PPL is politically dead yet Mr Abbott can’t - or won’t - accept the deep flaws of the policy.

PPL is politically dead yet Mr Abbott can’t - or won’t - accept the deep flaws of the policy. Photo: Andrew Meares

What do you call a man who sticks with a policy that he can’t afford, that hardly anyone likes and that will not deliver the outcome he expected? Principled? Obdurate? Stupid?

It is difficult to understand why Prime Minister Tony Abbott has dug himself into such a very deep hole over his paid parental leave scheme.

It has no chance of passing the Senate now the Greens have shifted their position so it is politically dead yet Mr Abbott can’t - or won’t - accept the deep flaws of the policy. Is this because he is badly advised, or because he won’t listen?

Illustration: Andrew Dyson.

Illustration: Andrew Dyson.

Maybe he might be persuaded if he were to realise that, far from being of benefit to Australian mothers, under his scheme most would be worse off than they are under the existing scheme.

Yes, you wouldn’t know from much of the commentary but we already have a paid parental leave scheme. It has been in operation for three years now, paid by the government through the employer, thus maintaining workforce attachment,and more than 340,000 mothers - and 40,000-plus dads and partners - have already benefited from it.

Under this scheme, primary carers, mostly mothers, are paid a flat rate of $622.20 a week based on the national minimum wage for 18 weeks after the birth of the baby. The leave can be taken at the same time, as well as or instead of any employer-provided scheme.

High-earning “women of calibre”, the very ones Abbott says he wants to help, might be not be thrilled when they realise that, rather than getting the money through their employers, under the Prime Minister’s parental leave scheme they will have to deal with Centrelink to get the promised $50,000.

And lower-earning women who are, let’s face it, the vast majority of the female workforce, will receive less under Abbott’s scheme than they do now.

Even though Abbott’s scheme is supposed to be funded by a tax levy on big business, the money will be administered by the federal government, through Centrelink, an agency that is already under-resourced and unable to cope with its huge load.

Just last month the Commonwealth Ombudsmen found that Centrelink is failing its customers and pointed to inaccuracies in family tax benefit payments as being among the agency’s failings.  

Centrelink is known to have antiquated IT systems. Late last year it was facing a backlog of 70,500 outstanding claims for family tax benefits and allowances. The agency has had to cope with its integration into the Department of Human Services as well as being required to sack hundreds of staff, partly as a result of the efficiency dividend imposed by Labor’s last budget. 

How on earth is it going to cope with many thousands of new customers  resulting from Abbott’s scheme?

And, while it might be all very well to promise high-earning women income replacement while they are on parental leave, what about women who have either no or low incomes? What do they get? Under Abbott’s scheme, a very raw deal.

A full 25 per cent of recipients of the paid parental leave scheme have incomes below the national minimum wage.  They get a pay rise while on the current scheme. 

They number around 100,000 - that’s a lot of mothers to get offside by cutting their income. 

Previously the Greens seemed on track to vote for it once Abbott reluctantly agreed to drop the income cap from $150,000 to $100,000 but now they are making fresh demands.

Senator Christine Milne said last week the Greens “won’t be able to even consider supporting any scheme” until Abbott can demonstrate that his Cabinet and his party room are on board. That is extremely unlikely given the consistently loud opposition to the scheme by a number of Abbott’s colleagues.

And the Greens now insist the scheme is budget-neutral, ie fully funded by the business levy. That’s not going to happen either.

So why not stick with the existing scheme? It costs only $270 million a year, about the  amount Abbott “saved” by dropping the cap on his scheme.

It could do with improving. Its obvious flaws are the comparatively low rate of payment and the lack of super payments.  Both are easily - and comparatively cheaply - fixed.  Last week the Commission of Audit recommended both, advocating raising the payment to average weekly earnings which would almost double the amount received by mothers.

Minister for Social Services, Kevin Andrews, has received a review of the scheme, conducted last year by his department with outside expert input. Under the paid parental leave legislation he is required to table that report within 15 sitting days of receiving it so we should expect to see it next week.

It could be a game changer, switching theparental leave debate back to the realm of the affordable and the effective.

The Productivity Commission will be reporting on childcare in July and it will not be surprising if it also joins the increasing chorus of calls for harmonisation between parental leave and childcare. Everyone - except, it seems, Abbott - recognises that lack of affordable childcare is a much greater barrier to women’s workforce participation than a paid parental leave scheme. 

In fact, the OECD has found that paid parental leave beyond 20 weeks “appears to have a negative effect on female participation”. Abbott’s scheme of 26 weeks could be counter-productive as well as expensive.

You would think a government that claims to have a budget emergency would be grateful that we already have an affordable and effective scheme. Improving it will be far cheaper than Abbott’s billions-dollar baby.  

The fact that Abbott is so politically deaf on this subject suggests not only that he fails to understand the flaws of his own policy - and the fact it is likely to do precisely the opposite to what he claims - but that he does not care.

The 64,000-dollar question, and one to which no one has yet supplied a plausible answer is: Why?

Anne Summers is the editor and publisher of Anne Summers Reports.

Twitter: @SummersAnne

Anne Summers' article above is based on a flawed premise – that women earning under the minimum wage will receive the paid parental leave at their salary. This is untrue – the floor for the scheme will be the minimum wage and the new cap will be $100,000. Most women will be significantly better off under this scheme. Mothers will receive 26 weeks of paid parental leave at their actual wage or the national minimum wage (whichever is greater), plus compulsory superannuation.

Even those women who earn below the minimum wage will receive the minimum wage for PPL, just as women do under the current scheme. Furthermore, they will receive the superannuation guarantee rate of 9.25 per cent on the minimum wage.

Jane McMillan, Director, Press Office, Office of the Prime Minister.

In his campaign policy speech (25/8/2013) Mr Abbott said: ‘‘And there will be a fair dinkum paid parental leave scheme in place, because factory workers and shop assistants deserve to get their actual wage while they are on leave." Mr Abbott promised "their actual wage", not a floor based on the national minimum wage as outlined on the Liberal Party website. I am pleased the Prime Minister is now confirming that low-paid women will have a floor wage should his scheme be enacted.

Anne Summers, Editor and Publisher, Anne Summers Report.