Among the surprises revealed during stakeholder briefings over the Abbott Government's paid parental leave legislation is a plan to use constitutional powers to override the existing provisions within private employer contracts and industrial agreements. Marie Coleman was briefed by federal government officials and explains what's in store.

The Abbott Government wants to have its new Paid Parental Leave Scheme (PPL) legislation passed through both Houses of Parliament before July 1, 2014 (when the new Senate takes office). Implementation is to start on July 1, 2015.

Rushed stakeholder consultations are underway during January, with a view to getting an exposure draft of the legislation ready before autumn.

The basic parameters of the Abbott scheme are as laid out prior to the federal election:

26 weeks paid leave for the primary carer paid at the primary carer's income level, subject to a payment cap of a total of $75,000. Women earning less than Adult Minimum Wage (AMW) will be paid at AMW.
2 weeks paid leave (of the 26) for the partner, at the partner's income level, same cap as for primary carer.
Superannuation at employer rate, or a base rate 9.25 per cent of income payable to the primary carer during the period of leave (some issues yet to be resolved).
Paid through Centrelink (not by employer).
Financed by 1.5 per cent levy on company incomes to be paid by companies with an after tax turnover above $5 million per annum, offset by some changes to company tax rates.
The scheme is proposed to subsume and replace the current Commonwealth scheme, introduced by the Rudd Labor government, which is paid (subject to a residency and an income test at $150,000 per annum) for 18 weeks at the Adult Minimum Wage level, regardless of the actual income of the primary carer, with two additional weeks available to the partner also at AMW.

The Government has made it clear that any related changes to the Fair Work Act sought by interested parties, such as the Australian Greens, will not be on the table.

Approximately 51 per cent of currently employed women have access to employer paid PPL (either through industrial awards, or individual employment contracts), which they may access in addition to the current Government scheme. This includes State, Commonwealth and Local Government employees as well as private sector arrangements. This will cease under the proposed new arrangements. It is likely that some low paid Commonwealth and State employees currently able to access both their employer scheme, and the (Labor) Government scheme, will be losers under the new arrangements.

In a surprising step, the Commonwealth proposes to use the social services powers in the Australian Commonwealth Constitution to override private employer contracts as well as industrial agreements. This has the potential to raise alarms about whether the Commonwealth might similarly use its powers to override other sections of individual contractual agreements or industrial awards.

At this time, the attitude of unions covering state and local government employees is not known. However, premiers have agreed at a December 2013 COAG meeting to have officials work with the Commonwealth to discuss integration of schemes (most states have multiple state-financed PPL schemes under differing awards).

Under current arrangements, women who are not able to access PPL, as a result of not meeting the work test, have the Baby Bonus of $5437 to fall back upon. However, on March 1, 2014, the Abbott Government will abolish the Baby Bonus. There will be a significantly smaller addition to Family Tax benefit A of $2000 on the birth of the first child, and $1000 for second and subsequent children.

There are some concerns that women on contracts, or working casually in highly seasonal industries (for example, tourism in Tasmania in the summer ... not much winter work) may not be able to meet the work test. Many school teachers are now employed on rolling short term contracts, and have no work-no pay during the summer school break. They will also have no fall-back of significance. This is an issue which is being raised by stakeholders.

There are also problem issues around the definition of income. Many couples running an enterprise (tradesmen whose wives take bookings, do the accounts) may not pay the wife a wage. The same is the case for many doctors' wives. How then to determine the income level to be replaced? The issue also arises where a woman may be employed on a low base rate wage, but earn significant additional income through bonuses, or commissions. The issues arising from difficulty in defining income for replacement purposes also flow on to decisions about the most appropriate rate of payment of superannuation, but it appears that the basic 9.24 per cent rate will apply at AMW.

While the proposed new scheme has a duration of 26 weeks (compared to the 18 weeks post-birth of the current scheme), one significant difference is that up to 6 weeks of the leave can be taken before the birth. With the possibility of another two weeks being surrendered for partner leave (albeit at the partner's income level), the balance will be 18 weeks paid leave post birth, just like the current system. The National Foundation for Australian Women is pressing for the partner leave to be additional to the 26 weeks, and provided on a take it or lose it basis, as is common in many OECD schemes

continue

In the consultations, some employer groups are signalling that they want to be the paymaster (but using government funding) in order to maintain the connection with their employees. It seems that an opt-in provision is possibly likely to be maintained for this.

