Prime Minister Tony Abbott. Photo: Andrew Meares
The debate over Prime Minister Tony Abbott's paid parental leave scheme is focused entirely on the cost of the scheme to the bottom line rather than a more sophisticated discussion about the social and budgetary value of caring for babies.
The paid parental leave scheme introduced by the Gillard government in 2011 is a muddled acknowledgment of the shrinking unpaid care economy rather than middle class welfare. The shift to that acknowledgement had begun in 2006 with the Council of Australian Governments' priorities for addressing population ageing which then Treasury head Ken Henry called the ''three Ps: population, participation and productivity''.
We were warned in 2002 by US economist Nancy Folbre that Australia's ''magic pudding of care'' - unpaid care of children by women - could not be relied on to deliver quality citizens and workers in the future. Without more equitable arrangements, no one would care for the kids - at least not for free. Tony Abbott's epiphany on paid maternity leave presents an important opportunity to reshape Australia's investment in maternal and child health and improve gender equity.
The benefits of paid parental leave to the broader community are lower health costs in the future and greater workforce participation. Research shows infants need their mother, and her milk, in the early months to reduce illness, prevent later obesity and chronic disease, as well as protect the mother's health. Breast cancer rates are higher among women who breastfeed for less than six months, and studies show children weaned prematurely have a lower IQ. The Longitudinal Study of Australian Children has provided evidence that attending long daycare full-time increases illness among infants.
The Gillard paid parental scheme pays the same amount for 18 weeks regardless of the mother's normal earnings. It targets mother and child health and productivity. It also improves employment participation by maintaining mothers' links with their workplace. For a modest cost, the scheme gives thousands of women and their infants a chance to bond and breastfeed. It provides women in low-paid, casual, part-time work with a replacement wage.
But the scheme set at the federal minimum wage is too stingy to significantly address gender equity. It fails to acknowledge the higher maternity costs for women who give up more than the minimum wage, and it ignores the issue of lost superannuation.
Eighteen weeks is also too short. We know that equal sharing of care and household duties is still a mirage; time-use research finds little change in housework sharing among couples with children. Most new mothers return to work in the first year, but mainly return part-time after six months in order to balance the intense demands of work and family. Bill Shorten's recent call for flexible working arrangements for working women so they can ''negotiate hours and arrangements to better juggle work and family'', is welcome but it is only a small part of the solution. Babies and employment are particularly hard to juggle.
Abbott's more generous scheme, if passed by the Senate, provides the mother's usual wage (capped), for six months. Many countries target improved gender equity by providing 12 months paid parental leave at full or close to the mother's previous earnings. Norway, for example, has achieved high labour force participation along with breastfeeding rates near 50 per cent at 12 months. Access to childcare and reduced parental working hours also promote mothers' workforce participation and fathers' sharing of the care.
The unfairness of Australia's private superannuation system for women is well documented. Private super treats women's unpaid care work as valueless. Women doing unpaid or low wage work are less able to contribute to superannuation, get less employer contributions, and receive less value from publicly funded tax concessions for super.
Abbott's scheme acknowledges this concern. For Labor to brand Abbott's $5 billion scheme extravagant and unfair because of its
generosity to higher income women is hypocritical.
Labor's policy of maintaining the current income tax concessions for superannuation is a vastly more expensive and untargeted middle-class welfare scheme, with its benefit going mainly to high income earning men. The latest Treasury estimate of the cost of these tax subsidies for retirement is $27-$32 billion a year. It remains to be seen whether subsidies of retirement income encourage work participation of the superannuants, although we increasingly expect this of elderly age pensioners. The challenge for both parties in addressing problems of population ageing and productivity is to improve paid parental leave and childcare quality. This is possible without increasing deficits by bringing Abbott's scheme and the current scheme closer together, while addressing the inequities of superannuation.
Maternity leave needs to be longer. Health authorities recommend six months of exclusive breastfeeding and ongoing breastfeeding past 12 months. It takes about 20 hours a week to exclusively breastfeed - feeding a baby is by itself a part-time job. Mothers who return to work earlier, wean earlier. Abbott's scheme might fund longer leave - up to 12 months - if its wage replacement were less generous. Costly full-time long daycare attendance by infants would then be less necessary; savings on childcare subsidies for infants could also be used to improve childcare standards.
The work of being a new mother should be paid at more than $15 per hour. Abbott's scheme increases paid paternity leave to better reflect what Australian mothers sacrifice when they take leave. Gender equity would be significantly improved by valuing women's mothering work more highly.
Finally, we need to address the gross inequities in superannuation tax concessions. Winding back existing super concessions through a simple tax offset and government co-contributions could fund super contributions on behalf of paid parental leave recipients, with billions to spare, including to maintain the public age pension.
Abbott's epiphany on paid parental leave is welcome. It assists gender equity, advances economic justice for women and benefits Australia's future population health and human capital.
Past generations of women have had to choose between a paid career and family. New mums (and some dads) still face an often exhausting struggle to balance demands of work and family.
It's time for a better deal.
- Dr Julie Smith is a fellow at the Australian Centre for Economic Research on Health, at the Australian National University. Her current research supported by Australian Research Council funding focuses on economic aspects of breastfeeding and care of infants including maternal time use and its relation to paid parental leave policy.