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Issue #1608      August 28, 2013

Editorial

Parental leave – who pays?

Tony Abbott is desperate to reverse his misogynist reputation and increase support from women voters. He is looking to his parental leave policy to do just that, even though there is considerable opposition to it within Liberal Party ranks and ruling class circles. One parent or partner will be entitled to paid parental leave at their current wage or salary rate up to $150,000 per annum plus superannuation payments for six months (i.e. maximum payment of $75,000). If a male takes the leave, and his income is higher than the mother’s, he will be paid the lower female wage. Apparently child rearing is only worth a lower “woman’s wage”!

Labor introduced paid parental leave in January 2012; prior to that it was mostly limited to public sector employees and “white collar” employees through awards and employment packages. Its scheme only provides 18 weeks at the minimum wage (at present $622 per week) and the combined family income must be less than $150,000 to be eligible. The maximum payment over 18 weeks is $11,200, but the net gain is $6,200 because Labor cut the $5,000 baby bonus for families receiving paid parental leave. There is an additional provision for two weeks’ leave for the other parent, also on the minimum wage.

Labor’s scheme is inadequate both in terms of dollars and length of leave. It compares poorly with Canada’s 50 weeks’ paid leave, the UK’s 39 weeks, or the 18 months on full pay in France, Sweden and Estonia. It does not cover parents or partners who have not worked at least 330 hours in the paid workforce for ten of the 13 months prior to the birth or adoption. There are no entitlements prior to birth.

Abbott’s proposal has come under attack from all directions. Progressives object to its unfairness, as it favours those on higher incomes. Australia’s largest employers are screaming as they look set to be charged a 1.5 percent levy on taxable income over $5 million to help fund the scheme. This is despite the fact they have been promised a reduction of 1.5 percent in the corporate tax rate. What the government hasn’t revealed yet is how many public servant jobs will be lost or hospital beds closed to fund the loss of taxation revenue – at this stage estimated at $4.3 billion.

If the Coalition scheme is introduced, trade unions will have a job on their hands to protect existing provisions in awards and EBAs and have them included as extensions to the new scheme. This is permissible at present under Labor’s scheme. They will also need to be protected in the event that funding for the scheme is unwound in the future. If the present outcry from large employers is anything to go by they plan to pull the plug on paying any parental leave.

The Coalition has foreshadowed a taxation review. Don’t be surprised if the review finds the levy to be anti-competitive and recommends its abolition. Such a review might opt for a levy in true neo-liberal style on those who benefit directly – workers – along similar lines to the Medicare levy which is only paid by individuals, not companies. Or it might advocate an “income contingent loan”, along similar lines to HECS. Parents or partners would begin repayments when back in the workforce and their income (or the combined family income) has reached a certain amount.

Governments and employers have been forced by trade union and public pressure into accepting paid parental leave as a right, the precedent that was set in the former socialist Soviet Union and East European countries. Whether or not the Coalition implements Abbott’s scheme if elected, the question of who funds paid parental leave remains. It is a class question. By employers such as through a levy? Through central revenue which is raised by the taxation of individuals and corporations? Or directly by workers?

The proper funding of parental leave for all families should be through central revenue, but not as a result of budget cuts to jobs and services. The taxation system is in need of urgent reform along progressive lines, with higher marginal rates on rich individuals and higher taxes for the corporate sector. There are also areas of spending which can be cut, such as the bloated military budget and fossil fuel subsidy to mining companies. It should be fully funded, for at least six months and at a higher rate than the minimum wage.

Next article – Asylum seekers: A national moral crisis

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