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Time to admit defeat on PPL

Tony Abbott should admit defeat on his PPL policy and move on, writes Ryan Batchelor of the Chifley Research Centre.

The first child supposed to benefit from Tony Abbott’s paid parental leave scheme has already been conceived. His or her parents might not know yet, but they soon will. What they then won’t know is exactly what government support their new family could receive, and that’s not good enough.

Mr Abbott’s ‘signature’ parental leave policy was supposed to start on 1 July 2015, in a little over eight months time. But there are no details on how that scheme will work. No budget, no legislation, no application form, nothing.

It’s time for Mr Abbott to face facts and admit his PPL policy does not have the parliamentary support to become law – not from Labor, the Greens, Palmer United, and especially not from his own colleagues.

Instead he could announce a face-saving compromise that boosts support for new parents by improving the current national paid parental leave scheme – introduced by Labor – and then continues to help them as their baby grows with more support for childcare.

Australia has only had a national, government funded, paid parental leave scheme for three and a half years. Our scheme is modest: 18 weeks at the minimum wage. But it was the first ever in this country and was always designed as a platform from which to build a better scheme. Labor introduced it from 2011, and added two weeks especially for dads from 2013.

Labor’s scheme has worked. A recently released review found that it had allowed new mums to spend more time at home, delaying a ‘return to work up to about 6 months after the birth of their baby’ and then ‘slightly increasing’ the chance that they would return to work before their baby turned one.

By contrast, Mr Abbott’s policy would give us the most generous government-funded paid parental leave in the world (yes, more generous than in Scandinavia). The only problem is that not many people support it, least of all members of the Liberal and National parties. It has no chance of becoming law. The government hasn’t even introduced the bills into the parliament yet. Who knows whether they have even been drafted.

Joe Hockey is reportedly set to receive the Productivity Commission’s final report into childcare this Friday. This could be a great ‘circuit breaker’ (to use insiders’ jargon) for Mr Abbott to come clean with parents and admit his ‘signature’ policy is going nowhere. He could then immediately announce a new package of support for new parents.

A better policy would expand the existing PPL scheme, and then invest more in childcare. This would boost support during and beyond the first six months of a child’s life.

As the Productivity Commission’s inquiry process showed, childcare is a hot issue for parents. It is one of the biggest barriers that stops parents returning to work. Fixing childcare will help lift Australia’s workforce participation rates, especially for women. More so than making PPL much, much more generous for high-income women, as Mr Abbott’s proposal would do.

The PC report on childcare deserves a careful and considered response by government. The 2015-16 Budget process is the place for that response. But parents need help now and an interim package that targets immediate costs and then does proper reform in the Budget is the way to go. This, plus improvement to the current system of PPL, is a sensible compromise position. Both of these could be funded by retaining the funding source Mr Abbott had proposed for his PPL and redirecting it into better policy.

Of all the things parents-to-be need to worry about, what support their government will actually be providing them when baby arrives should be way down the list. The time has come for Mr Abbott swallow his pride and sort this out.

***

Here’s what Mr Abbott should do:

Improve the current Paid Parental Leave scheme:

  1. Extend the current scheme from 18 to 26 weeks – in 2009 the PC said every extra week costs an extra $50m a year
  2. Add superannuation – this would add 9.5% to the total costs

Immediately help with childcare costs:

  1. Immediately increase the Child Care Benefit by 10% – this reduces fees for low and middle income families
  2. Immediately increase the Child Care Rebate to $10,000 a year – this helps middle and higher income families who use a lot of care because both parents work
  3. New capital grants for childcare centres in areas of high need – new centre or expanded capacity – boosting supply will meet demand and should put downward pressure on fees

About Ryan Batchelor

Ryan Batchelor

Ryan is a member of the Board of Directors of the Chifley Research Centre. He served the previous Labor Government as Policy Director to Prime Minister Julia Gillard and as Chief of Staff and Senior Adviser to Minister Jenny Macklin. He also worked as Labor’s Campaign Policy Director during the 2010 and 2013 Federal Elections. After spending some time living and working in Timor-Leste, he is currently a graduate student in the United Kingdom.

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