where we are now
DESCRIPTION
Paid Parental Leave Draft report October 2008 Presentation Paid Parental Leave Forum Robert Fitzgerald AM Angela MacRae Commissioners. Where we are now. Around 285 000 babies born in 2007 175 000 to women in paid work prior to birth - PowerPoint PPT PresentationTRANSCRIPT
Productivity Commission
Paid Parental LeaveDraft report October 2008
Presentation
Paid Parental Leave Forum
Robert Fitzgerald AM
Angela MacRae
Commissioners
Productivity Commission 2
Where we are now
• Around 285 000 babies born in 2007– 175 000 to women in paid work prior to birth
• 53% of female employees and 50% of male employees have access to employer-provided paid parental leave*
Mothers returning to paid work after childbirth
3 months 6 months 12 months
All mothers 11% 20% 41%
Mothers employed prior to birth 15% 29% 58%
*Using adjusted ABS figures
Productivity Commission 3
Objectives
• Child and maternal health and wellbeing
– the importance of a 6 to 9 months timeframe
• Labour market attachment
– Lifetime perspective
• Work/life balance and gender equity
– The ‘sort of society we would like to live in’
Productivity Commission 4
Design features follow from objectives
Child & maternal welfare
Work/life balance& gender equity
Labour forceattachment
Adequate duration & payment
More than welfare for most
Employment-relatedmeasure
Includes provisions forboth genders
SuperannuationEmployment-based
eligibility test
Link to NationalEmployment Standards
Employers as‘paymasters’
AdditionalityExtra weeks at home
Stronger attachment to workforce
Productivity Commission 5
Key features of the Commission’s scheme
• Duration– 18 weeks parental plus 2 weeks paternity
• How much?– Minimum wage ($544 per week) regardless of
pre-birth income – taxable and included for means tests
– No access to baby bonus or FTB(B) while on leave
– Super at 9% of minimum wage or actual wage if lower – for subset only
Productivity Commission 6
Key features of the Commission’s scheme
• Who pays?– Government funds cash payments– Employers to fund capped super – Employers act as ‘paymasters’
• Eligibility– Work for average of 10 hours per week over 12
months before birth (incl. self-employed)– Extra conditions for super
• Non-eligible parents– Existing entitlements plus paternity leave plus
removal of means test on baby bonus
Productivity Commission 7
From the employee perspective
Have you given birth?
Have you worked for the last 12 months?
For an average of 10 hours a week?
With multiple employers?
With one employer? $543.78 for 18 weeks plus super
plus job return guarantee
$543.78 for 18 weeks
Productivity Commission 8
From the employer perspective
Has an employee given birth?
Has she worked for you for the last 12 months?
For an average of 10 hours a week?
Act as paymaster for government
Pay super for 18 weeks
Job returnguarantee
Productivity Commission 9
Eligibility
Employed mothers*
Not employed
Eligible for statutory paid parental leave 139,000
(79% share of employed)
Eligible for super contributions 118,000 (85% share of those eligible for paid
parental leave)
Insufficient workplace attachment 36,000 (20%
share of employed)
176,000
109,000
Mothers of newborn children
* Includes self-employed & contractors
Productivity Commission 10
How much per family?
Paid parental
leave
Paid paternity
leave
Total
$ $ $
Government contribution 9 788 1 088 10 876
Employer contribution 881 98 979
Total 10 669 1 185 11 854
Maximum paymentsa
a Benefits are all in gross terms (ignoring tax effects and offsets against social transfers) and are for a parental leave period of 18 weeks and paternity leave of 2 weeks
Productivity Commission 11
Business impacts
• Super contributions– capped & at 9%– additional eligibility tests– maximum cost 3% of annual salary
• Many small employers would face no costs in a given year– only face costs when person on leave– average 1.1% of employees would be on maternity leave per year
for businesses employing less than 20 people
• Paymaster function for some employers• Costs for business of overall obligations lowered by using
– quick reimbursement (maybe PAYG withholding)– existing administrative arrangements– better leave notices
• They will get retention benefits
Productivity Commission 12
How much will it cost each year?
0
200
400
600
800
1000
1200
1400
1600
Gross costs less Offsets = Net costs
Cost categories
$ m
illion
Parental leave $1,336m
Paternity leave $61m
Superannuation contributions $106m
Baby bonus savings $670m
Tax & other welfaresavings $307m
Net governmentcontributions
$452m
Net businesscontribution $74m
Net schemecost $527m
Productivity Commission 13
Funding by weeks
0
$200
$400
$600
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18Weeks of parental leave
So
urc
e o
f fi
na
nc
ing
($
pe
r w
ee
k)
(a) Includes the net funding of paternity leave and tax deductions for employers' superannuation contributions
$543.78
Baby bonus savings Tax & budget savings
Additional cash cost to government
Net business super contribution
Other government contribution (a)
Productivity Commission 14
Gross costs of two models
Commissionscheme
‘Top up’ model
Government $m 1 398 1 398
Business $m 106 1 225
Total costs $m 1 504 2 623
Business share Share 7% 47%
Productivity Commission 15
A case study of a small business
PC scheme Top up model
Cost to employer of leave for one employee earning $65 000
$881 $13 856
Share of annual wage 1.4% 21.3%
Business gross revenue ------- $1 million -------
Net profit before policy change ------- $42 000 -------
Net profit after policy change $41 383 $32 301
% change in net profit -1.5% -23.0%
Business with 4 employees
*Based on a business with a gross margin of 6% and a tax rate of 30%
Productivity Commission 16
This is a draft report, so we will be seeking feedback
• October: Background appendices on web• October: Informal consultations with participants• 10 November: Hearings commence• 14 November: Closing date for submissions• End February: Final report to government
For hard copies of the draft report email:[email protected]
Productivity Commission
Paid Parental LeaveDraft report
Presentation to Melbourne
Paid Parental Leave Forum
5 November 2008