Research fellow and author of Fairer Paid Parental Leave, Matthew Taylor, says a Parental Leave Contribution Scheme (PLCS) would be a fairer and more sustainable approach than the Coalition’s alternative.
“Under a PLCS, money would be given to working families as a loan, which would begin to be repaid only once parents were earning above a minimum repayment threshold,” Mr Taylor says.
Mr Taylor estimates that a typical family with two children would pay off their loan within five to eight years, and would not pay more than six per cent of their annual income towards the loan.
“Importantly, both parents would be responsible for the loan, with the higher-income earner paying the lion’s share of repayments,” he says. “A PLCS recognises the unpaid work of parents – usually mothers – who stay at home with a newborn during the parental leave period, and ensures that the primary income earning parent – usually the father – contributes to the cost.”
Related: Why proper paid parental leave is long overdue
Mr Abbott’s proposal, which is proving unpopular with some MPs, would pay new mothers 26 weeks at their full wage, capped at a maximum payment of $50,000. It’s estimated to cost the country more than $5 billion annually – that’s $3 billion more than Labor’s current scheme, which offers 18 weeks’ pay at the minimum wage.
“At a time when the Coalition government is talking about ending the ‘age of entitlement’ and budget savings, it is extraordinary that they are proposing a scheme that would deliver large amounts of cash to the highest income families,” Mr Taylor says.
“Despite the Abbott government’s claims that the scheme is a productivity measure, the additional $3 billion of expenditure will do nothing to increase women’s labour force participation.”
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