Costing a Paid Maternity Leave Scheme
National Centre for Social & Economic Modelling University of Canberra
Costing a Paid Maternity Leave Scheme
Consultancy report for the Human Rights and Equal Opportunity Commission
Rachel Lloyd, Ben Phillips, Gillian Beer and Ann Harding
8 November 2002
About NATSEM
The National Centre for Social and Economic Modelling was established on 1 January 1993, and supports its activities through research grants, commissioned research and longer term contracts for model maintenance and development with the federal departments of Family and Community Services, Health and Ageing, and Education, Science and Training.
NATSEM aims to be a key contributor to social and economic policy debate and analysis by developing models of the highest quality, undertaking independent and impartial research, and supplying valued consultancy services.
Policy changes often have to be made without sufficient information about either the current environment or the consequences of change. NATSEM specialises in analysing data and producing models so that decision makers have the best possible quantitative information on which to base their decisions.
NATSEM has an international reputation as a centre of excellence for analysing microdata and constructing microsimulation models. Such data and models commence with the records of real (but unidentifiable) Australians. Analysis typically begins by looking at either the characteristics or the impact of a policy change on an individual household, building up to the bigger picture by looking at many individual cases through the use of large datasets.
It must be emphasised that NATSEM does not have views on policy. All opinions are the authors' own and are not necessarily shared by NATSEM.
Director: Ann Harding
National Centre for Social and Economic Modelling
University of Canberra ACT 2601 Australia
170 Haydon Drive Bruce ACT 2617
Phone + 61 2 6201 2750 Fax + 61 2 6201 2751
Email natsem@natsem.canberra.edu.au
Website www.natsem.canberra.edu.au
Acknowledgments
The authors wish to thank Annie Abello, Matthew Toohey and Lex Weaver for their assistance.
General caveat
NATSEM research findings are generally based on estimated characteristics of the population. Such estimates are usually derived from the application of microsimulation modelling techniques to microdata based on sample surveys.
These estimates may be different from the actual characteristics of the population because of sampling and nonsampling errors in the microdata and because of the assumptions underlying the modelling techniques. The microdata do not contain any information that enables identification of the individuals or families to which they refer.
Contents
Estimating the distribution of incomes
Estimating the number of women eligible for PML in each group
Employees who currently receive PML
Executive summary
The Human Rights and Equal Opportunity Commission (HREOC) has asked NATSEM to estimate the cost to the government of a paid maternity leave scheme. The scheme proposes that women who have worked for 40 out of 52 weeks in the previous year are eligible for 14 weeks maternity leave paid by the government at the amount of their salary prior to birth or the Federal Minimum Wage, whichever is lower. Women who receive paid maternity leave will not receive the Maternity Allowance or the Baby Bonus in the first year. They will also not be entitled to Family Tax Benefit Parts A and B for the period they are on paid maternity leave. The paid maternity leave will be taxable but not means tested.
NATSEM has developed a group model to estimate the costs of the scheme. Using ABS data, we have developed 200 hypothetical families and estimated the number of women in families such as these that would be eligible for paid maternity leave in a year.
1. Current system (no paid maternity leave)
Information about the woman's income both before and after the birth as well as the father's income is used to determine the family's entitlement to government benefits and their tax liability.
2. Proposed paid maternity leave system
The woman's income before the birth is used to determine how much paid maternity leave she would receive from the government under the proposed scheme. Her income before and after the birth and the father's income are used to determine the family's entitlement to government benefits and their tax liability. Because the woman is no longer eligible for some benefits and because her higher income will reduce entitlement to other benefits and increase tax, the government costs for these outlays will be reduced.
The gross cost to the government is the total cost of paid maternity leave for all women. In 2003-04 we estimate this would be $460 million.
The net cost of the scheme is the cost to the government once the effect of decreases in other government outlays and increases in taxation revenue are taken into account. This is found by comparing the costs to the government under the current and proposed systems. The net cost to the government in 2003-04 is estimated to be $213 million. In other words, $247 million, or over half of the gross cost, would be saved by reductions in other government outlays and increased tax.
