Fernando Ossorio: el decadente

parental leave

Some contemplating parenthood expressed concern about how they would cope: I’m 30 years old and would love to start a family in the next couple of years but at present, without paid maternity leave, having a child any time soon is financially impossible for us. (personal response)

HREOC said that paid parental leave would promote gender equality:

… by fostering shared responsibility between men and women for the care of children (sub. 128, p. 6).

Emily’s List said that it would help:

… to address women’s workplace disadvantage and decrease the level of sex and maternity discrimination that women continue to experience in the workplace. (sub. 65, p. 1)

The Work + Family Policy Roundtable said:

Incongruities between the public and private worlds of work and family are an obstacle to gender equality, family formation and parents’ capacity to reconcile paid work with family responsibilities. (sub. 220, p. 4)

Rachel Cowling said:

… surely the fundamental objective should be to support health and wellbeing in families, which in turn supports healthy child development. Feeling a level of control over one's life is really critical to a sense of wellbeing … (sub. 39, p. 1)

Catholic Social Services Australia said that:

… there’s a danger of us talking about how families might adjust to workforce participation rather than … talking about how workforce might adjust to family requirements. (transcript, p. 837)

The Public Health Association of Australia highlighted the wellbeing benefits that arise when society recognises the dual roles of mother and worker. In its view:

… when women are recognised both as mothers and as workers then there is less likely to be as broad a prevalence of depression. That goes specifically to sickness but it's also about wellness, it’s about feeling good about themselves and being able to manage and being able to manage their children in a positive way in a positive environment in a positive community. (transcript, p. 23)

Family Day Care said:

I think that a message should be sent by the Australian community to fathers that they are a very important part of a young child’s life. (transcript, p. 829)

The Victorian Division Women’s CPA Network argued for income support for parents: A mother should not be penalised for having a child by then having her career put on hold. This places financial strain on the family unit and pressure for the mother to return to work earlier than she would like so her career and financial contribution to the family unit can be sustained. (sub. 150, p. 1)

1.10 PAID PARENTAL LEAVE

Box 1.2 (continued)

One participant noted that offering paid maternity leave:

… will help create a cultural shift by placing value on the unpaid work that women do as mothers. (personal response)

Working Women's Centre South Australia Northern Territory Working Women's Centre and Queensland Working Women's Service said:

The objectives ought to be to provide women with appropriate time away from their workplace to rest and prepare for the birth or adoption of their baby, to give birth and recover, to bond with their child and establish a care routine including the option of breastfeeding. This time should be free from anxiety about income and also keep the woman employee engaged with her workplace. A paid parental scheme is important for the ongoing health and wellbeing of the child. (sub. 70, p. 2)

NIFTeY said that the primary objective of paid parental leave should be:

… support for the needs of babies, determined by sound evidence, rather than opinion or lobby groups. (sub. 55, p. 9)

Olivia Ball argued that:

Paid maternity leave is a human right. It remains for the Australian Government to fulfil this right for all women within its jurisdiction. … Given financial support, many women would want to stay home longer with their babies and would breastfeed longer too. Breastfeeding itself has a strong basis in human rights (e.g., rights to life, health and food) (sub. 52, p. 1)

For example, many participants placed the issue of paid parental leave in the context of human rights. Claimed rights included:

• that babies and young children deserve a good start in life

• that parents deserve support for having a child

• that parents in paid work deserve some balance between home and employment

• that taxpayers without children deserve not to pay for the needs of other parents

• that businesses deserve a fair opportunity to be viable.

Dealing with the issue in terms of rights is particularly difficult, as sincerely and strongly held views expressed in some submissions may be contradicted by sincerely and strongly held views expressed in other submissions. In many cases the conflict came down to implied tradeoffs between different rights that were accepted as legitimate. Such complexities and conflicting viewpoints make a clear direction for policy difficult to ascertain.

Often related to the question of rights are concepts such as ‘equity’ and ‘work- family balance’. These are social issues whose relevance for policy depends on evolving community norms and ethics and on careful definition of what, for

OBJECTIVES 1.11

example, ‘equity’ means (particularly to people in different financial, family and workplace circumstances). Submissions variously advocated greater equity between men and women, between working and non-working mothers, between mothers who are eligible for paid parental leave and those who are not, and between mothers and other women in the workplace. These matters are discussed in chapter 6.

Public views on mandating paid parental leave are to some extent polarised. As an indication, the Commission received about 250 submissions and roughly 500 personal feedback emails, overwhelmingly in favour of some form of paid parental leave, as were virtually all attendees at the public hearings. (Employer support was conditional upon it being wholly taxpayer funded.) A common view expressed by individuals was that a period of paid parental leave would have reduced the financial pressures on them to return to work earlier than was preferred, the baby bonus notwithstanding. The consensus in favour of paid parental leave is not absolute, however. Many comments left on media websites and internet blogs were opposed, arguing that having a child is a private decision that entails costs that are appropriately financed by the parents, not by taxpayers or by a levy on wages. A key question for this inquiry is to examine the private benefits and costs, and the public or community-wide benefits and costs, that might arise from a mandated paid parental leave scheme.

