Christian Porter (Pearce, Liberal Party, Minister for Social Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill introduces a package of measures designed to enhance and better target the paid parental leave scheme—referred to here as the PPL scheme.

The government recognises the important role of parents in the primary care of their children and so maintains a range of programs and payments to support them. Currently, the government spends an undeniably substantial amount of taxpayers' money in three main areas of direct family support each year: around $20 billion in family tax benefit; around $6 billion in childcare benefit and childcare rebate; and around $2 billion in paid parental leave.

The government's commitment to supporting parents in caring for their children must of course be balanced with the responsibility to ensure that family assistance and social security payments are well targeted and also sustainable into the future.

The government considers that all working parents should be entitled to paid leave to spend important bonding time with their newborn or newly adopted child in those important early months. Our PPL policy will provide the important safety net for families who do not have access to employer schemes, or only have access to a few weeks under an employer scheme, distributing funding more fairly amongst new parents in a way that better recognises need.

The revised package in this bill maintains the important features of the existing PPL scheme. It will maintain the positive outcomes that the scheme has generated, while delivering savings that can be used to fund other policy priorities to support greater workforce participation.

There are around 300,000 births in Australia each year, with around half of all new mothers accessing the PPL scheme. The current scheme provides eligible working parents with 18 weeks of payment at the rate of the national minimum wage, currently $672 per week—therefore, a total of $12,106 over 18 weeks.

To receive parental leave pay, a parent must be away from work and caring for a baby or newly-adopted child. Parental leave pay can be accessed anytime from the date of birth until the baby's first birthday, but needs to be taken in one continuous 18-week block.

A review of the PPL scheme was conducted by the Department of Social Services during 2013 and the first half of 2014, as required under the Paid Parental Leave Act 2010. This review drew on several sources, including public submissions, consultation meetings, administrative data and findings from an external PPL evaluation conducted by independent researchers between 2010 and 2014.

One of the key findings from the PPL evaluation was that PPL has increased the length of time that mothers spend away from work following the birth of a child, and increased the likelihood that they return to work by the time their baby is 12 months old. It must be noted, however, that studies show that, for mothers with higher incomes, the current PPL scheme is not having an significant impact on how much time they take off after a birth or the timing of their return to work.

The two central purposes of the government's PPL scheme are: first, in helping to enable parents, particularly mothers, to take time away from work in the crucial first few months of a child's life—and the health benefits of this time for both the mother and the baby cannot be overstated: second, to encourage expanded participation in the workforce, especially by mothers, which is a key objective of the government. And PPL is an important element in the mix of policies aimed at encouraging and supporting participation. Strengthening women's economic security reduces their vulnerability to poverty, homelessness and family violence.

When women are economically empowered, whole families and entire communities benefit. Children are better off growing up in families with working parents, as they have access to more opportunities and are less likely themselves to become welfare dependent.

The government understands the important role of PPL in supporting the health and wellbeing of mothers and babies and in encouraging workforce participation. The measures in this bill are designed to support these objectives in a fair and equitable way that sees PPL funds directed to those most in need of assistance.

Presently, mothers can access both 18 weeks of parental leave pay as well as any employer-provided paid parental leave. They can also choose to access parental leave pay at the same time as other paid leave if they want, an approach that does not necessarily extend the time taken off after a birth.

Findings from the external evaluation of the PPL scheme show that the current arrangements are having the most pronounced impact on lower income mothers, including those who are self-employed or casually employed. These mothers are much less likely to have access to employer schemes, and they benefit from being able to access the current 18-week PPL scheme.

As noted, however, for mothers with higher incomes the PPL scheme is not having an significant impact on how much time they take off after a birth or on their timing of their return to work.

It is not expected that providing some boundaries to government-provided PPL for mothers of higher incomes and more generous employer schemes will have a negative impact on their ability to take time away from work following a baby, or on their workforce participation decisions. Decisions around participation are more likely to be influenced by other factors such as the access to and affordability of child care, for which the government has proposed very significant improvements and reforms in its Jobs for Families Child Care Package.

The government is committed to maintaining the positive outcomes and features of the present PPL scheme while also making it fairer by better targeting government assistance to those families without access to comprehensive employer-provided parental leave pay.

Placing some limits on the number of weeks of government-provided parental leave pay that can be accessed by those with access to substantial employer-provided paid parental leave will make the scheme fairer and more equitable in its distribution of funds and will not undermine the objectives of the scheme.

Arrangements will not be changed for those mothers without access to employer-provided paid parental leave. These mothers will continue to receive the whole 18 weeks of government-provided parental leave pay. Indeed, under this proposal all eligible mothers will receive a minimum of 18 weeks of paid parental leave at at least the minimum wage.

This new PPL measure, however, better directs PPL expenditure to those who benefit from it the most, while maintaining the shared responsibility of employers and government in combining to provide adequate paid parental leave for those with higher wages and substantial employer-based schemes.

The new PPL measure make it much less likely that employers will wind back their own schemes, since the new arrangements now being proposed will encourage employers to build on the foundation that is the PPL scheme.

The proposed measure considers the number of weeks of paid parental leave an employer provides, and then pays a further amount of taxpayer-funded parental leave pay up to a total of 18 weeks.

