Replacing the federal government’s Paid Parental Leave (PPL) system with one based on principles of gender equality is essential to tackling impediments to women’s economic participation, and would help Australia move on a wider level towards equal responsibility for raising children, KPMG argues in a paper released today. The report was developed with the Business Council of Australia’s Women’s Participation Taskforce.
The current PPL system provides for 20 weeks paid at the minimum wage. There are 18 weeks usually paid to the mother, and two weeks are generally paid to the father, as “Dad and Partner Pay”
Under the KPMG scheme, after the birth or adoption there would be an allocation of 20 weeks for two parents, with a maximum 18 weeks for either parent. The number of weeks under the scheme would increase to 26 weeks over six years, rising by two weeks every two years. This approach would allow movement towards more equal parental leave without taking away any existing benefit.
The paper, the sixth in KPMG’s gender equity series, also proposes an ‘equality supplement’, where bonus weeks are awarded to the extent that responsibility for care is shared more equally. If the nominated carer weeks were allocated evenly, within a 55/45 percent range, then each parent would receive two additional weeks of leave. If the split was within, for example, 65/35 percent, then each parent would receive one additional week.
KPMG estimates that by the time this proposal was fully implemented in year six, it would cost the government approximately $1.1 billion in additional PPL payments annually. But the measure would contribute to decreasing the workforce participation gap between men and women. KPMG has assessed that national household consumption could exceed the base case by a cumulative $140 billion (in current terms) over twenty years, if we could reduce the 2018 participation gap by half.1
Alison Kitchen, KPMG Australia Chairman, said: “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.”
“Parental leave is the starting point and Australia needs a system which encourages parental equality from day one. The current PPL scheme does not do this and is based on a traditional ‘primary carer/secondary carer’ model where all applications for primary care default to the birth mother. Under our proposed scheme, flexibility and equality would be the default settings for paid parental leave.”
She added: “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 percent of men nominate caring for children as a principal barrier to working. This shows the impediments to women’s economic participation, which a revamped PPL system could help to address.” 2
The report finds that current international experience is moving away from the old ‘maternity leave’ approach to systems where such leave can be transferred, in whole or in part, to a father, or where there is a non-transferrable “individual” component for a parent. This overcomes the problem of fathers feeling obliged to transfer their share to the mother.
KPMG Economics & Tax Centre Partner, Grant Wardell-Johnson said: “As a country, we need to enable men to participate in child-raising more fully. Currently, more than 99 percent of government Paid Parental Leave for the private sector is taken by mothers and a similar percentage of “Dad and Partner Pay” is taken by fathers. So it’s clear that the existing approach reinforces cultural norms based on a heavily gendered allocation of care responsibilities.
“Over recent years, many large companies have taken steps to expand their paid parental leave offerings and given fathers and partners access to the same amount of leave available to mothers. But two-thirds of Australian workers work in smaller businesses and many are self-employed. These businesses are less likely to have the resources to invest in staff and 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.”
The report’s principles underpinning a revamped scheme of government-funded parental leave include:
- The system should have a component which is based on a non-transferrable individual right rather than only a family right.
- The scheme should not be gender-based in legal form and should cater for same-sex relationship.
- Individual rights should operate on a ‘use it or lose it’ basis to promote take-up of the leave and should not be available to be realised in the form of a different benefit.
- Benefits of the government scheme should be additional to any benefits provided by an employer scheme and not be reduced because of this.
- The scheme should incentivise parental care arrangements that are more equal. This could take the form of additional paid leave or greater flexibility.
- The ‘use it or lose it’ period should be two years from the birth of the child.
Grant Wardell-Johnson added: “Our report shows there are considerable advantages for Australia to move to a primary model of gender equality for parenting. It would give rise to a higher standard of living arising as a result of increased female productivity and participation, a reduction in the gender pay gap and the gap in unpaid domestic work.
“It would also be good for fathers, giving them greater involvement in their children’s lives – but it is crucial here that there is widespread business support for such a change. It is important that men do not feel a stigma for taking leave or that their bosses will feel it is career-limiting. Many business leaders are already showing that this is not the case through words and action affirming that playing a larger care-giving role is a positive for their careers and that of their partner. We believe our proposals will help in encourage more businesses to follow this lead.”
1 KPMG’s first paper in the gender equity series, Ending workforce discrimination against women, published in April 2018, used economic modelling to show that taking focused steps to increase female participation rates could deliver a $140 billion lift in living standards over twenty years.
2 This new paper points out that in 2018-19, almost 50 percent of women cite caring for children as the main reason they are not working or not working more hours. Caring for children has consistently been the main barrier to work for women over at least the last decade. By contrast, only 3 percent of men nominated caring for children was the main barrier to work or working more hours in 2018-19. it is consistently one of the least cited reasons by men.