Commission proposes $12,000 parent leave

[BeautifulMadness]

New parents would be eligible for up to $12,000 in paid leave under a taxpayer-funded scheme proposed by the Productivity Commission.

Under the scheme, mothers would be able to take 18 weeks paid maternity leave and fathers two weeks, or vice-versa.

Both would be paid at the minimum wage rate of $544 a week, to a maximum per couple of $11,854 before tax, with their employer paying superannuation.

Businesses would have to fork out $75 million per year to pay the nine per cent superannuation to eligible parents.

The federal government would foot the majority of the bill at an additional cost of $450 million per year.

Maternity leave would be offered on top of any existing employer-funded scheme, and must be taken together within six months of the child's birth.

It is estimated around 140,000 mothers would meet the criteria each year.

Industrial Relations Minister Julia Gillard says it is no longer a question of whether Australia should have paid parental leave, but rather how to best provide such a scheme.

But Ms Gillard has refused to say if a parental leave scheme will be part of next year's budget.

She said the report was only a draft, but she agreed with Prime Minister Kevin Rudd it was time to "bite the bullet" after 12 years of neglect in this area.

"Today, we've received the draft report of the Productivity Commission," she told reporters.

"Now we've moved from the question of if we have paid parental leave to how to do paid parental leave."

New mums who are not in the workforce would receive a payment called the maternity allowance, worth - when combined with family tax benefits -

up to $6,800 pre-tax.

The allowance would replace the $5,000 non-taxed baby bonus payment.

The commission says the scheme is aimed at delivering better health outcomes, encouraging greater workforce participation and promoting better work-life balance.

Commissioner Angela McRae said the commission opted for 18 weeks to give parents the best chance of spending the first six months after giving birth at home.

"This is the most critical time for the nurturing of the newborn child," Ms McRae said.

"We think it's important, given the objectives,

to go for a longer period."

Commissioner Robert Fitzgerald said a non-government funded scheme would cost business an extra $1.2 billion per year.

"The consequences of that ... mean much greater active discrimination against the employment of women of child-bearing age," he said.

Mr Fitzgerald said he expected companies to

continue to provide maternity leave schemes in order to retain skilled women.

"The reason they have entered into voluntary schemes is to be employers of choice, they want to stand in the market place offering better terms

and conditions than their competitors."

Prime Minister Kevin Rudd said the federal government was an advocate for paid maternity leave.

"This Australian government believes the time has come to bite the bullet on this and we intend to do so," Mr Rudd told reporters in Newcastle, in the NSW Hunter Valley.

"The future economy has to provide this level of choice for stay-at-home mums, to be supported with the baby bonus, but also for women in the paid workforce to be supported with paid maternity leave."

ACTU president Sharan Burrow said employers should be required to "top up" the government payment so women on higher wages have their income fully replaced while on leave.

"An employer top-up would be an investment in the wellbeing of employees, with women more likely to return to work in good mental and physical health," Ms Burrow said in a statement.

She said 18 weeks was a "good start to help women recover from childbirth, bond with their baby and establish feeding".

But the ACTU says stay-at-home mothers should also receive an equivalent 18-week payment and women should be able to access some of the funds before the birth of their child.

The commission will seek national consultation on its proposed model over the next few months before it hands down a final report to government next February.

[Toomanytoomany]

Yay!

Although, just like the baby bonus, it will come in a couple of months *after* I'm able to take advantage of it!

[briggsy's girl]

there is a LOT in this that isn't fully "qualified" or is spun to look better than it may be

it doesn't state whether this money is taxable - so it doesn't qualify whether you will actually receive that income. if it IS taxable, it's likely to impact on other eligibility for payments (ftb and ccb for other children etc). it also states what i personally believe - if employers are expected to foot superannuation for the time the person is on maternity leave, they're going to be more "picky" about employment of females of child bearing age. it will lead to covert discrimination simply cos small businesses can't afford to both replace the employee AND foot the bill for the employees super.

New mums who are not in the workforce would receive a payment called the maternity allowance, worth - when combined with family tax benefits - up to $6,800 pre-tax.

this bit here sort of backs up what i said - it will be taxable! if the person is on max rate ftba and b, they're getting about 280 a fortnight (rounded figures) so over the 18 weeks they're talking, of this 6800, they're receiving 2500 (ballpark) in FTB - which leaves 4300 of TAXABLE income over 18 weeks - an amount, before tax, of only 477 per fortnight. if this is then taxed, you're marginally better off than the current baby bonus scheme (385 per fn from jan!)!!! and given that you'll have 4300 in taxable income, you're likely to be close to the thresholds to start reducing your FTBB AND if you're on a low income (parenting partnered), your income support counts as a taxable income, so it's added to this and you're getting even LESS FTBB!

and hey, if you look at it - that 4300 is LESS than the current baby bonus!


gotta love all the fancy schmancy wording of the proposal, but it's not really benefitting people the way this smart marketing will have us believe!

[Diamond Girl]

BG - Just so you know FTB payments are not included in your tax return as income, and since the tax free threshold is currently $6,000 the remaining baby bonus of $5k would not attract any tax. Currently the baby bonus is exempt income therefore is also not included in the tax return, but when they use the words 'pre-tax' it may suggest that this may change in the future.

Another thing that annoys me is that SAHMs always get less than working mums, but that is a totally different matter altogether.

[briggsy's girl]

DG - if you noticed, i took the FTB OUT of the taxable income equation! if you read my post, i said IF it were taxable, as it reads to me, the BALANCE would be taxable - if you then ADD that to any other income for a SAHP (ie, parenting payment) it WILL reduce FTBB entitlement. the $4300 amount also takes you bloody close to the threshold to start reducing FTBB entitlement anyway... for a working parent, there is a very real chance that the payment would negate their FTBB entitlement, so over a period of 18 weeks they're taken care of, but take any longer off work, and sorry, do it on your own.

theoretically, it's a good idea - but the impact on existing entitlements could be more than people realise. offering a taxable alternative to a payment that isn't currently taxable needs a LOT of consideration.

[Nixon]

I think this new scheme would not be means tested - which would differ to the current baby bonus scheme. I think it's a good thing - shows the government is finally trying to appreciate the improtance of mother and baby bonding in the early stages.

I hope financially it works out, but by the sounds of BG's post it may not add up.

[Ozziehoffy]

I don't think it's completely fair to be honest. Like Diamond Girl said... SAHM are getting ripped off with this proposal! It really gets me cranky how just because we stay at home we get less. With this proposal they will still be getting the baby bonus as well. Stupid govt!!