Many participants see paid parental leave in broader symbolic or signalling terms — that implementation of a mandatory scheme would demonstrate community acceptance, as manifested through the political process, of the underlying rights being advocated. While difficult to capture in an investigation of benefits and costs, these symbolic issues have value and need to be taken into account.

Current programs help address some objectives

Some of the objectives discussed above are at least partly met by current government policies and programs and employer-provided paid parental leave arrangements. The government-mandated right to 52 weeks of unpaid parental leave facilitates workforce attachment. It effectively provides many employees with a right of return to the job they held before the birth of a child. In addition, the financial stresses of having a baby are reduced by the range of cash benefits that governments make to parents on the birth of a child and thereafter.

At the time of the birth of a baby, or the adoption of a child under two years of age, the $5000 baby bonus is payable. It is non-taxable and, from January 2009, will be paid in 13 fortnightly instalments and means-tested to families earning less than $150 000 per annum (as assessed on family earnings in the six months after the birth) (chapter 9).

1.12 PAID PARENTAL LEAVE

Taken together, the baby bonus and the guarantee of a return to the same or similar job provides de facto paid parental leave for many parents (AIFS, sub. 138, p. 4). This view is supported by participants who noted, in their responses to the Personal Feedback Paper, that the baby bonus had allowed them to stay at home longer than otherwise after the birth of a child. One question for this inquiry is the extent to which a mandated paid parental leave scheme could secure better outcomes than are provided by these arrangements.

Many parents are also eligible for ongoing financial support by way of family tax benefits A and B, the parenting allowance and certain payments to cover the cost of child care. (These payments are ongoing and far outweigh the baby bonus in terms of the ultimate value to parents/families.) In total, payments to parents on the birth of a child and thereafter are high by international standards. Moreover, the structure of assistance is also among the most progressive in the OECD in the extent to which assistance is directed to low income families with children (Whiteford 2008). The ability of any design feature of a paid parental leave scheme to achieve particular objectives depends on how the scheme interacts with existing welfare arrangements. In addition to government support, an increasing number of employers provide their employees with paid parental leave. Employer-provided parental leave is available to around 50 per cent of working women (and some large employers of women have only recently commenced providing paid maternity or parental leave, so may not be included in the data reported here). One issue for this report is the likely effect of a government-mandated scheme on the nature and extent of benefits that employers would be willing to offer employees in future. These matters are discussed in chapter 7.

1.4

Some rationales are stronger than others

Whether a particular objective is valid depends on its underlying rationale — the reasons for seeking to achieve that objective. It depends on good evidence that paid parental leave can help further that objective. It also depends on evidence that meeting the objective would lead to community benefits that would not otherwise be achievable.

Of the objectives listed in the previous section, those that, singly or together, appear more likely to support a case for paid parental leave, whether by addressing inherent market failures or difficulties in realising social norms, are:

• enhancing maternal and child health and development

OBJECTIVES 1.13 • promoting gender equity and work/family balance.

Close analysis of each, including their rationales, the strength of evidence as to their impacts, and the implications for the design of any paid parental leave scheme, are discussed in chapters 4, 5 and 6. However, the rationales for two commonly-stated objectives are not strong.

Financial assistance

Many participants indicated that their inability to take fuller advantage of the existing unpaid parental leave rules was due to the difficulties of managing family life on reduced household income for the period of the mother’s absence. While the experiences of individual women vary enormously, many personal responses to the inquiry expressed concern about having to return to work earlier than they would have preferred, or than may have been optimal on health and welfare grounds, because of financial pressures. Early return to work for financial reasons is even more of an issue where the mother is the main or sole income earner. Some who were contemplating having a family in the near future expressed concern about how they would cope financially.

Were increased financial assistance by itself to be a key objective, it could be addressed effectively by increasing one or more family payments. But the design of a paid parental leave scheme needs to include an element of financial assistance that encourages or facilitates a period of absence from the workforce, reducing the financial pressure on some mothers to return to work early, to help achieve better health and welfare outcomes for mothers and children. In this way, it has a different role to family payments. Financial assistance is better seen as a design feature that creates an incentive to take parental leave, rather than an objective in itself.

