How Changes in Paid Parental Leave Will Affect Working Mums in Australia

There was a bad time, long ago, when a woman who was pregnant covered up, strapped in and did everything necessary to hide her blooming figure because, once discovered, she lost her job. Ask your mum, grandmother or a woman of her age. Today, with dual-income families, that would certainly plunge many households into chaos and poverty. Fortunately, enlightened policies about pregnancy and adoption leave have been in place for some time now.

Here we are at the next bend in the road, talking about child care and paid parental leave, particularly how long and how much. The law may be about to change, and the changes will have a profound effect on Australian families.

Where We Are Today

Under the Paid Parental Leave Scheme, implemented in 2011, parents may take up to 18 weeks of parental leave at minimum wage (currently around $622 per week before tax) to care for a newborn or newly adopted child. The parent, usually mum, must qualify by:

• Working for at least 330 hours for 10 of the 13 months before the due date (about a day a week);
• Making less than $150,000 per year; and
• Being an Australian citizen or a permanent resident.

Dads or partners may also take leave but are covered under slightly different provisions. Almost before the ink was dry, however, the law came under criticism, and in March 2014, amendments were introduced that would change the law in important ways.

Proposed Changes

The proposed scheme increases both the period of paid parental leave and the maximum payment. It would give eligible working mums of children born or adopted on or after July 1, 2015 six months of pay at the greater of:

• Minimum wage or actual wage up to an income cap of $100,000 per year (resulting in a maximum payment of $50,000); plus
• Superannuation contributions at a guaranteed rate of 9.25 percent.

The new scheme is not means tested, which also means that mums making more than $150,000, however few, may also participate up to the capped amount.

Dads would be limited to two weeks of paid leave, also at the greater of minimum wage or actual wage, plus superannuation.

What Does This Mean for Working Mums?

The additional eight weeks of leave will give all families a better chance to build better bonds. The change in rate is hugely important for working mums making more than minimum wage but less than $100,000. The change in eligibility requirements is significant for those few new mothers making more than $150,000 per year.

The Next Bend in the Road

These changes have critics, of course. Some fault the plan as too generous, essentially forcing working women to stay out of work for the first six months because returning to work and paying for childcare would move the family backward economically. Rural women, who tend to be lower paid, see little advantage for them.

The program will be funded by a 1.5 percent tax on business. Working mums wear every hat and are also businesspeople, investors and taxpayers. Is it possible that a tax that supports infant welfare with one hand will take it away with the other?

Finally, of course, what happens for the next 18 years? Where is the continuing investment in families and children? Many argue that the investment would be better spent on early childhood care and education.

Paid parental leave is a huge step toward supporting working families, but it comes with a price tag. Today’s debate is about the smartest way to allocate resources, but that’s something families are good at deciding.

About Karen Cho

Karen Cho is a lawyer with Owen Hodge Lawyers in Sydney, NSW. With nearly a decade of experience in the legal profession, Karen’s main areas of interest include wills and probate matters, conveyancing, criminal law, debt recovery, civil litigation and commercial transactions. For every client Karen strives to reach positive outcomes and she does this by offering attentive, time-effective and friendly service.