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Where we are now

Paid Parental Leave Draft report Presentation to Melbourne Paid Parental Leave Forum 5 November 2008. Where we are now. Around 285 000 babies born in 2007 175 000 to women in paid work prior to birth

sebastian-lane
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Where we are now

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  1. Paid Parental LeaveDraft report Presentation to Melbourne Paid Parental Leave Forum5 November 2008

  2. Where we are now • Around 285 000 babies born in 2007 • 175 000 to women in paid work prior to birth • 53% of female employees and 50% of male employees have access to employer-provided paid parental leave* *Using adjusted ABS figures

  3. Objectives • Child and maternal health and wellbeing • the importance of a 6 to 9 months timeframe • Labour market attachment • Lifetime perspective • Work/life balance and gender equity • The ‘sort of society we would like to live in’

  4. Design features follow from objectives Child & maternal welfare Labour force attachment Work/life balance & gender equity Adequate duration & payment More than welfare for most Includes provisions for both genders Employment-related measure Additionality Employment-based eligibility test Superannuation Link to National Employment Standards Employers as ‘paymasters’

  5. Key features of the Commission’s scheme • Duration • 18 weeks parental plus 2 weeks paternity • How much? • Minimum wage ($544 per week) regardless of pre-birth income – taxable and included for means tests • No access to baby bonus or FTB(B) while on leave • Super at 9% of minimum wage or actual wage if lower – for subset only

  6. Key features of the Commission’s scheme • Who pays? • Government funds cash payments • Employers to fund capped super • Employers act as ‘paymasters’ • Eligibility • Work for average of 10 hours per week over 12 months before birth (incl. self-employed) • Extra conditions for super • Non-eligible parents • Existing entitlements plus paternity leave plus removal of means test on baby bonus

  7. From the employee perspective $543.78 for 18 weeks $543.78 for 18 weeks plus super plus job return guarantee

  8. From the employer perspective Pay super for 18 weeks Act as paymaster for government Job return guarantee

  9. Eligibility Mothers of newborn children Not 109,000 employed Employed mothers* 176,000 Insufficient workplace Eligible for statutory paid attachment 36,000 (20% parental leave 139,000 share of employed) (79% share of employed) Eligible for super contributions 118,000 (85% share of those eligible for paid parental leave) * Includes self-employed & contractors

  10. How much per family? Maximum paymentsa a Benefits are all in gross terms (ignoring tax effects and offsets against social transfers) and are for a parental leave period of 18 weeks and paternity leave of 2 weeks

  11. Business impacts • Super contributions • capped & at 9% • additional eligibility tests • maximum cost 3% of annual salary • Many small employers would face no costs in a given year • only face costs when person on leave • average 1.1% of employees would be on maternity leave per year for businesses employing less than 20 people • Paymaster function for some employers • Costs for business of overall obligations lowered by using • quick reimbursement (maybe PAYG withholding) • existing administrative arrangements • better leave notices • They will get retention benefits

  12. How much will it cost each year? Superannuation Net scheme cost $527m contributions $106m 1600 Paternity 1400 leave $61m 1200 1000 Tax & other welfare $ million Parental leave $1,336m Net business contribution $74m 800 savings $307m 600 Baby bonus 400 Net government contributions $452m savings $670m 200 0 Gross costs Offsets Net costs less = Cost categories

  13. Funding by weeks $600 Net business super contribution $543.78 Other government contribution (a) $400 Source of financing ($ per week) $200 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Weeks of parental leave Baby bonus savings Tax & budget savings Additional cash cost to government (a) Includes the net funding of paternity leave and tax deductions for employers' superannuation contributions

  14. Gross costs of two models

  15. A case study of a small business Business with 4 employees *Based on a business with a gross margin of 6% and a tax rate of 30%

  16. This is a draft report, so we will be seeking feedback • Mid October:Background appendices on web • Mid October:Informal consultations with participants • 10 November:Hearings commence • 14 November:Closing date for submissions • End February:Final report to government For hard copies of the draft report email: parentalleave@pc.gov.au

  17. Paid Parental LeaveDraft report Presentation to Melbourne Paid Parental Leave Forum5 November 2008

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