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Push to extend paid parental leave to 26 weeks

Lucy Dean
·5-min read
KPMG argues this change would deliver major benefits. Image: Getty.
KPMG argues this change would deliver major benefits. Image: Getty.

Extending paid parental leave to 26 weeks and increasing the amount of time fathers receive would deliver a $140 billion lift in living standards, consulting firm KPMG has proposed.

Folding gender equality principles into the national paid parental leave scheme would help more women return to the paid workforce and erode current workplace and economic gender imbalances, KPMG argued in a paper released with the Business Council of Australia’s Women’s Participation Taskforce on Thursday.

Currently, Australian women generally receive 18 weeks of paid leave after having a child, while new fathers are granted two weeks under ‘Dad and Partner Pay’. Together, that’s 20 weeks of leave paid at the minimum wage.

Under the KPMG plan, the paid parental leave scheme would gradually increase to 26 weeks over the course of six years.

Each parent would be eligible for a maximum 18 weeks to encourage the other partner to take up the remaining weeks.

Additionally, parents who split caring responsibilities more evenly would be paid up to two bonus weeks of leave.

As it stands, more than 99 per cent of Government-provided paid parental leave in the private sector is taken by mothers, while a similar proportion of ‘Dad and Partner Pay’ is generally taken by fathers.

“For many families, the household division of caring responsibilities begins to be embedded at birth. This triggers a pattern of unequal care and work during prime working years for both parents, with the responsibility for care traditionally falling more heavily on women, resulting in women’s participation in the workforce still sitting well below that of men,” KPMG Australia chair Alison Kitchen said.

“Parental leave is the starting point and Australia needs a system which encourages parental equality from day one.”

She said the current scheme’s emphasis on the “primary carer/secondary carer” model, which by default assumes the primary carer is the birth mother, limits women’s economic participation and needs an overhaul.

KPMG modelling found that while the scheme would cost the Government $1.1 billion annually by the time it is fully implemented, it would deliver a $140 billion increase in national household consumption.

“Almost half of women cite caring for children as the main reason they are either not working at all, or not working more hours. By contrast, just 3 per cent of men nominate caring for children as a principal barrier to working. This shows the impediments to women’s economic participation, which a revamped paid parental leave system could help to address.”

The Parenthood organisation, which represents 68,000 parents and carers also called for an increase to paid parental leave in its Budget submission.

“We know that significant structural, systemic and cultural barriers prevent women from engaging in paid work to the same extent as men,” The Parenthood executive director Georgie Dent said.

“We know that Australian families are missing out comparative to global peers and it fails to deliver optimal results for women, children, families and the economy.

“The upcoming budget must deliver substantial new investment to ensure universally accessible, high quality early childhood education for at least two years before school as well as increases in paid parental leave.”

Paid parental leave reforms a Budget pipe dream

CANBERRA, AUSTRALIA - MARCH 25: Senator Anne Ruston during an appearance at Community Affairs Legislation Committee at Parliament House on March 25, 2021 in Canberra, Australia.  (Photo by Sam Mooy/Getty Images)
Minister Anne Ruston has said the Government won't be changing the parental leave scheme. Image: Getty.

Women’s welfare advocates have argued that improving women’s economic participation and security by reforming the paid parental leave should be one of the Government's priorities.

However, it appears unlikely that the Government will deliver significant change in the May Federal Budget, despite recently appointing a Minister for Women’s Economic Security.

Social Services Minister Anne Ruston has said the current program will not be altered, claiming changes to extend the scheme will be too costly for employers.

“Right now, we’ve got to really be focused on getting the economy open, we need to be focused on getting jobs back into the economy. We need to be careful we’re not putting a brake on the economy by making people uncertain about what’s coming,” she told The Australian on Wednesday.

The Labor party has a “goal” of delivering 26 weeks of paid parental leave at full pay and superannuation, which would be funded by both employers and the Government.

However, Ruston said Labor’s plan is too light on detail and impossible to cost.

“From what’s been thrown around, it’s going to be significantly more expensive either for employers, who at the moment we’re trying to get to employ ­people, or for the taxpayers,” Ruston said.

However, KPMG Economics & Tax Centre partner, Grant Wardell-Johnson said Australia simply must do more to encourage men to participate more fully in child-raising.

He noted that to achieve this, the Government will need to bring business on board. While many large companies have schemes designed to give fathers and mothers equal access to leave, smaller businesses and self-employed Australians struggle to deliver the same benefits.

“This is where Government has a role to complement what is already being done in the private sector to make Australia a stronger and fairer society.”

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Image: Yahoo Finance
Image: Yahoo Finance