Bills Digest no. 12 2015–16
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WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Monika Sheppard and Luke Buckmaster
Social Policy Section
19 August 2015
Contents
Note
on terminology
Purpose of the Bill
Background
Position of non-government parties
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Committee consideration
Structure and key provisions of the Bill
Concluding comments
Date introduced: 25
June 2015
House: House of
Representatives
Portfolio: Social
Services
Commencement: Sections
1–3 on Royal Assent, Schedule 1 on 1 July 2016 and Schedule 2 on 1 April 2016.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
Discussions involving the matters covered by the Fairer
Paid Parental Leave Bill 2015 (the Bill) can be confusing because key terms
tend to be used differently (and sometimes interchangeably) by the various
interested parties. In this Bills Digest, the term Paid Parental Leave refers
to the Australian Government-funded payment scheme provided for under the Paid
Parental Leave Act 2010 (PPL Act).[1]
The scheme encompasses two categories of payment:
- Parental Leave Pay, which provides support
for up to 18 weeks for eligible primary carers who take time off work to care
for a newborn or recently adopted child and
- Dad and Partner Pay, which provides fathers or
partners caring for a newborn or recently adopted child with up to two weeks
government-funded pay.
Many employers provide paid leave for new
parents on the basis of a contract of employment, enterprise agreement
or a workplace policy. This is often referred to as paid parental leave and
includes paid maternity leave and paid paternity leave. The
Government uses the terms employer-provided primary carer leave and primary
carer pay in the Bill and Explanatory Memorandum (EM) to refer to such
payments.
Usage in this Bills Digest will conform with
the definitions above. The exception to this is where direct quotes are used
from other documents.
The purpose of the Bill is to amend the PPL Act to:
- target
payments under the Australian Government’s Parental Leave Pay (PLP) scheme to people
whose employer-provided parental leave entitlements are less than the maximum PLP
scheme entitlement (the Fairer PPL measure), from 1 July 2016 and
- remove
the requirement for employers to provide payments to their employees under the
PPL scheme (the employer paymaster role measure), from 1 April 2016.[2]
The Government’s rationale for the first measure is to
provide ‘fairer parental leave pay by creating a base level of paid parental
leave entitlement for all eligible working mums’.[3]
According to the Minister for Social Services, Scott Morrison:
This measure recognises the primary role of government-funded
parental leave payments as a safety net. Payments should be aimed at people who
need them most because they cannot access employer-funded payments at all or
cannot access payments of the same value as, or higher than, the Paid Parental
Leave scheme payments.[4]
The reason given for the second measure is ‘to ease
administrative burdens on business’.[5]
The Regulation Impact Statement (RIS) for the Bill estimates that the change in
administrative costs would average about $48 million annually, for the
business and not-for-profit sectors.[6]
There is no explanation as to how this figure was calculated.
In proposing its government PLP scheme (later adopted by
the Rudd Government), the Productivity Commission suggested that it could help
achieve a range of commonly agreed objectives, including:
- generating
child and maternal health benefits by increasing the time parents take away
from work
- promoting
the idea that parents can take time out from work for family reasons
- countering
work participation disincentives for new parents posed by the tax/welfare
system and
- increasing
retention rates for business, with reduced training and recruitment costs.[7]
The PPL Act provides for the payment of PLP to
eligible primary carers in the first year after the birth or adoption of a
child. PLP is paid for a particular period (the PPL period) for up to 18 weeks at
the rate of the national minimum wage (currently, $656.90 per week).[8]
To be eligible, claimants must have incomes of $150,000 or less.[9] They must also have worked
at least one day a week for at least ten of the 13 months before the birth or
adoption of the child.[10]
While PLP is paid from general taxation
revenue, it is generally paid through the recipient’s employer. PLP is taxable
income and does not include superannuation contributions. Working fathers or
partners may be eligible for Dad and Partner Pay (DAPP), a separate two-week
payment, paid at the national minimum wage.[11]
In 2013–14, there were 144,255 recipients of
PLP, and 72,975 fathers and other partners who took the full two weeks of DAPP.[12] In 2014–15, PLP was
expected to cost $1.9 billion and DAPP $94 million.[13]
The Bill implements a 2015–16 Budget measure to remove a
person’s ability to claim the full PLP entitlement if that person is receiving primary
carer leave payments from their employer (primary carer pay).[14]
The Department of Social Services (DSS) has
recently quantified the number of people expected to be affected by the Fairer
PPL measure. The figures equate to 47% of claimants—34,000 people (20%) who receive
primary carer pay in excess of the maximum PLP entitlement and 45,000 people (27%)
who receive primary carer pay valued at less than the maximum PLP entitlement.[15] The
latter group will receive primary carer pay and an additional sum of PLP to ‘top
up’ their entitlement to the maximum PLP entitlement ($11,824.20).
The DSS analysis was based on data provided to the review
of the PPL scheme in 2013 (PPL Review).[16]
These data were supplied in three phases spanning 2010–12. However, the
number of affected people is likely to be larger than 79,000 given the growth
in numbers of families receiving PLP since 2012 (42,975 in 2010–2011 to 144,966
in 2013–14).[17]
In terms of financial impact, for those people who may have claimed the maximum PLP entitlement and whose employer primary
carer pay entitlement is greater than the PLP rate, the Fairer PPL measure will
reduce these household incomes by over $11,800.[18] It is harder to estimate
the financial impact on those whose employer primary carer pay entitlement is
less than the PLP rate as this will depend on the amount of primary carer pay,
which varies across industries and employers.
