Tim Watts (Gellibrand, Australian Labor Party) Share this | Hansard source

I rise to speak on the first bill which will surely become the Prime Minister's biggest personal policy failure, his signature policy failure: his Paid Parental Leave scheme.

The bill under consideration, the Paid Parental Leave Amendment Bill 2014, is the first part of a botched policy job that will not be good for working women, our economy or our society.

It takes the previous Labor government's carefully constructed Paid Parental Leave scheme and it strips it of its balanced approach. It is another example of a lack of policy know-how in this increasingly blunder-prone government. Effective policymaking does not happen by luck or serendipity; it requires careful planning, wide consultation and an appreciation of how a single policy fits into a wider framework.

The Labor Party understands how effective policy is implemented. From Medicare to the introduction of HECS, we have guided Australia through some of the most significant reform periods in our history, to effective policy measures, which, I might incidentally add, are currently under attack by the Abbott government in the light of their recent budget.

When the need became clear for a mandatory paid parental leave scheme, to ensure that Australia's working women were being provided with the support that they needed when taking time off to start a family, Labor took a considered approach. We decided upon realistic objectives, explicitly seeking to establish a paid parental leave that would 'signal that taking time out of the paid workforce to care for a child is part of the usual course of life and work for both parents'. And, secondly, 'promote equality between men and women, and balance between work and family life'.

We undertook two years of policy development consultation, referring the issue to the Productivity Commission so that we could get an independent analysis of what would work best in this policy area. The Productivity Commission report on this matter was thorough. It received over 400 submissions and held 16 public hearings. After this thorough period of policy analysis, in May 2009 the Productivity Commission released its final report. It concluded that the most effective paid parental leave scheme would be for 18 weeks, paid at the minimum wage and would only be available to parents earning less than $150,000.

This scheme would not only strike the best balance for getting Australian women back into work but also have the least impact upon business and the overall economy. In the 2009-10 budget Labor implemented the recommendations of the Productivity Commission report and allocated funding for a national paid parental leave scheme. After a careful implementation process, the scheme was introduced in January 2011. The impact of Labor's Paid Parental Leave scheme on the lives of thousands of working women around Australia is undeniable. Before the scheme was introduced, only 55 per cent of working mothers had access to paid parental leave. Today, this figure has increased to 95 per cent. That is 40 per cent more working women who are able to take the appropriate time off needed after having a child before heading back to the workforce. Moreover, the scheme implemented by the Labor government has, overwhelmingly, helped women on lower and middle incomes, who are often in casual or part-time work. The median income of workers now covered by the Paid Parental Leave scheme is $45,000 a year. Many of these women are in casual or part-time jobs whose employers would not voluntarily provide any form of paid parental leave. These women needed government to step in to ensure that they received a fair go and could take time off from the workforce while having a baby. But Labor was not satisfied with the successful rollout of the Paid Parental Leave scheme. As with all good policy processes, the previous Labor government demanded feedback and consulted on the scheme, once it had been implemented. Labor initiated a formal review of the Paid Parental Leave scheme process. It consulted and listened to the community. It heard the voices of small business, which found that the burden of administering the scheme was too significant. It understood that, when trying to grow a small business, there is less time to spend on administrative activities. The previous government realised that government, too, can play a role so that these administrative costs are not too steep and that employees can still access the paid parental leave that they deserve. So the previous Labor government made changes to the Paid Parental Leave scheme, a key part of the 2013 federal election campaign, proposing a scheme administered by Centrelink for businesses with fewer than 20 employees.

This would have allowed employees of small businesses to receive paid parental leave without small businesses suffering under the current administrative burden. It also would have ensured that, for most businesses, employers continued their payments to employees on maternity leave. It allowed the connection between employer and employee to remain open during the maternity leave process, making it easier for the new mother to transition back into the workforce. Anyone who has managed staff in the private sector would understand the importance of this direct connection between managers and staff, ensuring the return of women to the workforce.

But the legislation before us today destroys the balance constructed by the previous Labor government by removing the role of the employer entirely from the Paid Parental Leave scheme process. It takes legitimate criticisms from small business and then goes too far, applying a one-size-fits-all solution. It gives no thought to how the changes will impact larger businesses where the administrative costs of the PPL scheme are diminished due to their size. Labor will move to amend this legislation in the Senate so that only small businesses with less than 20 employees will have access to the government administered scheme, as originally intended. But such a ham-fisted move occurring as the coalition begins to roll out its own Paid Parental Leave scheme should not be surprising, because every aspect of the coalition's Paid Parental Leave scheme has been an example of blunderous policymaking.

I wrote recently in the Australian about Anthony King and Ivor Crewe's excellent new policy study The Blunders of Our Governments. In this book Anthony King and Ivor Crewe examine cases of 'horror policymaking' which not only fail to achieve their aims but also do so at significant economic cost. What is clear about the Abbott government's vaunted Paid Parental Leave scheme, or perhaps I should say the Prime Minister's Paid Parental Leave scheme, is that it falls into every one of the traps that King and Crewe identify in this book. Let us start with the blunder of a policy rooted in 'cultural disconnect', or ignorance of how others lead their lives. The lack of gender, cultural and economic diversity within the Prime Minister's inner circle leaves him particularly vulnerable to this kind of blundering. Perhaps for the Prime Minister $150,000 a year may seem very typical as an income for a working woman and so a government subsidy of half this amount may seem perfectly justifiable. But in reality a woman in this income bracket would actually be earning more than 95 per cent of Australians. Even in the Abbott government's revised policy, payments under the scheme are capped at $100,000, which is more than 80 per cent of Australian income earners get paid. It is no wonder that the public reaction to the Paid Parental Leave scheme from interest groups, experts and the general public has been one of overwhelming condemnation.