For example, an employee who receives eight weeks of an employer-provided paid parental leave will receive an additional 10 weeks of taxpayer-funded parental leave pay. The parental leave pay payment under this proposal aims to extend the amount of time a parent can take away from work, and therefore will not be able to be taken concurrently with the employer-provided paid parental leave.

There are also some circumstances, such as when a person works part-time, where a person receives less than the national minimum wage during a period of employer-provided paid parental leave, which may, also, be less than 18 weeks. In these instances, the government will supplement the person's employer paid parental leave to the level of the national minimum wage for that period, as well as then pay a further amount of PPL up to a total of 18 weeks.

It is estimated that more than half of working women eligible for parental leave pay also do not have access to any employer-provided paid parental leave and will therefore be totally unaffected by this measure. That group will continue to have access to the full 18 weeks of taxpayer-funded parental leave pay at the national minimum wage. These tend to be mothers with lower incomes. They are also predominantly working in the private sector. This group includes mothers who are employed casually and those who are self-employed.

It is then further estimated that over 40 per cent of working mothers who will be eligible for parental leave pay will have access also to employer-provided paid parental leave of less than 18 weeks. Under the proposed new arrangements, this group of mothers will be eligible for a further payment of parental leave pay, to ensure and to take their total combined employer-provided and taxpayer-funded entitlement up to 18 weeks.

It is then estimated that only four per cent of working mothers will no longer be eligible for the taxpayer-funded parental leave pay. This group will be those that are likely to have the higher incomes and have access to employer-provided paid parental leave of at least 18 weeks, above the minimum wage.

This measure ensures that the taxpayer-funded PPL scheme acts as a fair safety net for those families who do not have access to substantial public-sector or corporate schemes. Importantly, all eligible parents will continue to have access to a guaranteed 18 weeks of paid parental leave at, at least, the full rate of the national minimum wage. This will occur either from a combination of taxpayer-funded parental leave pay and employer-provided paid parental leave, or from taxpayer-funded parental leave pay only.

To further enhance the fairness of the PPL system, this bill also includes some very important enhancements to the current PPL work test and backdating arrangements. These changes are being made in response to representations from the community and from issues that were raised as part of the PPL review.

In response to findings from the PPL review, from 1 January 2017, the PPL work test rules will be modified to take into account the circumstances of pregnant women in occupations where they cannot continue working during the pregnancy.

This change will allow the PPL work test to be moved to an earlier period in circumstances where a pregnant woman has had to cease work due to a hazard in her workplace that would create a risk to her pregnancy and where another safe job could not be provided.

In such a case, if the primary claimant could not satisfy the work test that would ordinarily apply, because she ceased work, the work test period becomes the 392 days immediately before the day on which she ceased work because of the hazards.

In addition, from 1 January 2017, a longer break between two working days will be allowed under the PPL work test rules. To meet the current PPL work test, a parent must have worked 330 hours in 10 of the 13 months before the child's date of birth. A parent can have a break of up to eight weeks between two working days in this period and still satisfy the present work test.

But, in some professions, such as casual teachers, there may be a longer break between two workdays, which would otherwise prevent them from accessing parental leave pay despite having a long work history. To address circumstances such as those faced by casual teachers, the permissible break between two working days will be widened to 12 weeks.

Parents are able to lodge their claim for parental leave pay up to three months before the expected date of birth, and are required to provide proof of the birth before payments can commence. Under current arrangements, Parental Leave Pay payments can only be backdated where a claim is completed and proof of birth provided within four weeks of the birth.

This bill will also extend the four-week backdating arrangements to all claims. These more generous backdating provisions will give parents more time to finalise their claim, and reduce the chance of a family missing out on some parental leave pay because they have returned to work, or in circumstances such as where a mother or child is suffering from a medical condition relating to the birth of the child.

Finally, this bill will also implement the government's continued commitment to reduce the red-tape burden on Australian society and compliance costs on businesses by ensuring that employers are not required to be the paymaster for the government's PPL scheme.

This bill will remove the mandatory requirement for employers to administer taxpayer-funded parental leave pay to their eligible long-term employees.

This will mean, from 1 January 2017, all parents will receive their Parental Leave Pay payments directly from the Department of Human Services unless an employer opts in to provide Parental Leave Pay payments to its employees, and an employee agrees to their employer paying them.

This change will generate an estimated $44 million reduction in annual compliance costs for Australian businesses.

The government is continuing to reduce red-tape burdens for business, including new and established businesses, and this is a critical step towards improving Australia's productivity. Of course, unnecessary red tape hinders innovation, investment and job creation.

Importantly, this measure is strongly supported by the business community. In a member survey conducted by the Australian Chamber of Commerce and Industry in May 2013, 84 per cent of businesses agreed the government should not require employers to be the paymasters for the PPL scheme.

The government's commitment to support parents in caring for their children must of course be balanced with the responsibility to ensure that payments are well targeted and sustainable into the future. This bill provides an important safety net for families who do not have access to an employer scheme, or who only have access to a few weeks of funded leave, whilst also at the same time being fairer for all Australians and Australian taxpayers.

I commend the bill to the House.

Debate adjourned.