Any estimates of the impact of the Fairer
PPL measure would also need to account for the possibility that employers may
alter primary carer pay arrangements to ensure that their employees remain
eligible for PLP (see stakeholders’ comments below). If employers make
alternative arrangements, then a lower number of families would be financially
affected. DAPP will not be affected by the Bill. The EM states:
The ability for fathers and partners to access Dad and
Partner Pay and employer-provided paid paternity leave is to encourage them to
take additional time off work to bond with their child. Dad and Partner Pay can
only be paid while on unpaid leave, which encourages dads and partners to
extend their total period of leave rather than simply supplementing their
income during a period of paid leave.[19]
Currently, employers are required to provide regular
instalments of PLP to employees who have been with the employer for at least 12
months prior to the birth or adoption of the child, if the Department of Human
Services (DHS) has determined that an employer must do so (an employer
determination) and that determination has come into force.[20]
Section 101 of the PPL Act requires DHS to make an
employer determination if satisfied of certain matters—such as a person’s
eligibility for PLP. The determination comes into force when the employer is
notified and provides DHS with a notice accepting the determination (an
acceptance notice). If there is no employer determination, an employer can
voluntarily provide PLP instalments to one or more employees by giving DHS the
appropriate notice (section 109).
Of parents who received PLP in 2012–13, 73.7% (123,502)
received PLP through their employer. In most cases (88.3%), employers chose to
provide PLP only to those employees for whom they were required to act as
paymaster.[21]
Large businesses (200+ employees) were responsible for 65.6% of payments; small
businesses (with less than 20 employees) were responsible for 13.9% of payments.[22]
Previous attempts to remove the employer paymaster role
At the 2010 and 2013 elections, the Coalition announced
that, under its PPL scheme, ‘employees will be paid
directly by the Commonwealth Government, not via their employer’.[23] Therefore, when the Labor Government introduced the Paid
Parental Leave Bill 2010, the Coalition opposed the requirement that employers
act as paymasters for the PPL scheme. The then Shadow Minister for Small
Business, Bruce Billson, argued:
The Coalition insists that the small business community not
be left holding the parental leave cheque because they do not need to. There is
no advantage to it and there are plenty of disadvantages to that model ... So if
the Rudd Labor Government has any interest whatsoever in regulatory and
compliance burdens and has listened to the legitimate and substantiated
concerns of the small business community, they will not force them to be the
ones handling the cash with the risks that are attached to that and the
inevitable costs of changing their own internal systems, payroll systems and
the like; the reporting obligations back and forth to the FAO [Family
Assistance Office] and to the employee; the concerns about triggering an
increased financial liability for workers compensation and payroll expenses
because their payroll budget is inflated by that amount. It adds no advantage
whatsoever.[24]
Mr Billson sought to remove the employer paymaster role
through the introduction of a private member’s Bill, the Paid Parental Leave
(Reduction of Compliance Burden for Employers) Amendment Bill 2010. The Bill
did not pass the House of Representatives.[25]
In 2013, the Coalition Government proposed removing the
employer paymaster role from the PPL Act in Schedule 7 of an omnibus bill,
the Social Services and Other Legislation Amendment Bill 2013.[26] Schedule 7 was omitted as a result of
Government amendments made at the Consideration of Senate Message stage in the
House of Representatives, with a view to reintroducing it in a separate Bill at
a later date.[27]
The following year, Mr Billson,
now the Minister for Small Business, introduced the Paid Parental Leave
Amendment Bill 2014 (PPL Amendment Bill) into the House of Representatives.[28]
In presenting the PPL Amendment Bill, Mr Billson stated:
[The employer paymaster role] measure
will generate a significant compliance cost saving for Australian businesses,
especially small businesses. Small businesses are particularly impacted by
regulations, as they often do not have the resources or specialised staff to
deal with compliance requirements.[29]
The PPL Amendment Bill has not been debated in the Senate
and is almost identical to Schedule 2 of the current Bill.[30]
The Government has not indicated why it has chosen to reintroduce the
employer paymaster measure in the Bill, rather than proceed with the PPL
Amendment Bill.
Employer attitudes to the employer paymaster role
The Bill reintroduces the measure contained in the PPL
Amendment Bill to enable DHS to pay PLP directly to employees, unless an
employer elects to provide the payments to an employee and that employee agrees
to their employer acting as paymaster.
In 2014, the following impacts of the employer paymaster
role on employers were reported in the PPL Review:
- a
high proportion of employers found that the scheme had been easy to implement
in their organisation, although 41% had found organising payments time
consuming
- 29%
of employers reported additional costs in providing payments to their
employees, primarily due to the extra workload[31]
and
- the
estimated cost of implementing the PPL scheme ranged from $250 to over $1,000:
- 45%
of employers estimated the cost to be less than $250
-
21%
of employers estimated the cost to be $250–$999
-
20%
of employers estimated the cost to exceed $1,000 and
- 14%
of employers did not know the cost involved.[32]
Phase 2 of the PPL Review (2012) canvassed 41 employers’
attitudes toward the employer paymaster role. The responses were mixed:
Of the employers who voiced an opinion about the employer
role, 14 were positive, 12 were negative, and 12 were neutral or ambivalent.