This condemnation was compounded by the second classic blunder of the Abbott government, a failure to adequately consult with stakeholders or, as authors King and Crewe put it, 'a deficit of deliberation'. Effective policies are those that engage in wide community consultation with the public and interested stakeholders, processes that make sure that the proposed policy reforms are well supported by the community before they are rolled out. If they are not supported, smart governments make changes or engage in the persuasion necessary to ensure that there is buy-in from all stakeholders. Yet the Paid Parental Leave scheme proposed by the Prime Minister is notable for its absence of consultation, even within the party room of those opposite. This policy was announced at an International Women's Day event in March 2010 and took many by surprise. There are allegations that even the shadow cabinet had not been consulted before the Prime Minister, the then opposition leader, made the announcement of this policy. In failing to consult with his party room the Prime Minister was perhaps guilty of another classic policy blunder, that of prioritising symbolism over substance. The timing of this announcement on International Women's Day does lead one to speculate.

This 'deficit of deliberation' continued for more than three years with little consideration of the policy within the caucus room of those opposite. As late as May 2013, three years after the initial policy had been announced, the member for Tangney stated: 'There hasn't been a detailed policy debate on this issue within the party room.' That lack of debate led to a vague policy constantly shifting in its aims and goals. First we saw a six months Paid Parental Leave scheme capped at $75,000 and paid for by a 1.7 per cent levy on companies. This was projected to cost $2.7 billion. By 2010 this policy had shifted to a 1.5 per cent levy on companies and the cost had blown out to $8.8 billion. As late as April 2013 the shadow Assistant Treasurer admitted that the funding plan for the scheme had not yet been finalised. The Prime Minister relaunched his paid parental leave policy in August 2013 now with a projected cost of $5.5 billion. It defies belief that the government can claim to be competent economic managers when their funding model for just a single policy can shift so much in scope.

Adding to those problems was a tendency within the Abbott government to engage in 'groupthink', shutting out the voice of dissenters and thereby ignoring legitimate criticisms of the PPL scheme. We saw this occur to prominent Liberals like the member for Higgins, whose initial opposition to the PPL scheme was quickly stifled and her legitimate criticisms ignored. What this meant was that the flaws in the Prime Minister's Paid Parental Leave scheme were not uncovered while the policy was being developed. The result of this bungled policymaking process was a policy that is unpopular, ineffective and unsuitable for Australia.

Its unpopularity within the business community is widely known. Business groups have long attacked the Prime Minister for the exorbitant cost of the scheme and argued that it would be an ineffective way of getting women back to the workforce. As recently as February of this year the Australian Chamber of Commerce and industry called for a rethink of the scheme. They argued for greater means-testing, saying that this would 'considerably improve both the scheme's affordability and fairness'. The Australian Industry Group too believe that 'the current system works well. There is no need for it to change.'

It is not just business that dislikes the scheme: even key Liberal members have come out from the sidelines to condemn this policy. Peter Costello, the man many Liberals turn to when they think of sound economic management, dismissed the idea as 'silly' in the Sydney Morning Herald when it was first announced. He argued that 'increasing tax would be as foreign to the Liberal Party as voluntary unionism was to the local ALP branch'. Those are important words to remember in the days after parliament has passed the Liberals' deficit levy. He is not the only former Howard government minister who dislikes this policy. Former finance minister Nick Minchin will go nowhere near the scheme. He said last year, 'I have been on the record many, many times are saying that I am not a supporter of Tony Abbott's Paid Parental Leave scheme.' Former Howard government minister Peter Reith too has described the scheme as 'obviously bad policy'.

But it is not enough that the policy has been condemned by those in the Prime Minister's own party; it has been condemned by those in his own caucus room as well. Let us read some of the highlights from last year. From the member for Tangney: 'I do have significant concerns about the scheme.' From the member for Mitchell: 'The question is, is this good economic policy at this time, and my answer is no.' From Senator Eggleston: 'I think it should be supported but there seems to be widespread concern that the cost is pretty high at the current time.' Let us not forget Senator Bernardi and Nationals senator John Williams, who dislike the scheme so much they have canvassed voting against it.

But what is most damning about this policy is that ultimately it will be ineffective. The policy's stated objective when launched in March 2010 was clear. It was to 'enable more women to stay in the workforce and thus boost national productivity'. Yet studies by the Grattan Institute and the Productivity Commission show that the most effective way to get women back into the workforce is to provide them with affordable child care. Indeed, the Grattan Institute stated in their June 2012 report Game changers: economic reform priorities for Australia:

… international experience suggests that government support for childcare has about double the impact of spending on parental leave.

It is a long-term vision that the Abbott government does not seem to understand. We have seen in the latest budget, with the freezing of family tax benefits A and B, that making life easier for Australian families is simply not their priority.

The previous Labor government's paid parental leave scheme was the model of good public policy making. It was a result of an extensive consultation process and the recommendations of independent policy bodies. It was widely supported by the business community, interest groups and the general public. Most importantly, it allowed 40 per cent more working women to take time off when they started their families. Of course, no policy is perfect and necessary adjustments needed to be made, particularly to mitigate the costs of the scheme to small business, but this is no reason to take the one small criticism of the scheme and implement it indiscriminately.

The bill before us today is the beginning of a process that will result in a vastly inferior paid parental leave scheme for Australia's working mothers. It is a scheme that is unpopular, expensive and completely ineffective. It is a blundering policy from a government that is prone to wink first and think later when it comes to women's issues. Perhaps if the Prime Minister had spent less time in opposition reading Fifty Shades of Grey, in a similarly misguided play for the female vote, and more time studying up on the practice of good policy making then the Australian people would be spared such a significant policy blunder in the future.

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