Paid Parental Leave Amendment Bill 2014

It is disappointing, in the broader context of paid parental leave, that we are seeing yet another example of that priorities problem this government seems to have. I have spoken in this House before about the issue of priorities when it comes to paid parental leave. You see this gold-plated Rolls Royce paid parental leave scheme that the Prime Minister has come up with, and his only concession to the arguments of fairness and equity that have been raised has been to reduce the threshold from $150,000 per annum earners down to $100,000 per annum earners. That means, still, that people who are earning $100,000 or more per annum—even if they earn $1 million or more; it is not capped—will be paid $50,000 if they have a baby versus someone on a lower income who will be paid a lower amount. We know that this income replacement process for paid parental leave was squarely dealt with by the Productivity Commission in its 2009 report. We know that the Productivity Commission expressly recommended against a full income replacement scheme in that 2009 report into paid parental leave. Yet, unfortunately, the Abbott government is pushing ahead with this inequitable scheme, where people who earn more get more government assistance and people who earn less get less government assistance.

Ms BUTLER (Griffith) (15:11):  I rise to speak in relation to the Paid Parental Leave Amendment Bill 2014. In so doing, it is important to think about the purpose of paid parental leave. It has been pleasing to me to see the shift in consensus in this country in the last decade. I remember very well the then Labor opposition in the early 2000s bringing forth to the Australian people a policy of paid parental leave and that being widely opposed by Liberals and Nationals across this country. It took a Labor government to introduce paid parental leave, as you know, Madam Speaker, and that followed on from a Productivity Commission report that Labor commissioned in government that considered a paid parental leave scheme.

It is important to consider what the Productivity Commission report had to say about paid parental leave. The Productivity Commission made some remarks that are very pertinent to the present debate in respect of paid parental leave broadly and the mechanism for administering paid parental leave, which is the subject of the bill before us today. The Productivity Commission, in considering paid parental leave, looked at a few objectives for a paid parental leave scheme. The starting point was: why have a paid parental leave scheme?

The Productivity Commission looked at a few objectives, as I said. The first objective was child and maternal health. Obviously there is a child and maternal health objective in the sense that paid parental leave is aimed at assisting parents to stay at home and bond with newborn children if possible while removing some of the stress that comes from going for a long period of time without an income, which of course most people—myself included—would not be able to manage in terms of the household finances for very long. Another issue that was taken into account, and an objective of paid parental leave, was the equity issues. In simple terms, women tend to take longer breaks from the workforce than men and, as a consequence, end up with less superannuation and less income over the course of a lifetime.

The third key objective that was considered by the Productivity Commission was the labour force benefits of a paid parental leave scheme. There is the obvious workforce participation of a paid parental leave scheme, in that it provides an incentive to stay in employment both to qualify for the paid parental leave scheme and then, once the person has had a child, to continue in employment to remain qualified for the paid parental leave scheme. There are also other workforce benefits—first and foremost of which is the one that is the subject of this bill and the debate of this bill, which is workforce attachment.

I have been listening to the debate today and I note that some the Liberal-National members who have addressed the bill have claimed that it is a small business measure and that there is no workforce attachment benefit to retaining the administration of paid parental leave in the hands of the employer. I turn to those comments. Firstly, the bill is not a small business specific measure; it is a bill which takes from all employers the administration of the Paid Parental Leave Scheme and returns it to the Commonwealth, therefore demonstrating and signifying to the people who use the scheme—employers and employees—that really the Paid Parental Leave Scheme is not an incident of work but an incident of welfare. It is a very unfortunate message to be sending to people because, as I have said, one of the considerations and objectives for paid parental leave was attachment for the person taking the leave to their workforce.

Attachment is so important for a number of reasons. Firstly, skills can be eroded by long absence from the workforce. We know that in paid parental leave legislation there are keep in touch days that are important for keeping the person in touch with the workplace on an ongoing basis. Secondly, there is the out of sight, out of mind issue which arises when people take long periods of leave from the workplace. There I am talking about things like promotion—if a promotion opportunity arises and somehow the person on parental leave is not informed or a promotion opportunity arises and it is advertised only in the internal newsletter and the newsletter is not sent to the person on parental leave, or the management of the firm considers an efficiency restructure and surprise, surprise, it is the person on parental leave whose job magically appears to have become redundant in that process. All of those things are concerns for people who go on parental leave. People on parental leave are concerned about making sure they will have a good job to go back to when they return. There is legislation in place but it is not just legislation. It is not just rule based compliance that is important in normalising absence from the workforce to look after children and in making sure that people who take those absences are not disadvantaged. As well as rules based compliance with the right to return to the same job or a job of equal status, as well as the right to take absences in the first place, as well as the right to have those absences recognised as a normal incident of working life for parenting aged people, culture is needed. Rules alone are not enough to develop that approach by employees and employers. You need to have a culture where it is a normal part of life for people to be absent. Part of building that culture is keeping people in touch with the workplace and attached to the workforce during long periods of absence. That is why workforce attachment is an important issue.