Employers in medium size organisations expressed mostly positive attitudes to
the employer role. Employers in large organisations were polarised and either
strongly for or strongly against the employer role. Employers in small
organisations tended to be mostly negative or ambivalent towards the employer
role...Most Phase 2 employers felt it was too early to see if the PPL scheme
would lead to improved rates of retention in the organisation following periods
of parental leave.[33]
The RIS for the current Bill agrees with the PPL Review that
it is difficult to quantify the impact on employers of having to provide
payments to employees but stated that the Fairer PPL measure directly responds
to feedback received by the Government over a significant period of time. The
RIS refers to the ‘overwhelming and sustained opposition from employer groups’
and in particular the position of the Australian Chamber of Commerce and
Industry (ACCI) (see below). The RIS concludes:
Many employers are of the view that costs to administer the
PPL scheme outweigh any benefits that a mandatory employer paymaster role may
deliver.[34]
Australian Labor Party
The Shadow Minister for Families and
Payments, Jenny Macklin, has indicated that the Opposition will not support the
Fairer PPL measure. Ms Macklin described the measure’s potential impact as
‘unfair’ and ‘devastating for new mums’ and contrary to the intention of the
PPL scheme.[35]
Labor’s scheme was designed so that Paid Parental Leave could
be topped up by employers who wanted to add to the government’s scheme ... The
combined benefit of the Government’s scheme and employer contributions mean
women can spend more time with their babies. That’s exactly how Labor’s PPL
scheme was designed to work. The Productivity Commission, the Fair Work
Ombudsman and business groups agree that employer contributions are an
important part of Paid Parental Leave.[36]
In the second reading debate on the PPL Amendment Bill, Ms
Macklin indicated also that the Opposition will not support removal of the
employer paymaster role from the PPL scheme. Ms Macklin emphasised that the
scheme was designed by the Productivity Commission following ‘comprehensive
investigation and extensive consultation’ and was well supported by women and
their employers:
A central feature of our scheme was to ensure we found a way
of enabling women to remain connected to work and their careers when they take
time out of the workforce to have a baby or adopt a child. Overwhelmingly,
employers have said that they support the employer role. They support it
because it helps them retain a connection with their staff. It helps them to
support that staff when they are ready to return to work. That is why we
designed it that way. Both women and business have overwhelmingly supported
this aspect of the design.[37]
Ms Macklin flagged that the Opposition was prepared to
make a concession for small businesses:
... during the 2013 campaign Labor took to the election a
policy to enable businesses with fewer than 20 employees to streamline
administration and have Centrelink make paid parental leave payments to their
employees while on maternity leave. This was a sensible balance between the
need to maintain a relationship with their employers while they are on paid
parental leave and the need to give small businesses the option of having their
paid parental leave administered by Centrelink.[38]
The Opposition tabled amendments to the PPL Amendment Bill
in the Senate to exempt businesses with fewer than 20 employees from having to comply
with an employer determination.[39]
As indicated above, the Senate has not debated the PPL Amendment Bill, so
whether these tabled amendments would have passed is not known. However, the Opposition’s
policy position contrasts with the position adopted in this Bill, which is to
remove the compulsory paymaster role for all employers.
Australian Greens
The Australian Greens (the Greens) have long been critical
of the PPL scheme, describing it in 2013 as ‘a bare minimum payment based on a
welfare model, rather than putting Australia firmly on the route to paid
parental leave as full workplace entitlement’.[40]
The model proposed by the Greens calculates the PLP entitlement based on the
primary carer’s salary, with an income cap of $100,000 and a safety net floor
of the national minimum wage, to be paid for six months (26 weeks):
That means over the 6 months the paid parental leave for the
primary carer will be between $16,170 and $50,000 based on their salary, plus
any additional support provided by their employers.[41]
The Greens opposed the Government’s proposed change to the
employer paymaster role when the Social Services and Other Legislation
Amendment Bill 2013 was debated in the Senate.[42]
The Greens member in the House of Representatives, Adam Bandt, did not comment
on the PPL Amendment Bill during the second reading debate in the Lower House.
The extent of cross bench support for the Bill in the
Senate is not clear. Two senators—David Leyonhjelm and Bob Day—have indicated
their support for the proposed measures, while Senator Zhenya ‘Dio’ Wang has
announced his opposition to the Bill. Senators Jacqui Lambie, John Madigan,
Ricky Muir and Nick Xenophon have expressed concerns about the proposed changes
to the PPL scheme.[43]
Senator Glenn Lazarus is yet to confirm his position.
Australian Chamber of Commerce and Industry
The Chief Executive of the Australian Chamber of Commerce
and Industry (ACCI), Kate Carnell, has recently commented that the fairer PPL
measure is not likely to achieve savings in the private sector, as employers
will exchange primary carer pay for other employee benefits:
Of course employers will pay their benefits differently. They
won’t walk away, they will just find a different way to pay the benefit, they
will act in the best interest of their company and their staff, so their staff
don’t just lose $11,500 ... This policy might achieve savings in the public
sector, but in the private sector it won’t work as a savings measure.[44]
ACCI has opposed the employer paymaster role both prior to
and after introduction of the PPL scheme.[45]
ACCI argues that requiring employers, including small business, to deliver
public monies to employees under the scheme increases the burden on business.
Its position is reflected in the Bill.[46]
Australian Industry Group
The Australian Industry Group (Ai Group) has stated:
The Government must ensure that new arrangements do not deter
businesses from putting in place or continuing to offer their own parental
leave schemes. These schemes allow businesses to attract and retain staff while
they care for children.[47]
The Chief Executive, Innes Willox, is reported to have
said that employers might find ‘other ways ... to retain and incentivise their
workforce’ which would affect the measure’s estimated savings.[48]
Australian Council of Trade Unions
The Australian Council of Trade Unions (ACTU) has called
on cross bench senators to vote against what it called the ‘savage and
unexpected cuts’ to PLP.[49]
The ACTU argues that the proposed measure will deny 46 per cent of Australian
women (80,000 families) access to government-funded PPL. The union warns that mothers
could be forced to return to work earlier due to financial concerns and stated its
support for 26 weeks PPL, as recommended by the World Health Organisation:
The current PPL scheme was designed to include
financial contributions from government and employers and aims to meet the World
Health Organisation recommendation for at least six months paid leave for new
parents to promote child and maternal health, build strong families and help
mothers stay in the workforce.[50]
At its May Congress, union delegates voted
to defend all employees’ rights to access the PPL scheme as well as any
entitlements achieved through bargaining. The ACTU committed to work with
employers to ensure that they continue to support employees with care
responsibilities.[51]
National Foundation for Australian Women
The National Foundation for Australian Women
(NFAW) considers that the PPL scheme should be strengthened—for example, by
increasing coverage to 26 weeks at the national minimum wage—in order to enable
mothers to spend more time with their new child. NFAW compared entitlements
under the current PPL scheme and the scheme as it would be amended by the Bill:
Scenario 1: Bank Employee
Nora is pregnant and works full time as a
customer service consultant at a bank, where she earns $50,000 ($962 a week). Her
employer has an 8 weeks paid parental leave scheme ($7,692 for the 8 weeks)...