The gross cost over the next four years is estimated to be $1 970 million while the net cost for four years is estimated to be $864 million.
Costs of a PML scheme in future years
|
Year
|
Gross cost $million |
Net cost $million |
|
2003 - 04
|
460 | 213 |
|
2004 - 05
|
481 | 215 |
|
2005 - 06
|
503 | 217 |
|
2005 - 07
|
526 | 219 |
|
Total
|
1970 | 864 |
Source: STINMOD/01b outyears model and NATSEM calculations
These figures are likely to overestimate the cost as some women already receive maternity leave paid by the Commonwealth. For those who currently receive paid maternity leave from another employer, the government subsidy will push them into higher income bands and hence reduce the net government outlays. If these effects are taken into account, we estimate the gross cost to government in 2003-04 would be approximately $429 million and the net cost would be $207 million. In addition, because women are likely to return to work later under the proposed scheme, the costs to the government of child care subsidies will be reduced.
1 Introduction
The Human Rights and Equal Opportunity Commission (HREOC) has asked NATSEM to estimate the cost to the government of a paid maternity leave (PML) scheme. The gross and net (once the effect of decreases in other government outlays and increases in taxation revenue are taken into account) costs are to be calculated. HREOC's specification of the proposed scheme is at Attachment A.
NATSEM considered a number of different ways to cost this proposed scheme. Ideally we would use a micro dataset of women who had a baby in the previous year that contained information on women's salary prior to the birth of their child, the number of weeks worked in the year prior to the birth, and their income and their partner's income in the financial year in which the child was born. The only dataset that met these criteria was the ABS Survey of Employment and Unemployment (SEUP), a longitudinal dataset collected in 1994-97. However, the small sample of women with a child under one and the poor quality of the income data meant that we felt that this dataset was not suitable for this model.
As a result, we decided to produce a group model which allocates women to one of 200 groups based on their income, the income of their partner (if they have one) and the time of the financial year at which the baby was born. The number of women in each group eligible for PML is estimated using published and unpublished results from ABS surveys. The value of government benefits for which the family is eligible and tax liability are calculated under the current and proposed systems using the hypothetical version of STINMOD, NATSEM's static microsimulation model of the tax and transfer system. The amount of Baby Bonus is not modelled in STINMOD and so we have modelled it in Excel. All of these pieces of information are combined to estimate the gross and net costs of the scheme.
2 Timeframe
HREOC asked us to cost the proposal for the next four years. Given that a paid maternity scheme is unlikely to be introduced before July 2003, the first year we have costed is the financial year 2003-04. STINMOD has an 'outyears' component which allows costings for future years. We have used the projected policy parameters (for example payment rates and thresholds) for 2003-04. To estimate the average income and number of women in each of the different income groups we used the base dataset for 2003-04. This dataset is derived from the 1996-97 and 1997-98 Survey of Income and Housing Costs - but with incomes uprated to estimated 2003-04 figures using factors such as changes to the consumer price index and average weekly earnings. The dataset is also reweighted to take account of changing demographic structures in the population (Bremner et al 2002).
For the 2004-05 financial year, we repeated the process using the 2004-05 STINMOD base dataset and projected parameters. We calculated the increase in costs between 2003-04 and 2004-05 and applied this factor to calculate costs for 2006-07 and 2007-08.
3 Overview of the approach
To calculate the costs of a PML scheme in 2003-04 we followed the following steps:
1. Define 200 hypothetical families. Of these 160 are couple families and 40 are single parent families. Women are divided into 10 equal groups based on their pre-child income and men into 4 groups based on their income. This gives 50 groups. To take account of the timing of births during the year, it is assumed that women have their child at one of four points during the year. So for each of the 50 income groups there are four possible scenarios in terms of timing of the birth. Sections 4 and 5 give more information on how this was done.
2. Estimate how many women there are in each of our family types and how many of these are eligible for the proposed PML scheme. This is done using information from ABS surveys. Section 6 provides more detail.
