Paid parental leave – what’s next for Australia?

Supporting working families

Belinda Townsend

Economics and finance, Government and governance, Social policy, Health | Australia

19 September 2019

Ten years on from the historic announcement of Australia’s paid parental leave scheme, it is time for policymakers, experts, industry, and government to reflect on further improvements to support Australian families, Belinda Townsend writes.

In 2009, after decades of policy advocacy, the Australian government announced its first national paid parental leave (PPL) scheme to provide 18 weeks’ pay at the minimum wage for eligible primary caregivers on the birth of a child.

The scheme, implemented in 2011, was widely praised for providing an important safety net for working families, for mothers to recover from childbirth and for parents to bond with their child.

Australia was one of the last countries in the OECD to implement a national scheme, with many countries introducing social schemes from the 1970s. A small innovation was added to in 2013 with an additional two weeks ‘dad and partner pay’ for secondary carers, also to be paid at the minimum wage.

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Notable in Australia’s legislation are three policy goals: to improve women’s workforce participation, to improve gender equality, and to improve maternal and child health.

A 2014 evaluation of the scheme demonstrated some improvement in these areas, including an increase in the rate of women returning to work following paid parental leave, and improvements in maternal health.

However, while Australia’s scheme has demonstrated benefits for employers and for families, Australia still lags behind other OECD countries.

First, mothers’ access to paid maternity and parental leave in the OECD is 53 weeks on average, compared to eighteen weeks government-funded leave in Australia. Dedicated fathers leave is also 8 weeks on average in the OECD, compared to two weeks.

At 18 weeks for primary caregivers, Australia’s government-funded scheme falls behind the World Health Organisation’s guidelines of 26 weeks for optimal infant breastmilk feeding.

Australia also falls significantly behind OECD countries on public expenditure on paid parental leave, at less than half the OECD average per live birth.

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This gap can in part be explained through Australia’s hybrid system – we have a minimum government-funded scheme with the option for employers to offer additional employer-funded leave.

Ten years on, while some employers – in particular very large companies – have offered generous provisions for paid maternity leave on top of the government scheme, more than half of employers in Australia do not currently offer any employer-funded leave.

Our new research in the international journal Health Promotion International shows that the history of advocacy for paid parental leave in Australia was subject to a variety of political factors that shaped its particular policy evolution.

There are vast differences in access to employer-funded leave across industry sectors. For example, WGEA reports some 80 per cent of employers in education offer employer-funded leave, compared to only 20 per cent of employers in retail trade. The outcome is that families in Australia have very different parental leave experiences and opportunities depending on the sector in which parents work.

There are also gender inequities in who can access paid leave in Australia. More than 95 per cent of parents who take up the government-funded scheme are women who are often recovering from childbirth, breast and infant feeding, or who have made a financial decision based on available leave for both parents.

Fathers have less access to paid leave in Australia compared to other OECD countries, and while they may take unpaid leave or other forms of personal leave, financial and cultural barriers continue to constrain a greater uptake of parental leave by Australian men.

But this isn’t the case in other countries, in particular where dedicated and substantive ‘fathers leave’ has been introduced.

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In Iceland, for example, paid parental leave is offered as three months dedicated mothers leave, three months dedicated fathers leave, and an additional three months that parents can allocate as they wish.

The leave is also offered at 80 per cent wage replacement, meaning fewer financial barriers to taking leave. The policy has seen a doubling of fathers taking up paid parental leave in Iceland, but we are yet to see this kind of policy innovation in Australia.

Further, Australia’s model was always intended to be a scheme that would be built upon and improved over time. For example, in its 2009 review of policy options for PPL, the Productivity Commission recommended a review of compulsory employer superannuation after three years as one potential step to improving the scheme.

The policy options available here are numerous. Employers could be encouraged to provide employer-funded leave for parents, or the possibility of a PPL levy could be reviewed.

Australia could extend the duration of government-funded PPL to at least align with the WHO guidelines on breastfeeding, and it could create more flexibility and access for fathers to take up paid leave, including extending the duration beyond two weeks. Superannuation could also be paid during parental leave. There is a multitude of ideas available. However, this is not the problem, as this question is one of political will.

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