Current PPL situation
Nora is able to access the Government
Parental Leave Payment of $11,539 (former NMW rate pre July 2015 adjustment)
over 18 weeks and her employer funded parental leave of $7,692 (8 weeks). This
means Nora would be able to access 26 weeks leave, with an income of $19,231.
This is 76% of her regular wages for that period ($25,000)...
Abbott Government Proposal
Under the new proposal, Nora would no longer
be able to receive both the PLP and her employer’s payment. Instead, she would
have access to 18 weeks of minimum wage – made up of her employer funded leave
of ($7,692) and a $4,134 top-up. This would bring the total amount of paid
parental leave that she receives during the 18 week period to NMW $11,826
(calculated at adjusted NMW rage from 1 July 2015). This means that her
parental leave drops to 66% of her regular earnings. If Nora was to stretch out
her total paid parental leave entitlements to the recommended 26 weeks, her
weekly payment would be $444, which is 46% of her regular earnings.... [52]
Chief Executive Women
The President of Chief Executive Women,
Diane Smith-Gander, described the ability to claim PLP together with employer‑provided
entitlements as ‘a necessary ingredient for the sustainability of parents’
working lives’:
The continuation of the Government parental leave payment of
$11,500 for an 18 week period, supplemented by employer contributions wherever
possible, is also an important enabler of enhanced workforce participation and
of continuity of superannuation contributions to prepare for self-funded
retirement.[53]
Other interest groups
In a joint statement, a number of organisations—such
as the Australian Council of Social Services, The Parenthood, Economic Security
for Women and the Victorian Women’s Trust—expressed dismay at the proposal to
remove access to the minimum leave entitlements provided by the PPL scheme for
all employees entitled to additional primary carer pay.[54] These organisations
called on the Government to reconsider its policy decision.
Two of the primary arguments made in the
statement were that PLP contributes to workforce participation and employee
retention rates, and is a social compact that requires a commitment from
government, employers and individuals. The statement explained these
positions as follows:
Paid parental leave increases lifetime workforce
participation, both over the long run following the early infant years of their
children, but also prior to the birth. In the absence of paid leave
entitlements, many women resign from their jobs and lose contact with their
former employers, making it more difficult for them to re-enter the workforce.
Paid parental leave increases retention rates for business, with reduced
training and recruitment costs and counters some of the incentives against
working posed by the tax and welfare system. Australia’s employment rate for
mothers is the lowest of all the countries in the OECD at 62%. Universal paid
parental leave is a critical strategy in encouraging new parents to stay in the
workforce and achieving the G20 goal of increasing women’s labour force
participation by 25% by 2025.
...
The Government’s refusal to contribute towards the cost of
paid parental leave for employees entitled to a co‑contribution from
their employer will disadvantage up to 47% of families currently receiving paid
parental leave. Limiting access to the Government scheme reduces incentives for
employers to contribute to paid parental leave, encourage[s] parties to negotiate
ancillary benefits instead and may impose a significant regulatory burden on
businesses that are required to report on their existing parental leave
arrangements.[55]
The University of Sydney’s Marian Baird,
Professor of Employment Relations Work and Organisational Studies, expressed
concern that the proposed changes would increase pressure on women to return to
work early, lead to more requests for part-time work and flexible work
conditions, and heighten demand for child care.[56]
The Explanatory Memorandum to the Bill states that the
Bill will have two financial impacts:
- for
the Fairer PPL scheme measure, savings of $967.7 million over the forward
estimates and
- for
the employer paymaster measure, $7.0 million in additional costs over five
years.[57]
The financial impact of the Fairer PPL
measure is based on estimated savings of $1,667.70 million over four years on
PLP payments, reduced by taxation foregone on those payments of $700 million.[58] The Government has budgeted for $900,000 over four years in extra
expenditure by the Administrative Appeals Tribunal, presumably to deal with
disputes over PLP scheme eligibility.[59]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[60]
The Parliamentary Joint Committee on Human Rights (PJC–HR)
has commented on the Statement of Compatibility with Human Rights (SC) in
relation to Schedules 1 and 2 of the Bill.[61]
Schedule 1
The SC states that Schedule 1 of the Bill:
... is compatible with human rights and, to the extent that it
may limit certain human rights, those limitations are reasonable, necessary and
proportionate. It does not disturb the existing safety net, focuses support on
those working women who need it most, while assisting the Government to
increase investment from within available resources in measures such as better
childcare support to more effectively advance the relevant rights.[62]
The PJC–HR considers that Schedule 1 limits the right to
social security, rights to work and maternity leave, and the right to equality
and non-discrimination and has sought further information from the Minister as
to whether these limitations are justifiable.[63]
In particular, the Committee noted that the proposed amendments reduce current
maternity leave entitlements and disproportionately affect women. The PJC–HR
noted its usual expectation:
... where a measure may limit a human right ... the accompanying
statement of compatibility [must] provide a reasoned and evidence-based
explanation of how the measure supports a legitimate objective for the purposes
of international human rights law. Additionally, it must be shown that a
limitation is rationally connected to, and a proportionate way to achieve, its
legitimate objective in order to be justifiable in international human rights
law.[64]
The PJC–HR considered that the SC does not provide
sufficient justification for the measure proposed in Schedule 1 of the Bill.[65]
Schedule 2
In 2014, the PJC–HR considered the PPL Amendment Bill which
contained a substantially identical employer paymaster role measure. On that
occasion, the PJC–HR sought advice from the Minister on the impact of the Bill
on employees with salary sacrifice arrangements in place.[66]
As explained in the RIS to that Bill:
Where ... [an employee's] employer is administering the ... [parental
leave] payment, these salary sacrifice arrangements are able to continue and so
the employee’s tax liability would continue to be calculated on a lower salary.