The financing of the scheme is seen by many big enterprises as an imposition on them when they are already offering PPL and a range of other family friendly benefits. However, it is apparent, but unconfirmed as yet, that enterprises not constituted as companies, yet which have a turnover over the $5 million per annum after-tax threshold, will not pay the levy.

Many big not-for-profits (aged care, disability and more) do have an annual turnover beyond the $5 million threshold, are associations, not companies, and don't pay company tax. Most religious organisations are not constituted as companies. Their employees will be eligible to claim PPL.

The majority of legal, architectural and similar professional entities are not constituted as companies, and will also escape the levy. However, their existing PPL schemes will be caught in the overriding legislation.

Some spirited public debate and behind the scenes lobbying can be expected once the exposure draft of the legislation is available. The Prime Minister has already conceded publicly that some negotiations/concessions may be required to ensure passage of the Bill in both Houses.


http://www.abc.net.au/news/2014-01-22/coleman-ppl/5212708

And the rightards insist that wealthfare is a myth.

Here's all the proof anyone could need that it's nothing of the kind.

An absolute joke.
Worst policy ive ever seen.
Even nanny state communists like gough wouldnt have tried this.
Jesuit priest, big spending (business's money)  and to support couples having babies.
Since when is business even remotely responsible for peoples decisions to breed.
Ludicrous joke.
Scott morrison should stage a coup and take over the federal liberal party.
Send communist tony and malcolm to manus island ;)

The cost of this stupid policy is going to hurt:

1. small business as big business recovers the cost of the 1.5% levy. Banks will charge small businesses higher interest rates on their loans as one example.

2. Those saving and investing towards their retirements—dividends will be franked 1.5% less, hurting their income (the levy is not considered a tax so no franking.)

3. Those living off investments in retirement

4. Everybody earning less than $150,000 per annum.

The stupid Greens, conservatives in fact, will agree to this complete waste and may just reduce the cap to $100K which really does not fix the idiocy of this idiotic scheme! With the private sector still indebted and not having much confidence this idiotic piece of middleclass welfare is going to see spending fall even further. This scheme values some babies MUCH more than others.

If a woman wants to stay home for 6 months looking after her new baby is there any need for the taxpayers to pay her wage for the full six months? Don’t think so—the woman can use annual leave, long service leave etc to cover two of those months—which is why the more limited Labor PPL only covers four months.

And once the 6 months is over—what child minding facilities are available so the women can return to work?

Complete and utter crap from Abbott.....If I was a cynic I would say Abbott is doing this only because he has three daughters who would benefit from such a crap policy.....Surely Abbott is not that shallow and self serving???

;) ;) ;)

Apparently his  daughters, school girls at the time, thought up this idiocy. They must have been smoking something good!

PPL should only go to white intellligent parents.

bwahahahaha more comedy GOLD from sprinty!

this is about all one can expect from the libs ... poorly thought out policy that will do more damage than good.


PPL, NBN, DA,  the list goes on......

Not NBN—Fraudband!

Won’t even start being rolled out to 2017, maybe.

This is why we need a 1/2 trillion dollar debt.

Over generous.

Dumb politicians making dumb promises.

Needs to be scrapped, the ALP policy seemed pretty good to me.

There will be lots more crud like this, middle class welfare, pork, irresponsible not-thought-out spending, just like when Howard was PM!

In the meantime—what are the shambles doing about the DEBT! ?

Doctor Jolly wrote on Jan 23^rd, 2014 at 9:18am:

This is why we need a 1/2 trillion dollar debt.

Yes we need it, that's why the ALP delivered $400 million of it to us.

::)

Under $300Bn and that wasn’t net debt either.