3. Estimate the income of the women in each of our groups for the financial year prior to the birth (which we will refer to as pre-birth income) and in the financial year of the birth (post-birth income), under the current situation (that is, no PML scheme). To calculate her income in the financial year after the birth, we assume that the woman takes 28.8 weeks of unpaid leave and then returns to work half-time. Section 7 expands on this.
4. Estimate entitlements to government benefits and tax liability under the current situation. We calculate the family's entitlement to Baby Bonus and use STINMOD to calculate entitlement to Maternity Allowance, Family Tax Benefit Parts A and B, Newstart Allowance, Parenting Payment and income tax liability. These depend on the woman's pre-birth income and tax, her post-birth income and the income of her partner if she has one. Sections 8 and 9 provide more information.
5. Estimate the post-birth income of the women under the proposed PML scheme. We assume that all eligible women take the full 14 week entitlement to PML which is paid at the woman's pre-birth salary but capped at the Federal Minimum Wage. They also take 28.8 weeks of unpaid leave and then return to work half-time.
6. Estimate entitlements to government benefits and tax liability under the proposed PML scheme. We use STINMOD to calculate entitlement to Family Tax Benefit Parts A and B, Newstart Allowance, Parenting Payment and income tax liability. Under the proposed PML scheme, the woman is not entitled to Maternity Allowance and Baby Bonus in the first year. She is also not entitled to Family Tax Benefit for the period she is on PML. We also estimate the amount the government would pay her while she is on PML. See Section 10 for more detail.
At this point, for each of our 200 cases we know the net cost to the government of supporting these families under the current situation and under the proposed PML scheme. We also have estimated how many women there are in each of these groups.
7. We estimate the gross cost to the government, that is the total amount it will pay in PML. To do this we multiply the amount each woman receives in PML by the number of women in each group and then sum up all of the groups to get the total. This is explained further in Section 11.
8. We estimate the net cost to the government of the proposed PML scheme. As women's incomes increase when they receive PML, they have a reduced entitlement to some government payments and will pay more tax. Under the proposed scheme, they do not receive Maternity Allowance and Baby Bonus in the first year and the Family Tax Benefit entitlement is reduced. Therefore, the total cost to the government is reduced. For each group, we calculate the difference between the net cost to government of supporting the family under the current situation and the net cost to government under the proposed PML scheme. We then multiply this difference in net cost by the number of women in each group and sum up all of the groups to get the total. We assume that women will not be worse off in terms of their government benefits under the proposed scheme. This is explained in Section 12.
In addition, we estimate costs for the financial years 2004-05, 2005-06 and 2006-07. This is explained in Section 13.
In Section 14, we estimate the effect of assuming that a certain proportion of women receive some PML already.
4 Estimating the distribution of incomes
Women's entitlement to PML depends on their income before the birth. The family's entitlement to other government benefits will depend on the family's income during the financial year of the birth. This will depend on the father's income and the mother's income, which depends on her pre-birth income, return to work pattern and the timing of the birth in the year.
We defined 40 different income groups, grouping working women of child-bearing age into 10 equally sized groups (deciles) based on their earned income and the men partnered with such women into four groups (quartiles) based on their private income. We used the STINMOD outyears basefile for 2003-04 (which as detailed in Section 2 above is an updated version of the ABS Surveys of Income and Housing Costs 1996-97 and 1997-98) to estimate the average income for women in each decile and men in each quartile. We also used it to estimate the number of women in each of the 40 combined income groups (each of the 10 groups of women is paired with each of the 4 groups of men). The average incomes of the women and men in these groups and the estimated number of women in each group are given in Table A-1.
We have also defined 10 groups of single working women of child-bearing age. Again, we used the STINMOD outyears basefile for 2003-04 to estimate the average income for women in each decile. The number of single women who will be eligible for PML is likely to be fairly small. Section 6 explains how the number of single women eligible for PML was estimated.
It should be noted that we have not included women aged under 20 years, as we believe that few of these would be in the workforce when they have a child. However, self-employed women are included.