However, as DHS does not offer salary sacrifice deduction functionality, an
employee’s tax liability could increase if the mandatory employer role is
removed and their employer does not opt back in. This may be a particular issue
for employees in the not-for-profit sector. This impact is not a compliance
cost, but is an impact on the after-tax income a person may receive, dependent
on an employee’s income and the level of salary sacrificed under the
arrangement.[67]
The PJC–HR sought clarification as to whether the removal
of the requirement for employers to provide PLP to employees may limit the
right to social security and the right to just and favourable conditions of
work and, if so, whether any such limitations are permissible.[68]
The PJC–HR also sought further information as to whether the PPL Amendment Bill
was compatible with the right to equality and non-discrimination, ‘given that
the majority of paid parental leave recipients may be women’.[69]
The Minister’s response stated that the PPL Amendment Bill
did not limit the essential level of benefits required as part of the right to
social security. Further:
... there will still be capacity to make salary sacrifice
deductions against PLP payments where employers and employees agree. The
ability to make deductions for salary sacrificing is unique to PLP amongst all
government payments, given the PLP employer paymaster role. This policy allows
employers to apply the same treatment to PLP payments they administer on behalf
of the Government as for the payment of salary and wages, if they so wish and
can afford to do so. The ability for an employee to reduce the tax liability
for their PLP payment through salary sacrificing is not guaranteed even under
current arrangements. Therefore, there is no limitation to the right to social security
as these amendments do not limit this essential level of benefit or limit
access to the scheme, and allow the continuation of salary sacrifice arrangements
where the employer opts in and agrees.[70]
The PJC–HR concluded its consideration of the PPL
Amendment Bill on the basis of the further information provided by the
Minister. However, as none of that information is included in the Explanatory
Memorandum for the current Bill, the Committee stated its usual expectation
that where additional information has been provided to establish that a measure
is compatible with human rights, that information should be included in future
statements of compatibility for similar types of measure.[71]
The Bill has been referred to the Senate Community Affairs
Legislation Committee for inquiry and report by 15 September 2015.[72]
Further information about the inquiry is available at the committee’s webpage.[73]
The Senate Standing Committee for the Scrutiny of Bills had
no comment on the Bill.[74]
The Bill contains two schedules, both of which amend the PPL
Act. Schedule 1 sets out amendments relating to the fairer PPL measure.
Schedule 2 contains amendments relating to the employer paymaster role measure.
Schedule 1 (the fairer PPL measure)
Part 1 of Schedule 1 of the Bill proposes
amendments to the PPL Act dealing with how the PLP entitlement will be
adjusted for claimants who receive paid parental leave entitlements from their
employers (primary carer pay). Parents who receive primary carer pay will no
longer be able to receive the full amount of PLP, if any. DHS will
assess each claim for PLP and deduct from the maximum PLP entitlement (18 weeks
multiplied by $656.90) any primary carer pay received by the claimant. Where the
primary carer pay exceeds the maximum PLP entitlement, the claimant will not receive
any PLP. Claimants whose primary carer pay is less than the maximum PLP
entitlement will have their PLP reduced by the amount of their primary carer
pay.
The process used to calculate an applicant’s PLP entitlement,
where that person receives primary carer pay, is explained in detail in
the Explanatory Memorandum, together with case examples.[75]
There are four key provisions to be inserted into the PPL Act by Item
11:
- new
sections 11A and 11B which set out how to calculate the maximum
period for which PLP is payable (maximum PLP period)
- new
section 11C which provides that, if the ‘adjustment for primary carer pay’
is equal to or exceeds the maximum PLP period, there is no period for which PLP
is payable (PLP period) and
- new
section 11D which provides a method for calculating the ‘adjustment for
primary carer pay’.
Item 13 replaces subsection 13(2) to require
a person to have a PLP period in order for DHS to make a payability
determination, a pre-condition for the payment of PLP. Item 20, proposed
section 26 of the PPL Act makes a similar amendment in relation to
the determination of claims lodged before the birth or adoption of a child (currently,
an ‘initial eligibility determination’, and under the Bill, a ‘provisional
entitlement determination’).
Schedule 2 (the employer paymaster role measure)
Part 1 of Schedule 2 of the Bill will amend
the PPL Act to remove the requirement for employers to provide PLP to
their eligible long‑term employees, from 1 April 2016. DHS will continue
to make employer determinations but a determination will come into force only
if an employer gives DHS an acceptance notice within 14 days of receiving
notice of the determination. Otherwise, DHS will pay PLP instalments directly
to employees.
Under current section 101, DHS is required to make
an employer determination if certain conditions are met:
- the
person is eligible for PPL
- instalments
are likely, if the determination is made, to be payable by the employer for at
least 40 consecutive PPL days that are week days
- the
person has been, or will have been, employed by the employer for at least 12
months immediately before the expected date of birth of the person's child
where the person claims before the birth, or the later of the expected date of
birth and the day the child was born where the person claims after the birth
- the
person is likely to be an Australian based employee of the employer for the
person's PPL period where a payability determination has been made, or the
period of days for which instalments are likely to be payable if a payability
determination has not yet been made and
- the
employer has an Australian Business Number.
Items 17–20 amend section 101 to:
- repeal
the two conditions relating to the likelihood of instalments being payable for
a minimum of 40 consecutive week days and the employee having being employed by
the employer for at least 12 months and
- substitute
two conditions requiring an employer to have elected to pay instalments for an
employee and the employee consenting to that arrangement in the claim for PLP.