FriYAY wrote on Jan 23^rd, 2014 at 9:26am:

Doctor Jolly wrote on Jan 23rd, 2014 at 9:18am: This is why we need a 1/2 trillion dollar debt. Yes we need it, that's why the ALP delivered $400 million of it to us. ::)

$400 million now? It's a pity your erections don't go up as fast as labors debt!

John Smith wrote on Jan 23^rd, 2014 at 10:49am:

FriYAY wrote on Jan 23rd, 2014 at 9:26am: Doctor Jolly wrote on Jan 23rd, 2014 at 9:18am: This is why we need a 1/2 trillion dollar debt. Yes we need it, that's why the ALP delivered $400 million of it to us. ::) $400 million now? It's a pity your erections don't go up as fast as labors debt!

bugger you cock head

FriYAY wrote on Jan 23^rd, 2014 at 11:05am:

John Smith wrote on Jan 23rd, 2014 at 10:49am: FriYAY wrote on Jan 23rd, 2014 at 9:26am: Doctor Jolly wrote on Jan 23rd, 2014 at 9:18am: This is why we need a 1/2 trillion dollar debt. Yes we need it, that's why the ALP delivered $400 million of it to us. ::) $400 million now? It's a pity your erections don't go up as fast as labors debt! bugger you cock head

strike a nerve, did I? ;D ;D ;D

John Smith wrote on Jan 23^rd, 2014 at 11:07am:

FriYAY wrote on Jan 23rd, 2014 at 11:05am: John Smith wrote on Jan 23rd, 2014 at 10:49am: FriYAY wrote on Jan 23rd, 2014 at 9:26am: Doctor Jolly wrote on Jan 23rd, 2014 at 9:18am: This is why we need a 1/2 trillion dollar debt. Yes we need it, that's why the ALP delivered $400 million of it to us. ::) $400 million now? It's a pity your erections don't go up as fast as labors debt! bugger you cock head strike a nerve, did I? ;D ;D ;D

No.

Just responded to your banal dribble with and appropriate rejoinder.

FriYAY wrote on Jan 23^rd, 2014 at 11:15am:

John Smith wrote on Jan 23rd, 2014 at 11:07am: FriYAY wrote on Jan 23rd, 2014 at 11:05am: John Smith wrote on Jan 23rd, 2014 at 10:49am: FriYAY wrote on Jan 23rd, 2014 at 9:26am: Doctor Jolly wrote on Jan 23rd, 2014 at 9:18am: This is why we need a 1/2 trillion dollar debt. Yes we need it, that's why the ALP delivered $400 million of it to us. ::) $400 million now? It's a pity your erections don't go up as fast as labors debt! bugger you cock head strike a nerve, did I? ;D ;D ;D No. Just responded to your banal dribble with and appropriate rejoinder.

yeah right .... don't worry, I believe you....... not ;D ;D ;D

Labor left about $200b of debt.

Liberals promised to cut spending to REDUCE debt.

Instead they are raising debt to 1/2 a trillion and increasing spending (eg. PPL).

They lied, get over it.

St George of the Garden wrote on Jan 23^rd, 2014 at 7:13am:

The cost of this stupid policy is going to hurt: 1. small business as big business recovers the cost of the 1.5% levy. Banks will charge small businesses higher interest rates on their loans as one example.

No, the cost will be borne by the taxpayers. The companies paying 1.5% more tax to pay for his PPL will get a 1.5% reduction in their tax. Tony saying companies will pay for it is a cop out so he doesn't have to explain how he will fill his 5 billion dollar@year black hole. We know how though, cut welfare to the needy

Doctor Jolly wrote on Jan 23^rd, 2014 at 12:14pm:

Labor left about $200b of debt. Liberals promised to cut spending to REDUCE debt. Instead they are raising debt to 1/2 a trillion and increasing spending (eg. PPL). They lied, get over it.

With the Greens help.

