At last- we have a government committing to paid parental leave!

Eva Cox, Chair of WEL
At last- we have a government committing to paid parental leave! This is the real good news: the government is prepared to acknowledge a clear unequivocal financial relationship between the workplace and parenting. This is the first time that there will be a specific publicly funded program that makes the connection explicit. We have had programs directed to reinforce the ‘choice’ of non working mothers, such as Family Tax Benefit B but not those in paid work, as even the child care funding also covers those who are not employed.This connection needs to be celebrated as a basic shift in the political perception of legitimate time off for the care of others. It has been a long time coming as shown by two near misses; one under Keating and another the Baby Bonus, Both converted a maternity leave possibility into a welfare payment for all mothers. This time it is clearly labelled leave and has a workforce entitlement component. Hooray!

Those not in the paid workforce will still do well in this model, in fact some may do better than some of those claiming the new payment. If they have not worked for at least 330 hours, or one day a week for 10 months in the 13 months before the birth, they still get the Baby Bonus and Family Tax Benefit B. This is $128.80 a fortnight or $3348.80 over a year. This is $8334.80 over 12 months, while the paid parental leave will produce $9,700 over 18 weeks. So the government will win kudos for a payment that costs them maybe an extra $1,365.20 per person

But wait! There are other potential clawbacks because the parental leave payment is taxable and the Baby Bonus is not. If the paid worker has other income in the year that push her into the 30% tax bracket or higher, she would be better off with the old Baby Bonus than the new payment. The Government therefore would futrther reduce its costs. The final Productivity Commission Report is also released tomorrow so we can check these costings.

The government has cleverly used Mothers’ Day and a relatively small amount of expenditure ($260M) to get some very good news responses. The leave is not coming in till 2011, which is most likely to be after the next election, so that makes me somewhat anxious! However, in sum, the many feminists who pushed for this change deserve congratualtions, not so much for the scheme itself, but for the principle it sets in place. Official recognitoion of the care/paid work nexus offers the possibilities of building onto this. Oops, should we mention this?

And the rest of the budget? Yes, there were good bits but as a social document based on fairness, it wasn’t crash hot. Those who were given more money were the presumably nice poor: a good rise for single pensioners (mainly female), and some for couple pensioners. The recipients included the Aged, those on Disability Support Pensions and Carers. The less marketable groups were left out big time: those on Newstart and sole parents on Parenting Payments, now to be detached from pension rates.

The sole parenting payment omission is quite odd. Wayne Swan made a big booboo at one point on TV last night, when he blamed the lack of a rise on the Harmer review not proposing one. Given that the brief for that report was retirement incomes, it obviously didn’t cover working age payments. These come under the main Henry review. Swan also claimed that the ‘generous’ family payments meant sole parents didn’t need any more. Apparently children don’t cost much in his household! Those currently on parenting payment single have children under 6 and got no extra money. Few got the money for school students as their children were too young..

The failure to raise the parenting payment is aimed at one category of sole parents. Those new ones and those who have been moved onto Newstart, have real trouble living on their very low incomes. There were new provisions, aimed at those parents who are involved in welfare to work. About 10-20,000 of these are on Newstart and are even worse off than those grandfathered on parenting payments. These changes are welcome but slight and delayed. We lobbied for these changes from 2007 and talked to the working party last year on the basis of some research we did with sole parents, showing they were having a really bad time. There has been some easing of demands for job hunting over the Xmas break and a relaxation of some of the participation requirements. However, it still does not deal with the serious difficulties of managing to find paid work that allows the flexibility needed by sole carers which will get worse in the recession. The extra training money will go to a few only and some don’t need training, they need jobs that allow them to parent.

So the poorest become poorer, and only some of the rich will lose a little upper class welfare. For the 2% older high income earners who are using super as a tax shelter big time, some parts of their shelter have halved. So their tax avoidance, which often exceeded the value of the age pension, will be reduced a little bit. The top 5% of earners currently get 37% of the super tax expenditures, so there is much more they could give up. The savings are only about $600M a year, it could have been tripled and still left them ahead by some billions as the total was $24B.

At the other end, the small benefits for the bottom 25% of income earners, who get 2% of super tax concessions and may have used the co-contribution scheme, have been cut by a third and 60% of those using this were women. This is not fair, even if for only three years.

Why are well off older people, mainly male, so powerful? Is it because most decision makers know that is who they will be in a few years time?

There is a clear bias in the rhetoric and some payments against wealthier families but since there are relatively few of these, the changes are more symbolic than effective. The government looks more redistributive than it is by harping on about ‘middle class welfare’ which usually means payments to women. The cuts in the Health rebate will not really be felt by many families. However, penalising those higher income earners who opt out of private insurance is a bit bizarre when their policy is for a universal health care scheme, not a residual one for those who can’t afford the alternative.

Now to the better news: Paid Parental Leave is there with some initial spending in this year, presumably on the process. The extra money for local jobs in highly affected areas of unemployment is good.

There is funding through Medicare for midwives which is a big plus, though annoying to obstetricians, Someone on Crikey stated

Access to midwifery through Medicare will be available for those who choose those services. The measure provides a choice that is more likely to be available in urban areas and those from smaller rural communities, whose preferred choice would in fact be able to have their babies delivered in their local town, will not be helped much. The really disappointing feature of this approach is that it introduces another provider-focused measure when more innovative service redesign measures might have had a better impact for consumers.

The cuts in family benefits are relatively small and make high savings because they go to many people. Again the small changes will hit the poorer families in some case.