Paid parental leave changes: public servants worse off

By David Donaldson

Friday December 18, 2015

The federal government’s new policy on paid parental leave is better than proposals from the last budget targeting so-called “double dipping”. But it will still leave most public servants thousands of dollars worse off.

It’s unclear whether the government intends to press on with plans to differentiate between public and private sector workers foreshadowed earlier in the year. Negotiations between the government and Senate cross-bench on the ultimate shape of the legislation are ongoing.

On available details, however, many workers in both the private and public sectors will end up being paid less under changes contained in the Mid-Year Economic Financial Outlook this week.

Under the existing system a typical public servant will receive 14 weeks’ pay at their own salary rate by their employer, before taking 18 weeks at the minimum wage.

Changes proposed in May to penalise alleged double dipping — that is, accessing paid parental leave through both the social security system as well as employee entitlements, as the system was originally meant to work — were never introduced because they could not get Senate approval. In the 2015 budget the government estimated it would achieve savings of $967.7 million over four years by removing the ability for individuals to double dip. Uncertainty around the outcome left agencies unsure how to deal with the issue.

“The new system would ‘top up’ workers’ paid leave up to 18 weeks.”

The new system would “top up” workers’ paid leave up to 18 weeks. That typical public servant would now receive their 14-week employee entitlement, but the social security system will only pay for four extra weeks at minimum wage. Anyone entitled to more than 18 weeks under their employer agreement will have no access to the government scheme.

UNSW Canberra human resource management lecturer Sue Williamson also thinks it’s “inevitable” a salary cap will be introduced, which would restrict access to payments for women earning more than a certain amount. “There’s been lots of debate around higher income earners,” she told The Mandarin.

With or without a cap, the result is a loss of thousands of dollars’ worth of paid parental leave.

Williamson has worked out that an APS4 — the level at which many women will have children — will lose around $9000, which equates to around seven weeks’ wages worth.

This might result in more woman going back to work weeks earlier, she says, going against the World Health Organisation’s recommendation that women take 26 weeks off to ensure mother-baby bonding and promote the wellbeing of both.

After the brouhaha around public servants double dipping the government appears to be changing approach.

Social Services Minister Christian Porter has thus far refrained from commenting on whether public servants would face different conditions to other employees after this week’s announcement. “We don’t know yet” whether the government will specifically target public servants in any way, Williamson says.

She thinks the new regime is “marginally better” than the one proposed by former treasurer Joe Hockey in May, which had “no policy rationale” and “seemed a bit chaotic”.

Porter told Sky News he wanted to make the system “as fair as possible”, arguing the current system was too generous to higher earners:

“There are a large number of people in the community who receive very generous parental leave from their employer, so they might be paid for instance 18 weeks at very close to their actual wage, which is a high wage, and then on top of that were able to access the $11,600 odd payment that is coming from the government.

“Now I am not convinced and I don’t think that it is a convincing argument that that is very good use of tax payers’ money, but how to solve that structural issue whilst making the system as fair as can be possible really means that you’ve got to design it around some kind of principle.

“I think that essentially the principle should be that people should get 18 weeks parental leave and that is what I am working with the crossbench on. We are not in a position to make any firm announcements yet, but the work continues.”

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