{"id":438,"date":"2016-01-27T01:13:46","date_gmt":"2016-01-27T01:13:46","guid":{"rendered":"http:\/\/workplaceculturematters.com.au\/?p=438"},"modified":"2016-01-27T03:20:22","modified_gmt":"2016-01-27T03:20:22","slug":"parental-leave-the-truth-about-double-dipping","status":"publish","type":"post","link":"https:\/\/workn.net.au\/?p=438","title":{"rendered":"Parental Leave – the truth about ‘double dipping’"},"content":{"rendered":"

The ALP’s Parental leave scheme, enacted by the\u00a0Paid Parental Leave Act 2010<\/em> (Cth)<\/a>, was the result of a 585 page report from the Productivity Commission<\/a>. \u00a0It\u00a0was not a perfect policy by anyone’s standards, but it was a measured\u00a0and\u00a0considered enactment. \u00a0\u00a0It has brought us a little closer to current international standards in government funded paid parental leave – albeit at the minimum wage for only 18 weeks.<\/p>\n

In contrast, the Coalition’s Fairer Paid Parental Leave Bill 2015<\/em> (Cth)<\/a> \u00a0looks like it was devised in 585 seconds. \u00a0After promising to improve the scheme, the government\u00a0decided instead to cut $970 million from it. \u00a0The\u00a0party claim the amendments are designed to reduce\u00a0‘double-dipping’<\/a>, a phrase\u00a0obviously chosen\u00a0to stir up the public’s\u00a0collective loathing for welfare cheats. Hopefully, this would distract\u00a0the electorate\u00a0from noticing the biggest election platform\u00a0back-flip in living memory.<\/p>\n

I am\u00a0not even going to address\u00a0the obvious social benefits of maintaining a paid public parental leave scheme – health of the newborn, maternal welfare, benefits to family, gender equality, shaping positive societal norms etc. \u00a0We can presume those benefits to be true, and equally presume that the current administration are not particularly interested in stuff like that. \u00a0It’s not a great surprise.<\/p>\n

What is surprising and disturbing about the policy is the serious economic and logical flaws. \u00a0The economic savings are premised on an adjustment that will be made on PPL for those parents who have\u00a0a private PPL entitlement. \u00a0 The adjustment will be equal to the amount of the private entitlement. \u00a0If the private entitlement exceeds the public PPL scheme, then the scheme will not be available at all. \u00a0Preventing this ‘double dipping’, is supposedly\u00a0going to deliver us a saving of $970 million. Is it really that easy?<\/p>\n

PPL is not a welfare payment<\/strong><\/span><\/p>\n

Firstly, \"work-vs-family-signs\"Paid Parental Leave (‘PPL’) is not intended as a welfare payment. \u00a0It is the opposite, it is an anti-welfare payment. \u00a0One of the prime purposes of a Paid Parental Leave scheme is maintain and boost Labour Force participation. \u00a0This has become an economic imperative. \u00a0For women aged 25-34, workplace participation has increased from 51 to 74 percent in the last 30 years. \u00a0Property values have grown significantly faster than income, and Australia now has the third highest property to income ratio in the world. \u00a0Subsequently, more families are relying on dual incomes to pay property mortgages or to manage rent. \u00a0Maintaining labour force participation is essential, and long term a PPL scheme results in an aggregate increase\u00a0<\/i>of six months of employment over the lifetime of most females. \u00a0 This benefit is not just in allowing employed mothers to return to work, but in encouraging women to engage in\u00a0employment prior to\u00a0planning a family.<\/p>\n

Put another way, providing 18 weeks of PPL, can potentially be offset by\u00a0millions of dollars of savings in\u00a0Family Tax Benefit A or B payments\u00a0by increasing the overall participation of mothers in the workforce. \u00a0Further, longer term economic benefits exist in the potential innovation found by a widening of the labour market pool through providing greater flexibility. \u00a0PPL is an economic investment, not a social economic burden. The $970 million saved is only a short term propostion, if at all.<\/p>\n

Receiving private and public PPL at the same time is not ‘double dipping’<\/strong><\/span><\/p>\n

We have a statutory entitlement to 52 weeks unpaid leave. \u00a0Providing\u00a0a parent with any amount of paid parental leave up to their full replacement wage for 52 weeks, does nothing other than to put that employee\u00a0back in the situation they would have been if they had not taken the leave.<\/p>\n

Private PPL schemes are rarely generous enough to completely compensate an employee for being away from work. \u00a0Having a baby is a financial sacrifice, even for the very wealthy, but especially for lower to middle income earners. \u00a0Six months PPL on full pay is rare. \u00a0Six weeks is a lot more typical. \u00a0The publicly funded 18 weeks at minimum wage is less than $12,000 in total. \u00a0Most parents who are lucky enough to have both payments will need both, and it won’t even go close to what they would have earned if they hadn’t had the baby and taken leave. \u00a0 The fact that those payments may come via two separate complementary income streams does not give them the character of a double benefit. \u00a0The purpose of the original Act was to complement<\/em> and supplement<\/em> existing entitlements. \u00a0To describe it in terms of ‘double dipping’ or welfare cheating is remarkable.<\/p>\n