::)

Setanta wrote on Jan 23^rd, 2014 at 12:50pm:

St George of the Garden wrote on Jan 23rd, 2014 at 7:13am: The cost of this stupid policy is going to hurt: 1. small business as big business recovers the cost of the 1.5% levy. Banks will charge small businesses higher interest rates on their loans as one example. No, the cost will be borne by the taxpayers. The companies paying 1.5% more tax to pay for his PPL will get a 1.5% reduction in their tax. Tony saying companies will pay for it is a cop out so he doesn't have to explain how he will fill his 5 billion dollar@year black hole. We know how though, cut welfare to the needy

I wonder if that 1.5% reduction in company tax will still go ahead? But the cost of the levy will be recovered by big business—no way are they going to subsidise small/medium business!

Also wonder at precautions against fraud? Family company, may have wife on the books for income splitting purposes, give her a meaningless title and when she gets pregnant—qualifies for $75K handout!

FriYAY wrote on Jan 23^rd, 2014 at 9:23am:

Over generous. Dumb politicians making dumb promises. Needs to be scrapped, the ALP policy seemed pretty good to me.

I agree. The only thing that can be improved with the ALP's policy is extending it to 26 weeks when it is affordable to do so.

Another thing - anyone that is able to negotiate a six-figure salary should be able to negotiate top-up payments for parental leave.

Setanta wrote on Jan 23^rd, 2014 at 12:50pm:

St George of the Garden wrote on Jan 23rd, 2014 at 7:13am: The cost of this stupid policy is going to hurt: 1. small business as big business recovers the cost of the 1.5% levy. Banks will charge small businesses higher interest rates on their loans as one example. No, the cost will be borne by the taxpayers. The companies paying 1.5% more tax to pay for his PPL will get a 1.5% reduction in their tax. Tony saying companies will pay for it is a cop out so he doesn't have to explain how he will fill his 5 billion dollar@year black hole. We know how though, cut welfare to the needy

Exactly - the "levy" is fictitious, just accounting trickery to hide the real source of the funding.

FriYAY wrote on Jan 23^rd, 2014 at 1:02pm:

Doctor Jolly wrote on Jan 23rd, 2014 at 12:14pm: Labor left about $200b of debt. Liberals promised to cut spending to REDUCE debt. Instead they are raising debt to 1/2 a trillion and increasing spending (eg. PPL). They lied, get over it. With the Greens help. ::)

I wouldnt be blaming the greens if I were you. Greens policy is a random "yes/no" algorithm. You luckily got a yes this time. Doesnt mean it was right

Bam wrote on Jan 23^rd, 2014 at 3:22pm:

Setanta wrote on Jan 23rd, 2014 at 12:50pm: St George of the Garden wrote on Jan 23rd, 2014 at 7:13am: The cost of this stupid policy is going to hurt: 1. small business as big business recovers the cost of the 1.5% levy. Banks will charge small businesses higher interest rates on their loans as one example. No, the cost will be borne by the taxpayers. The companies paying 1.5% more tax to pay for his PPL will get a 1.5% reduction in their tax. Tony saying companies will pay for it is a cop out so he doesn't have to explain how he will fill his 5 billion dollar@year black hole. We know how though, cut welfare to the needy Exactly - the "levy" is fictitious, just accounting trickery to hide the real source of the funding.

No, it is much more machiavellian than you think. If company tax is reduced by 1.5% so is the amount dividends are franked—the “levy” (really A Great Big New Tax) not counting for franking.

Thus—those who have super or their own investments in shares lose some income because more tax is levied. Those retired and living off investments also lose income. Those who qualify for $75K baby bonuses can resort to generous tax dodges created by those economic illiterates, Howard & Costello, to offset the drop in franking dividends.

So, in two ways will most of us pay and pay to have a few rich bitches sit on their arses for six months at our expense. Less income drawn either now or in the future and significant increase in the cost of living. Insidious, totally flawed middleclass welfare.

St George of the Garden wrote on Jan 23^rd, 2014 at 5:01pm:

... Insidious, totally flawed middleclass welfare.

Do you remember the days when John Howard taxed the bejesus out of us and used the proceeds to buy our votes? Ahh memories!

Yup, Swan spent 6 years removing all that unaffordable, irresponsible spending by Howard.

Mind you, still like $50Bn a year of such spending, helping only the very rich, left. Some reason the Libs not even going to look at it.