Table A-1 Distribution of women's and men's incomes incomes used in the model
Note: Only includes women (including self-employed women) in a couple aged 20-44 working full or part-time who have earned income (business income plus wage and salary income) greater than 0. Only includes men partnered with these women. Private income is income from wages and salary, own business, investments, and other private sources. Negative incomes reset to zero.
Source: STINMOD base population 2003-04
Table A-2 Distribution of single women's incomes used in the model
|
Female income declines
|
Average female earned income ($pw)
|
|
1
|
121
|
|
2
|
313
|
|
3
|
448
|
|
4
|
532
|
|
5
|
604
|
|
6
|
672
|
|
7
|
749
|
|
8
|
843
|
|
9
|
992
|
|
10
|
1286
|
Note: Only includes single women (including self-employed women) aged 20-44 working full or part-time who have earned income (business income plus wage and salary income) greater than 0.
Source: STINMOD base population 2003-04
5 Timing of the birth
The woman's income in the financial year of the birth depends on when the baby is born. For example, if a woman earning $40 000 per annum has a baby in July and currently takes unpaid maternity leave for 12 months from 1 July, she will have no earned income and the tax she pays as well as any social security entitlements will be based on this. On the other hand, if the baby is born in January and the woman takes 12 months unpaid maternity leave from 1 January, in the financial year in which the baby is born the woman's earned income will be $20 000 and social security entitlements and tax liability will vary accordingly.
Naturally, there are 365 possible days on which the baby might be born and each will produce a slightly different outcome in terms of the woman's income. However, in order to take account of timing of the birth in a simple way, we have divided women into 4 groups assuming maternity leave begins on 1 January, 1 April, 1 July or 1 October. We assume that births are evenly distributed through the year so that one-quarter of each group has their baby in each of the quarters. As a result we now have 200 hypothetical groups (50 income groups by 4 quarters).
6 Estimating the number of women eligible for PML in each group
As detailed above, the number of partnered women aged 20-44 working full or part-time in each combined income group was estimated using the STINMOD outyears basefile for 2003-04. This number was divided by 4 to account for the fact that we have estimated results for women having their child at four different points in the year.
Only women who have worked for 40 weeks in the past year are eligible for PML under the proposed scheme. Using the ABS Labour Force Experience February 2001 (cat. no. 6206.0) publication, we estimated the proportion of women who had worked for 39 weeks or more out of those who had worked at all during the year to be 81.63 per cent. We applied this constant percentage to the number of women in each of our groups. The percentage can be changed in the model to estimate the effects.
To estimate the proportion of women aged 20-44 who have a child in a year, we used the ABS Births 2000 (cat. no. 3301.0) publication. From this we estimated that 6.53 per cent of women in that age group have a child. We applied this constant percentage to the number of women in each of our groups. This percentage can be changed in the model to estimate the effects upon our results.
After both of these percentages have been applied to the numbers derived from the STINMOD outyears basefile, we have estimated the number of women in each of the 160 groups of partnered women who would be eligible for PML.
As noted above, we would expect the number of single women to be eligible for PML to be fairly small. In order to estimate the number of women in each of the 10 groups of single women we examined the number of working women with children under one year of age in the STINMOD basefile. The number of single women was approximately 10 per cent of the number of partnered women. Therefore we have estimated the number in each group of single women eligible for PML to be 10 per cent of the number of partnered women.
7 Return to work pattern
A woman's income in the financial year of the birth will also depend on her return to work pattern. Some women are likely to return to work in the first 14 weeks (although we believe that this number will be very small if women receive PML). Many will supplement PML with a period of unpaid leave. On return to work many women will work part-time. This is a behavioural effect and hence very difficult to estimate. It is likely to depend on the woman's income and that of her husband, as well as the work culture. The best indication of what return to work patterns would be under a PML scheme are likely to come from employees who currently have a similar period of PML. That information is difficult to obtain.