Item 21 replaces section 103 to provide an employer
with the right to accept or refuse to pay PLP instalments in accordance with an
employer determination. DHS must revoke the determination if it does not
receive an acceptance notice within 14 days of notification or it receives a
non-acceptance notice from an employer (items 28–29, subsection
108(1)).
Items 31–32 amend section 109 to set out the
requirements for an acceptance notice.
Item 37 amends the Guide to Part 5-1 (internal
review of decisions) to remove the reference to review of a decision to make an
employer determination. Similar amendments are made throughout the Part—such as
item 41 which repeals an employer’s right to apply for an internal
review of an employer determination decision (section 207).
Item 46 amends the Guide to Part 5-2 (review by the
AAT) to remove the reference to employer determination decisions. Similar
amendments are made throughout the Part.
Item 53 amends subsection 299(1) to enable a person
to elect to pay PLP instalments where there is a relationship between the
payer/payee similar to an employer/employee relationship, if provided for in
the PPL Rules or the regulations.
The Fairer PPL measure is likely to face considerable
opposition in the Senate. The Opposition and the Greens have indicated that
they will not support the measure as it will prevent a large number of working
parents from accessing government-funded PPL. The Greens’ policy actually
supports access to higher rates of PPL for a longer period.
Payments under the PPL scheme were originally intended to
be supplemented, not replaced, by primary carer pay. It was envisaged that it would be possible to use both forms of entitlement as part of an
overall package to increase opportunities to extend leave and meet some or all
of the objectives associated with PLP outlined above.[76] This is highlighted by
the Fair Work Ombudsman who lists ‘topping up’ an employee’s pay during the
period of government-funded PLP to their full rate of pay as an option for employers
wishing to offer a best‑practice parental leave scheme.[77] It also appears that the
Government was intending to allow private employers to offer ‘top-ups’ to the
far more generous PLP scheme (26 weeks paid at full income replacement up to a
cap) it proposed at the 2010 and 2013 elections but which has since been set
aside.[78]
On the other hand, the Fairer PPL measure
could be seen as consistent with an underlying principle of Australia’s welfare
system that government support be targeted at those most in need.[79] This approach focuses
on retaining incentives for private provision, with government payments
seen more as a safety net. Indeed, these principles were the source for much of
the opposition to the Government’s former PLP proposal. In this sense, the Fairer
PPL measure effectively redefines Government PLP as mainly a safety net scheme,
marking a substantial change from the Government’s previous emphasis on it as a
workplace entitlement.
Following announcement of the Fairer PPL measure, employer groups and unions have suggested that many employers
would offer their current primary carer entitlements in different ways (for
example, return-to-work bonuses), in order to enable their employees to
continue to access the Government scheme.[80]
If this were to occur, there might be little, if any, change in the number of PLP
claimants and the measure’s objective—to target PLP recipients—and its forecast
savings would not be achieved.
According to Government backbencher
(formerly the Coalition’s Shadow Minister on the Status of Women) Sharman
Stone, the measure will address the issue of some women receiving support who
do not need it at the expense of many who do:
Clearly we are in a terrible dilemma because we
have the worst of all worlds – it was extraordinary that some higher-paid
women, particularly public servants, were able to access a generous
employer-provided scheme and also collect $11,500, but for low-income earners
it was not at all unreasonable for them to add to the minimalist national
scheme to get a few more weeks at home with their newborn if that was all their
struggling small business employer could afford...[81]
Sharman Stone, who describes the current
system as ‘cheap and mean’, has argued that the Coalition should
attempt to negotiate a deal with the Opposition to find a way to offer more
generous PLP benefits to low‑income women.[82]
The second measure proposed in the Bill—the employer
paymaster role measure—has been considered in the 43rd and 44th Parliament but
has not been passed. The Opposition will support the measure insofar as it
relates to small business only, whereas the Government considers that no businesses
should be obligated to provide PLP instalments to their employees.
As noted earlier, employers and representative
organisations such as ACCI have consistently opposed the paymaster role for
employers under the PPL scheme. This objection has been based on the view that
employers should not be performing what is a government function and the
perceived administrative burden arising from the paymaster role. The objective
of the employer paymaster role measure is the reduction of that burden and its
associated cost.
However, the EM to the Bill does not clearly articulate
the cost to employers of administering the PPL scheme and the RIS cites
evidence from the PPL Review Phase 3 Report that most employers found the
scheme easy to implement with an estimated median implementation cost of
$350.00 (variable depending on the business size).
In addition, the Phase 2 Report canvassed a small
selection of businesses on their view of the employer paymaster role. The
responses suggest that there is a mixed view on the importance and value of the
role, and hence, there is not overwhelming and sustained opposition from
employers, as suggested in the RIS. It could also be argued that the
Government’s provision of up to $11,800 to employers towards the cost of
primary carer pay for their employees should be considered in evaluating the
costs and benefits of the paymaster role.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. Paid Parental Leave Act
2010, accessed 18 August 2015.
[2]. Explanatory
Memorandum (EM), Fairer
Paid Parental Leave Bill 2015, p. 1, accessed 29 July 2015.
[3]. Ibid.,
p. 2.
[4]. S
Morrison (Minister for Social Services), ‘Second
reading speech: Fairer Paid Parental Leave Bill 2015’, House of
Representatives, Debates, 25 June 2015, p. 7582, accessed 29 July
2015.
[5]. EM,
op. cit., p. 15.
[6]. EM,
Regulation Impact Statement (RIS), Fairer
Paid Parental Leave Bill 2015, p. 4, accessed 29 July 2015.
[7]. Productivity Commission (PC), Paid parental
leave: support for parents with newborn children,
Inquiry report, 47, PC, Canberra, 28 February 2009, pp. XV–XVI,
accessed 29 July 2015.