If a parent were going to receive more than one years’ full replacement wage then I would accept that an adjustment should be made. \u00a0Likewise, if they returned to work and continued to collect leave this could be seen as ‘double dipping’. \u00a0 But this is not what the Coalition are proposing.<\/p>\n

It will not save money<\/strong><\/span><\/p>\n

\"no-double-dipping-250x198\"<\/a>The saving is premised on the double dipping adjustment, but the Bill does nothing to prevent current employers from reducing or stopping private PPL benefits currently on offer. \u00a0They have also failed to predict \u00a0the very real effect it will have longer term as a disincentive on the\u00a0introduction of new private PPL schemes. \u00a0Reports showed that very few employers changed their parental leave benefits\u00a0after the 2010 scheme was enacted, but this was because the employers knew<\/em> that their employees could collect both. \u00a0 One of the reasons employers offer benefits such as PPL is as a way of attracting good employees. \u00a0If the PPL means that these employees will lose their public PPL (or only receive the difference) then the employers will simply offer something else, like extra wages, or additional annual leave. \u00a0Something that can be realised in real terms.<\/p>\n

Further,\u00a0a large proportion of private PPL schemes are the product of the\u00a0Enterprise Bargaining process. \u00a0EBAs last for three years, which means hundreds\u00a0of new deals\u00a0are being negotiated as we speak. \u00a0 In theory, every EBA in the country is subject to renegotiation on a cycle such as this. \u00a0Are Employee Representatives going to robustly bargain for a PPL scheme worth, for example, $15,000 for a worker in\u00a0the knowledge that this will result in a loss of all government entitlement to PPL, and only increase the worker’s net result by $4,000? \u00a0 \u00a0It would be remiss of them to do so. \u00a0They would be better to bargain directly for cash or other benefits. \u00a0The effect on Enterprise Bargaining strategy over the next three years alone will eat heavily in to the $970 million saved.<\/p>\n

Even if it did save money, who is actually paying?\u00a0<\/strong><\/span><\/p>\n

But even if these almost inevitable effects somehow don’t materialise, and the government manage to make these savings, who will foot the bill? \u00a0 \u00a0\u00a0Effectively, these measures would represent a tax on employers who have elected to provide voluntary PPL.\u00a0\u00a0 The Act creates a statutory entitlement due to workers, but then allows businesses to bear the cost of this entitlement if they had previously decided to bestow this benefit.\u00a0 Private businesses should be free to contract with their employees.\u00a0 If they offer benefits to employees, they are entitled to the reciprocal effects of that bargain.\u00a0 The amendment undermines the contractual value of these benefits.<\/p>\n

\"parent\"<\/a>It is even more disturbing when it is recognised that in real terms it is employees who ultimately will bear the loss.\u00a0 Employers make financial decisions and draft business budgets in accordance with the overall employment cost.\u00a0 This figure is inclusive of base salary, annual leave, personal leave, superannuation, workers\u2019 compensation, and other employee on costs.\u00a0 A Voluntary PPL scheme is part of this calculated cost.\u00a0 In the event that it is offered, this will have a natural reciprocal effect on the value of other benefits. \u00a0We spoke about the process of\u00a0Enterprise Bargaining above.\u00a0 We can assume that for almost all current agreements containing PPL, the employees will have given up some entitlement, such as higher pay, in order to receive the leave.\u00a0 These amendments represent an effective acquisition of these privately bargained contractual benefits.<\/p>\n

When viewed in these terms, the Coalition’s 585 second solution is maybe not so bright.<\/p>\n

Somebody is ‘double dipping’ – it’s just not the people they think…..<\/p>\n","protected":false},"excerpt":{"rendered":"

The ALP’s Parental leave scheme, enacted by the\u00a0Paid Parental Leave Act 2010 (Cth), was the result of a 585 page report from the Productivity Commission. \u00a0It\u00a0was not a perfect policy by anyone’s standards, but it was a measured\u00a0and\u00a0considered enactment. \u00a0\u00a0It has brought us a little closer to current international standards in government funded paid parental […]<\/p>\n","protected":false},"author":1,"featured_media":442,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[236],"tags":[],"_links":{"self":[{"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/posts\/438"}],"collection":[{"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/workn.net.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=438"}],"version-history":[{"count":22,"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/posts\/438\/revisions"}],"predecessor-version":[{"id":465,"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/posts\/438\/revisions\/465"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/workn.net.au\/index.php?rest_route=\/wp\/v2\/media\/442"}],"wp:attachment":[{"href":"https:\/\/workn.net.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=438"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/workn.net.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=438"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/workn.net.au\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=438"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}