The best source of information is the ABS Career Experience 1998 publication (cat. no. 6254.0). This gives the number of women who took various periods of unpaid leave. The length of the break is given in ranges so we used the mid-point of the range and the number of women in each group to estimate the average length of unpaid maternity leave to be 28.8 weeks. This is similar to the average length of unpaid maternity leave taken by women in the NSW Public Service.
Using the results from the ABS survey, we have assumed an average return to work pattern that is applied to all women under the current and proposed structures (Table A-3). In the current situation, women are assumed to have no PML, take 28.8 weeks unpaid leave and then return to work half time. In our scenario for the proposed scheme, women take 14 weeks PML, 28.8 weeks unpaid leave and then return to work half time.
Table A-3 Assumed return to work patterns under current and proposed systems
| Current system | |
| Paid maternity leave |
0
|
| Unpaid maternity leave |
28.8
|
| Work fraction on return to work |
0.5
|
| Proposed PML scheme | |
| Paid maternity leave |
14
|
| Unpaid maternity leave |
28.8
|
| Work fraction on return to work |
0.5
|
8 Baby Bonus
Under the proposed scheme, a woman receiving PML would not be entitled to the Baby Bonus for the first 12 months. In order to estimate the saving to the government, we need to estimate current entitlement to Baby Bonus. For each of the 200 hypothetical cases, the woman's annual taxable income before the birth is estimated by multiplying her weekly earned income by 52. (In other words, earnings from investments and social security are not included. Normally these would be included in taxable income, but including them makes the modelling much more complicated and we assume that they will be small and have little effect on the outcomes.) The gross income tax paid in the base year is estimated in Excel. Using the annual income before the birth, the base year gross tax and the number of eligible days (based on the quarter of birth), the first year Baby Bonus is calculated in Excel. (STINMOD does not model the Baby Bonus.)
9 Current situation
The woman's earned income in the financial year of the birth under the current situation (that is, no PML) is calculated according to the quarter of birth and the assumed return to work pattern under the current situation. This is divided by 52 to give the woman's weekly private income. This and the father's private weekly income (where appropriate) are input to the STINMOD hypothetical model to calculate the current entitlement to Maternity Allowance, Family Tax Benefit A, Family Tax Benefit B, Parenting Payment and Newstart Allowance and their income tax liability. Government expenditure under the current system for each woman is calculated by adding entitlement to Baby Bonus, Maternity Allowance, Family Tax Benefit Parts A and B, Parenting Payment and Newstart Allowance and subtracting income tax.
10 PML Proposal
The weekly amount of PML is estimated to be the lower of either the woman's earned income or the Federal Minimum Wage. The Federal Minimum Wage is currently $431.40 per week. We assume that the Federal Minimum Wage will increase by 3.7 per cent per year, which has been the average growth rate for the previous five years. Therefore, the Federal Minimum Wage in 2003-04 is estimated to be $447.40.
The woman's earned income in the financial year under the proposed scheme is calculated according to the quarter of birth, the assumed return to work pattern, and the period of paid and unpaid maternity leave. This is divided by 52 to give the woman's weekly private income. This and the father's private weekly income (where appropriate) are input to the STINMOD hypothetical model to calculate the new entitlement to Family Tax Benefit A, Family Tax Benefit B, Parenting Payment and Newstart Allowance, and their income tax liability under the proposed scheme. The Family Tax Benefit Parts A and B amounts are multiplied by 38/52 because the family is not entitled to these payments for the 14 weeks that the woman is on PML. These amounts are added to PML and social security entitlement and tax is subtracted to give government expenditure under the proposed PML scheme for each woman.
11 Gross cost of the scheme
Gross cost of the scheme is calculated by multiplying the amount of PML the government will pay for each case by the number of women in the group and summing across all groups. The gross cost based on our assumptions is $460 million in 2003-04. This accords reasonably closely with other estimates of the cost of the scheme. The Department of Finance and Administration costed the scheme at $475 million. The ACTU costed the scheme at under $400 million. The Democrats gross estimate is $425 million. However, it should be noted that each of these has slightly different assumptions about the scheme they are costing. The National Pay Equity Coalition has a higher estimate of $804 million based on payment of up to Average Weekly Earnings.
