New Paid Parental Leave -®
New paid parental leave

Too much, too little or just right?

So the budget is in and one of the items on working parents' watch list was the much-discussed Paid Parental Leave.

While there wasn't much detail in this year's Budget about Prime Minister Abbott's flagship Paid Parental Leave scheme the assumption is it will continue in its current form until July 2015 when the Coalition's version comes into effect.

What you think:

Paid parental leave keeps mums in the workforce by making it more affordable for working parents to take time off to be with their children after they are born.

But with the increasing cost of child care and a lack of places for children under-two, is paid parental leave really going to make the difference needed to sustain population growth and encourage women back into the workforce?

In our Child Care and Workforce Participation survey, 56 per cent of you agreed that the current scheme of 18 weeks at the minimum wage is appropriate.

Regarding the proposed increase, parents are divided: 40 per cent of you said Abbott's original plan to give working parents six months on full pay (up to $75,000) was important for keeping women in the workplace, while 35 per cent of you said the proposal was over the top and too costly.

Paid parental leave in Australia:

Australia was slow to introduce a paid parental leave scheme but we're getting there now. And we need it more than most countries due to our rapidly expanding economy and the fact our gross domestic product depends on a small and not very rapidly expanding population.

The current Paid Parental Leave scheme, which was introduced by the former Labor Government and based on recommendations by the Productivity Commission, is in place until July 2015 and offers primary carers earning $150,000 or less (both mums and dads) 18 weeks pay at the minimum wage ($622.10) which totals around $11,000.

To be eligible under the current scheme you must earn $150,000 or less and meet certain work and residency requirements.

The new Paid Parental Leave scheme proposed by the Abbott Government will give eligible working parents of children born or adopted on or after 1 July 2015 access to 26 weeks of Parental Leave Pay at a rate based on their wage up to an income cap of $100,000 per year or the national minimum wage, whichever is greater.

Importantly it is not means tested, which means that all eligible working parents will be able to receive it, but the amount a caregiver receives will depend on what they earn in their job.

This means women earning $100,000 or more will receive the maximum $50,000 in Paid Parental Leave while women earning less than that will receive 26 weeks of paid parental leave at their actual wage or the national minimum wage (whichever is greater).

According to the PM's Press Office Director Jane McMillan women who earn below the minimum wage will receive the minimum wage for Paid Parental Leave.

The scheme also provide superannuation contributions at a guaranteed rate of 9.25 per cent so parents can continue to build their savings for retirement.

And what about Stay-at-Home Mums?

With the axing of the Baby Bonus and nothing to replace it there wasn't much in this Budget in the way of good news for mums who choose to stay at home and raise their children.

The Budget will strip some 600,000 families of Family Tax Benefit Part B, worth $102 per week, for all families earning more than $100,000 and for families where the youngest child is six or older; moves designed to encourage non-working parents back into jobs.

Christian lobby Group Family Voice Australia said this year's Budget was short sighted and punishes stay at home mums.

Research officer Ros Phillips says working families receive plenty of government support such as the $7,500 Child Care Rebate and a potential $50,000 through the Paid Parental Leave scheme.

"A mother's choice to remain in the paid workforce while sending the kids to childcare institutions will be supported by up to $67,500, paid by the taxpayer and big business – who will pass on the cost to the rest of us. Mums who do this nation a service by providing optimal child care at home receive almost nothing," she said.

Although paid parental leave is an important and valuable social policy, the likelihood is that it is just one piece of the puzzle in determining whether a woman is likely to return to work after having a child. Other factors such as discrimination, workplace flexibility and access to affordable and high quality child care are just as important and only when the balance between these variables is addressed are we likely to see advances in female workforce participation.

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