at the fault of the employer, it can take a lengthy period of time to resolve, often causing the most distress to the employee and create unnecessary tension.[1]

1.5Coalition Senators are concerned about the tension this administrative burden places on employer-employee relationships during a stressful time for both prospective parents and small business owners.

1.6In their submission, the ACCI noted 73.14 per cent of their respondents would prefer an opt-in model, and 88 per cent believing Services Australia should administer the scheme over small business.[2]

1.7These sentiments were echoed by the Motor Trades Association of Australia (MTAA), who noted that while the Bill is admirable in what it seeks to achieve, it fails to address the practical impact it will have on small business.[3]

1.8In their submission the MTAA noted that:

… small businesses should not have responsibility for administering payments on behalf of Services Australia. This was supported by 86.3% of its small business member survey respondents, who favoured an ‘opt-in’ model.[4]

1.9In evidence presented at the committee hearing, when asked about challenges and complexities small businesses may face with administering the system, and why they may choose to opt-out, Mr Flavel of the Department of Social Services (DSS) said:

It's more a case that the current opt-out arrangements are not done on the basis of the size of the business, but rather on the basis of the administrative cost, particularly with respect to an employee who wants to take their entitlement in the form of a few days here and a few days there—in other words, anything less than 40 days—the employer has the ability to opt out of that arrangement. Clearly, for any sort of fixed cost, it's always going to be borne more by small business…[5]

1.10Even DSS acknowledges that small businesses are disproportionately impacted by the administrative costs caused by having them act as the middleman in the current Paid Parental Leave scheme.

1.11This is part of growing evidence that the PPL scheme is becoming more burdensome for small businesses as they try to navigate a complicated system.As this problem has only grown since the establishment of the PPL Scheme, it is clear an opt-in model would be the best way forward.

1.12It is recommended that the Bill should be passed with amendments that reflect the findings of the Education and Employment Committee’s report into the Potential impacts of the Commonwealth Paid Parental Leave Scheme on small businesses and their employees.

Senator Maria KovacicSenator Dave Sharma

Footnotes

[1]Ms Natalie Heazlewood, Director, Skills, Employment and Small Business, Australian Chamber of Commerce and Industry, Proof Committee Hansard, 23 January 2024,p. 14.

[2]Australian Chamber of Commerce and Industry, Submission 6, p. 5.

[3]Motor Trades Association of Australia, Submission 9, p. 3.

[4] Motor Trades Association of Australia, Submission 9, p. 6.

[5]Mr Matt Flavel, Deputy Secretary, Social Security, Department of Social Services, Proof Committee Hansard, 23 January 2024, p. 41.