Enhancing the fertility of the population

Some participants saw paid parental leave as having a beneficial effect on population fertility, citing public discussion in recent years about Australia’s birthrate. However, recent research by the Commission (box 1.3) shows that Australia’s fertility level has been rising over the past few years and is now relatively high compared with most OECD countries. It also found that, while universal paid parental leave might provide a small stimulus to fertility, its capacity to make a significant further difference to fertility levels in a cost-effective manner is small. For such reasons, seeking to increase fertility is unlikely to be a sound objective for a paid parental leave scheme.

1.14 PAID PARENTAL LEAVE

Moreover, adopting increasing fertility as an objective would also require some difficult decisions to be made about how that objective might be pursued. For example, one approach to explicitly target fertility might be to pay parental leave at a lower rate for the first child and at a higher rate for second and later children. Another might be to target benefits on those who currently have few or no children. A third might be to target benefits on those who, irrespective of whether they already have children, are judged more likely to respond to a higher payment. There are troubling implications in each case that are likely to rule out implementing schemes with these design features.

To the extent that paid leave encourages women to have children earlier, there could be some health and development benefits for the parent and the child. For example, a range of physical and mental disorders in children (rates of schizophrenia, for example) are strongly related to the age of the mother and the father. These caveats aside, the Commission does not see increasing fertility as an appropriate objective for a paid parental leave scheme.

Box 1.3 Key findings from the Commission’s recent work on fertility

Births in Australia are at an historical high — around 285 000 babies born in 2007 — with an estimated total fertility rate of 1.93 babies per woman, the highest since the early 1980s. Fertility rates have been generally rising for the last six years.

Much of the recent increase is likely to reflect the fact that over the last few decades, younger women postponed childbearing and many are now having these postponed babies. This has shown up as higher fertility rates for older women.

Some of the increase is also likely to be due to an increase in the number of babies women will ultimately have over their lifetimes.

• For example, today’s young women say they are expecting to have more babies

over their lifetime than those five years ago. Rising fertility reflects several factors:

• Buoyant economic conditions and greater access to part-time jobs have reduced the

financial risks associated with childbearing and lowered the costs associated with exiting and re-entering the labour market.

• With more flexible work arrangements, women today are more able to combine

participation in the labour force with childrearing roles.

• A recent increase in the generosity of family benefits is also likely to have played a

part, although probably only a modest one.

Australia appears to be in a ‘safe zone’ of fertility, despite fertility levels being below replacement levels. There is no fertility crisis.

OBJECTIVES 1.15

1.5

Some issues for scheme design

From the viewpoint of the mother, a mandated period of paid parental leave would be clearly beneficial. It would allow her to take a longer period of absence from her job than she would otherwise find affordable, or to enjoy additional financial assistance over the same period of absence that she was intending to take anyway. These are private benefits, the costs of which would come from others in the community, via taxation revenues (if government-funded) or by way of levies on employers (and the subsequent costs that such funding arrangements generate). From the viewpoint of the community that pays for paid parental leave, the focus should be on broader benefits that can be generated over and above those that arise from the private decisions of people. So, for example, if some women typically return to work earlier than the scientific evidence suggests would be beneficial for the child’s health and development needs, a program that encouraged those women to take a longer period of absence would, on average, generate a public benefit. Program design therefore focuses on seeking to achieve benefits that are additional to those that would arise through private decisions (sometimes termed ‘additionality’). Such public benefits can provide the rationale for a government- mandated paid parental leave scheme.

To achieve particular public benefits, there are many combinations of duration, eligibility, level of payment and other features that could be proposed.

Differences in scheme design can arise from differences in the emphasis given to particular objectives. For example, in very broad terms, seeking better health outcomes for the mother and child implies a focus on the length of time away from work, while workforce attachment implies a focus on the rules for obtaining leave (and ensuring that social welfare does not create incentives to stay out of the workforce). More specifically, the objective of ensuring a sufficient period of time for a mother to recuperate after the birth could be addressed by establishing a period of leave exclusively for use by the mother. Alternatively, the objective of encouraging increased involvement of fathers in the early periods of a child’s life could be facilitated by providing greater flexibility for parents to share leave provisions or even reserving some leave for the exclusive use of the father.

A particular concern is the scope for tension between the objectives proposed. For example, an extended period at home to aid the recovery of the mother and the development and wellbeing of the child may be somewhat at odds with maintaining the mother’s attachment to the workforce, where a long absence may see her work skills decline or become dated, perhaps creating barriers to her return to work.

1.16 PAID PARENTAL LEAVE

Similarly, quarantining a parental leave entitlement for the father/partner, rather than allowing couples to decide for themselves who takes the leave, may help reduce social attitudes antithetical to greater male caring roles, but it reduces the options available to the couple.

Many participants were aware of such tensions. For example, the ACTU noted that:

[there are] two social goods, … the benefit to the economy and to households associated with increased maternal participation in the paid workforce and … the child