[8]. Fair
Work Commission, Annual
wage review 2014–15, 29 June 2015, accessed 29 July 2015.
[9]. Paid Parental Leave Act
2010 sections 31 and 41, accessed 19 August 2015.
[10]. Paid Parental Leave Act
2010 Divisions 2–3 of Part 2–3, accessed 19 August 2015.
[11]. Department
of Social Services, ‘Guides to social
policy law: paid parental leave guide’, version 1.31, 17 August 2015,
accessed 19 August 2015.
[12]. DSS, Annual report 2013–14, pp. 39–40, DSS,
Canberra, accessed 29 July 2015.
[13]. Australian Government, Portfolio budgets statements 2015–16: budget related paper no. 1.15A:
Social Services Portfolio, p. 98,
accessed 29 July 2015.
[14]. Australian
Government, ‘Part
2: expense measures’, Budget measures: budget paper no. 2: 2015–16,
p. 168, accessed 29 July 2015.
[15]. Senate
Community Affairs Legislation Committee, Budget estimates: Social Services
Portfolio, Official
committee Hansard, 4 June 2015, pp. 6‑7, accessed 4 August
2015.
[16]. DSS,
Paid
Parental Leave scheme: review report, June 2014, p. 34, accessed 4
August 2015.
[17]. Department
of Families, Housing, Community Services and Indigenous Affairs (FaHCSIA), Annual
report 2010–11, p. 45, accessed 29 July 2015; DSS, Annual report
2013–14, op. cit., p. 30.
[18]. 18
weeks multiplied by the current rate of payment of $656.90 per week.
[19]. EM,
Statement of Compatibility with Human Rights (SC), op. cit., p. 3.
[20]. Paid Parental Leave Act
2010, Part 3–2, accessed 18 August 2015.
[21]. DSS,
Review report, op. cit., pp. 34–37.
[22]. Ibid.,
p.35.
[23]. Liberal
Party of Australia and the Nationals, The
Coalition’s real action plan for paid parental leave, Coalition policy
document, Election 2010, pp. 6–7, accessed 29 July 2015; Liberal Party of
Australia and the Nationals, The
Coalition’s policy for paid parental leave, Coalition policy document,
Election 2013, p. 6, accessed 29 July 2015.
[24]. B
Billson (Shadow Minister for Small Business), ‘Second
reading speech: Paid Parental Leave Bill 2010; Paid Parental Leave
(Consequential Amendments) Bill 2010’, House of Representatives, Debates,
31 May 2010, pp. 4534–4535, accessed 29 July 2015.
[25]. Parliament
of Australia, ‘Paid
Parental Leave (Reduction of Compliance Burden for Employers) Amendment Bill
2010 homepage’, Australian Parliament website, accessed 29 July 2015.
[26]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment Bill 2013 homepage’, Australian
Parliament website, accessed 29 July 2015.
[27]. K
Andrews (Minister for Social Services), ‘Consideration
of Senate message: Social Services and Other Legislation Amendment Bill 2013’,
House of Representatives, Debates, 18 March 2014, p. 2213, accessed 29
July 2015.
[28]. Parliament
of Australia, ‘Paid
Parental Leave Amendment Bill 2014 homepage’, Australian Parliament
website, accessed 29 July 2015.
[29]. B
Billson (Minister for Small Business), ‘Second
reading speech: Paid Parental Leave Amendment Bill 2014’, House of
Representatives, Debates, 19 March 2014, p. 2388, accessed 29 July
2015.
[30]. Parliament
of Australia, ‘Paid
Parental Leave Amendment Bill 2014 homepage’, op. cit. There is a minor
difference affecting section 202 of the Paid Parental Leave Act 2010 and
differences to provisions arising from amendments made by the Tribunal
Amalgamation Act 2015—none of the differences are substantive. For further
information on the Paid Parental Leave Amendment Bill 2014, see L Buckmaster, Paid
Parental Leave Amendment Bill 2014, Bills digest, 66, 2013–14,
Parliamentary Library, Canberra, 2014, accessed 29 July 2015.
[31]. The
RIS reported the median number of hours by business size: four hours (medium
sized business), five hours (small business) and seven hours (large business).
[32]. DSS,
Paid Parental Leave scheme: review report, op. cit., pp. 101 and 104–05. The
RIS reported that the estimated median cost of implementing the PPL scheme was
$350.
[33]. Ibid.,
pp. 101–102.
[34]. Ibid.
[35]. J
Macklin, Abbott
introduces cuts to paid parental leave, media release, 25 June
2015, accessed 19 August 2015.
[36]. J
Macklin, Labor
will oppose paid parental leave cuts, media release, 13 May 2015,
accessed 29 July 2015.
[37]. J
Macklin, ‘Second
reading speech: Paid Parental Leave Amendment Bill 2014’, House of
Representatives, Debates, 29 May 2014, p. 4827, accessed 29 July 2015.
[38]. Ibid.
[39]. Parliament
of Australia, ‘Paid
Parental Leave Amendment Bill 2014’, Amendments to be moved by Senator
Moore, on behalf of the Opposition, in committee of the whole, Australian
Parliament website, 17 June 2014, accessed 29 July 2015.
[40]. Australian
Greens, Balancing
work and family, better paid parental leave, Australian Greens policy
document, 2013, p. 2, accessed 29 July 2015.
[41]. Ibid.
[42]. Parliament
of Australia, ‘Social
Services and Other Legislation Amendment Bill 2013’, Amendments to be moved
by Senator Siewert, on behalf of the Australian Greens, in committee of the
whole, Australian Parliament website, 5 March 2014, accessed 29 July 2015.