I heard someone say before that they did not really understand workforce attachment, that they thought it was something the  Labor Party had made up to justify opposition to this bill. In fact, if you look at the history the Paid Parental Leave Scheme in this country and if you look back at the Productivity Commission report you will see that attachment was one of the key issues considered by the Productivity Commission in considering the payment mechanism, by which I mean in considering whether it should be the employer who administers the paid parental leave as part of payroll or whether it should be administered by a government department as part of the welfare system. The Productivity Commission had this to say about why it would be best for employers to administer the scheme, in other words, to keep workers on the payroll as part of the ordinary business, not some special category over here whose pay is being administered by the government and, as I say, it becomes out of sight out of mind. In its report, the Productivity Commission said:

The more that parental leave arrangements mimic those that exist as part of routine employment contracts, the more they will be seen by employers and employees as standard employment arrangements—

The Productivity Commission suggested that this would benefit employers:

… promoting employment continuity and workplace retention … signalling that a genuine capacity to take a reasonable period of leave from employment to look after children is just a normal part of working life.

That is the rationale that the Productivity Commission had in deciding to recommend that the payments should be administered by the employer rather than by the federal government. The Productivity Commission addressed some concerns about the administrative burden for employers saying:

… it is arguable whether there would be any material addition to administrative costs, not only for large employers with access to sophisticated payroll and human resource management systems, but also for smaller firms because (as acknowledged by some participants) the probability of an employee actually being on parental leave at any point in time would be quite low.

What is being said there is that in a small firm, in a small business, there is a low number of employees, that it is not the norm for an employee to be on parental leave; quite the contrary, it is an exception across the course of the employee's lifetime. So the incidence of employees being on parental leave was relatively low, according to the Productivity Commission. I am grateful to the Parliamentary Library for including in the Bills Digest some responses to a survey conducted of employers in respect of how they found the Paid Parental Leave Scheme to be administered. Tellingly, 74 per cent agreed that paid parental leave had been easy to implement. Of course, while some employer associations had raised concerns about employers having to administer the payments, it is certainly the case that in the course of the inquiries before the Paid Parental Leave Scheme was introduced there was some acknowledgment of the benefits of that workforce attachment consideration.

The Australian Industry Group, as the Bills Digest acknowledges, ultimately said that it understands the logic behind the government funded parental leave payments being channelled through employers for employees who are not short term and who remain attached to the enterprise, that such an approach should reinforce the employee's link with the workplace and achieve better return to work outcomes. So again we see the workforce attachment concerns. Obviously coming from a business background, I was in a law firm which was a private business. Like most private businesses, we had a concern about ensuring that our human resources were managed. It was very clear to me, as one of the leaders of that business, that retention is a vitally important issue for business. You hear different figures being bandied around but one of the figures suggests it can cost $70,000 when you lose an employee—to recruit, to replace, to retrain to reskill the replacement.

It is easy to see how important it is to seek to retain employees whenever that is possible. Work force attachment benefits should therefore not be discounted as a benefit to business for what, according to the research, appears to have been a burden that they have found easy to implement.

Of course this bill is not, as I said earlier, a bill about small business. It is a bill that applies to all businesses. It has been a bit mischievous of government MPs to suggest that Labor does not have any basis to reject this bill because all it does is help small business. We know that small businesses need to be able to devote time and energy to grow. That is why, during the election campaign, we campaigned to enable businesses with fewer than 20 employees to have Centrelink administer their paid parental leave payments. This bill does not just apply to small businesses, as has been mischievously implied by people opposite. It applies to all businesses other than those who opt to pay their paid parental leave payments themselves.

We say that there is a sensible balance needed to maintain the relationship, the work force attachment, with the employees while they are on paid parental leave, versus the resources that are needed to comply and to administer the payment. The bill that is presently before the House simply does not strike the right balance. We will move to amend the legislation in the Senate to ensure that only businesses with 20 employees can have their paid parental leave administered by Centrelink. It is consistent with our pre-election policy. To apply the rules so that there would be a move to administration by Centrelink only for small businesses is consistent with, I believe, the private member's bill of the small business minister when he was in opposition.

The fact is that this bill goes much further and does not strike the right balance. That is why we will seek to move an amendment to it in the Senate. When you think about what can only be described as a surprising move by the government to introduce a bill that does not strike the right balance, that goes further than the previous private member's bill, that contradicts the Productivity Commission's own recommendations around work force attachment, you would have to say that this is another example of the Abbott government's failure to get its priorities right.

It is disappointing, in the broader context of paid parental leave, that we are seeing yet another example of that priorities problem this government seems to have. I have spoken in this House before about the issue of priorities when it comes to paid parental leave. You see this gold-plated Rolls Royce paid parental leave scheme that the Prime Minister has come up with, and his only concession to the arguments of fairness and equity that have been raised has been to reduce the threshold from $150,000 per annum earners down to $100,000 per annum earners. That means, still, that people who are earning $100,000 or more per annum—even if they earn $1 million or more; it is not capped—will be paid $50,000 if they have a baby versus someone on a lower income who will be paid a lower amount. We know that this income replacement process for paid parental leave was squarely dealt with by the Productivity Commission in its 2009 report. We know that the Productivity Commission expressly recommended against a full income replacement scheme in that 2009 report into paid parental leave. Yet, unfortunately, the Abbott government is pushing ahead with this inequitable scheme, where people who earn more get more government assistance and people who earn less get less government assistance.

This is in the context of a budget where we are going to see indexation to pensioners changed so that pensioners end up suffering. We are going to see cuts to health funding in the sense of people receiving a lesser rebate when they go to the GP, the GP tax on people who formerly would have been bulk billed, and the ability for the states to levy the emergency department tax. All of these changes, not to mention, of course—and I have spoken about it recently—deregulation of university fees and higher debt burdens on university students, show that this government's priorities are twisted.

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