[43]. J
Ireland, ‘Abbott
government’s paid parental leave changes struggle for Senate support’, The
Sydney Morning Herald (online edition), 16 May 2015, accessed 29 July 2015;
J Ireland, ‘Blow
to Abbott’s paid parental leave cuts, as PUP senator calls changes “not acceptable”’,
The Sydney Morning Herald (online edition), 8 June 2015, accessed
29 July 2015.
[44]. L
Taylor, ‘Employers
and unions unite to try to force changes to paid parental leave plan’, The
Guardian (online edition), 20 May 2015, accessed 29 July 2015.
[45]. Australian
Chamber of Commerce and Industry (ACCI), Submission
to the Senate Community Affairs Legislation Committee, Inquiry into the
Exposure Draft and Paid Parental Leave Scheme Bill 2010, May 2010,
accessed 29 July 2015. ACCI, Submission
to the Senate Community Affairs Legislation Committee, Inquiry into the
Social Services and Other Legislation Amendment Bill 2013, 10 December
2013, accessed 29 July 2015.
[46]. ACCI,
Getting
on with business, reform priorities for the next Australian Government,
Kingston, ACT, August 2013, p. 32, accessed 19 August 2015.
[47]. Australian
Industry Group (AiGroup), Review
of the 2015–16 Federal Budget, 19 May 2015, accessed 29 July 2015.
[48]. L
Taylor, ‘Employers
and unions unite to try to force changes to paid parental leave plan’, The
Guardian, op. cit.
[49]. Australian
Council of Trade Unions (ACTU), ‘Tell the
Senate to save Paid Parental Leave’, Australian Unions website, accessed 29
July 2015.
[50]. ACTU,
Abbott
Government begins forcing new parents back to work early, media
release, 25 June 2015, accessed 29 July 2015. Also see World Health
Organisation, Breastfeeding,
the goal, factsheet, accessed 29 July 2015.
[51]. ACTU,
Unions
will work with business over unfair cuts to paid parental leave, media
release, 27 May 2015, accessed 29 July 2015.
[52]. National
Foundation for Australian Women, Paid parental leave:
six month top up proposal, official communique, 9 June 2015, accessed
29 July 2015.
[53]. Chief
Executive Women, Child
care is not a gender issue–it’s about the economy, media release, 10
May 2015, accessed 29 July 2015.
[54]. M
Coleman et al, Maternal
access to 26 weeks part-government-funded Paid Parental Leave, joint media
statement, accessed 29 July 2015.
[55]. Ibid.
The other two arguments were that the PPL scheme provides
universal access to PLP, and significant health benefits to mothers and
children.
[56]. M
Sansom, ‘Women
to desert public sector for corporates if maternity leave slashed’, Government
News (online edition), 19 May 2015, accessed 29 July 2015.
[57]. EM,
op. cit., p. 1.
[58]. Australian
Government, Budget
measures: budget paper no. 2: 2015–16, 2015, p. 168, accessed 29 July
2015.
[59]. Ibid.
[60]. The
Statement of Compatibility with Human Rights can be found attached at the end
of the EM, after the Regulation Impact Statement.
[61]. Parliamentary
Joint Committee on Human Rights (PJC–HR), Twenty-fifth
report of the 44th Parliament, The Senate, Canberra, 11 August 2015,
pp. 47–55, accessed 19 August 2015.
[62]. Statement
of Compatibility, op. cit., p. 5.
[63]. PJC–HR,
Twenty-fifth
report of the 44th Parliament, op. cit., pp. 50 and 52–53.
[64]. Ibid.,
p. 52.
[65]. Ibid.,
pp. 49–50.
[66]. PJC–HR,
Fifth
report of the 44th Parliament, The Senate, Canberra, 25 March 2014, p.
15, accessed 29 July 2015.
[67]. Explanatory
Memorandum, Paid Parental Leave Amendment Bill 2014, p. 16, accessed 19
August 2015.
[68]. PJC–HR,
Fifth report of the 44th Parliament, op. cit., p. 15.
[69]. Ibid,
p. 16.
[70]. PJC–HR,
Eighth
report of the 44th Parliament, The Senate, Canberra, 24 June 2014, p.
55, accessed 29 July 2015.
[71]. PJC–HR,
Twenty-fifth report of the 44th Parliament, op. cit., p. 55.
[72]. Selection
of Bills Committee, Report
No. 8 of 2015, The Senate, Canberra, 25 June 2015, accessed 19 August
2015.
[73]. Senate
Standing Committee on Community Affairs, ‘Fairer
Paid Parental Leave Bill 2015’, inquiry webpage, accessed 29 July 2015.
[74]. Senate
Standing Committee for the Scrutiny of Bills, Alert
digest, 7, 2015, The Senate, Canberra, 12 August 2015, p. 30, accessed
18 August 2015.
[75]. EM,
op. cit., pp. 4–9.
[76]. PC,
op. cit., pp. XX–XI.
[77]. Fair Work Ombudsman (FWO), Best practice
guide: parental leave, FWO, December 2013, p. 4,
accessed 29 July 2015.
[78]. Liberal Party of Australia and The Nationals, The
Coalition’s real action plan for paid parental leave, Coalition policy document, Election 2010, op. cit.; Liberal Party of
Australia and The Nationals, The
Coalition’s policy for paid parental leave,
Coalition policy document, Election 2013, op. cit.; A Summers, ‘Paid parental leave: a most difficult pregnancy’, Sydney Morning Herald
(online edition), 25 January 2014, accessed 29 July 2015.
[79]. L Buckmaster, ‘Comparing the Paid Parental Leave schemes’, Briefing
book: key issues for the 44th Parliament, Parliamentary Library, Canberra,
2013, accessed 29 July 2015.
[80]. L Taylor, ‘Employers and unions unite to try to force changes to paid parental
leave plan’, The
Guardian (online edition), op. cit.
[81]. L Taylor, ‘Liberal MP Sharman Stone attacks paid parental leave policy’, The Guardian
(online edition), 21 May 2015, accessed 29 July 2015.
[82]. Ibid.
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