12 Net cost of the scheme
Net cost of the scheme is calculated by subtracting the net cost to government under the current situation from the total cost to government under the proposed scheme. For the purposes of the costing we have included in the cost to government only the payments that are affected by the introduction of PML. For each hypothetical case, the net cost to government under the current situation is the amount of government payments (including Baby Bonus, Family Tax Benefit Parts A and B, Maternity Allowance, Parenting Payment and Newstart Allowance (other allowances are not affected in this model)) minus income tax. This is then multiplied by the estimated number of women in each group and summed over all the groups to give the total cost. The cost under the proposed scheme is the total amount of government payments (PML, reduced Family Tax Benefit Parts A and B, Parenting Payment Partnered and Newstart Allowance) minus tax. Again, this is multiplied by the estimated number of women in each group and summed over all the groups to give the total cost. It should be noted that we have assumed that no woman will receive less government payments under the proposed scheme than she does under the current scheme.
Under the proposed PML scheme, the government will reap some savings because the Baby Bonus and Maternity Allowance will not be paid and Family Tax Benefit Parts A and B will not be paid for the period of PML. In addition, women's incomes are likely to be higher than under the existing system, causing reductions in entitlement to other payments and an increase in tax liability.
Accounting for these 'savings', we have estimated the net cost of the proposed scheme in 2003-04 to be $213 million. In other words, the 'savings' amount to $247 million or over half of the gross cost of the scheme.
13 Future years
Using the STINMOD outyears model for 2004-05, we estimated that the increase in costs was approximately 4.57 per cent for gross costs and 0.9 per cent for net costs. Applying these factors to each of the next four years we estimate that the costs of the scheme will be as provided in Table A-4.
Table A-4 Costs of a PML scheme in future years
|
Year
|
Gross cost $million
|
Net Cost $million
|
| 2003 - 4 |
460
|
213
|
| 2004 - 5 |
481
|
215
|
| 2005 - 6 |
503
|
217
|
| 2006 - 7 |
526
|
219
|
| Total |
1970
|
864
|
Source: STINMOD/01b outyears model and NATSEM calculations
So, in total, the gross cost over the next four years is estimated to be $1 970 million and the net cost is estimated to be $864 million.
14 Employees who currently receive PML
Employees who currently receive PML fall into one of two categories - those who are currently paid by the federal government and those paid by another employer (be it state government or private companies). Very few employees receive 14 weeks PML so almost all would receive an increase. For example, a worker receiving 6 weeks PML would get an additional 8 weeks PML (capped at the Federal Minimum Wage). The effect on the employee is that in most cases their income would increase (though not by as much as employees currently receiving no PML), their entitlement to government benefits would be reduced and their tax would increase. The effect on the government will depend on whether or not the employee works for the federal government or another employer. If the employee works for the federal government, the gross cost to the government would be 2 weeks capped at the Federal Minimum Wage (as the government already pays the maternity leave for 12 weeks) and the government would reap savings from higher tax and lower government payments. For employees working for another employer, the gross cost will be 14 weeks capped at the Federal Minimum Wage (as for employees who have no entitlement to PML). There are likely to be higher savings however, as the higher incomes of this group will result in larger reductions in government payments and higher tax than for those who had no entitlement to PML.
To model these effects, we have developed a second model that allows three scenarios in terms of current PML entitlement - no entitlement, 6 weeks at full pay by an employer other than the federal government and 12 weeks at full pay with the federal government as the employer. While there are many other possible scenarios, we estimate that the 6 weeks is the average for employers other than the federal government. By adding these three scenarios, we have increased the number of cases to 600. It is difficult to estimate the number of women who are in each group but, based on unpublished 2000 Survey of Employment and Superannuation data, we have estimated that 62% have no entitlement, 30% have some entitlement funded by their employer and 8% receive full pay for 12 weeks funded by the Commonwealth.
Based on these estimations, the gross cost to the government in 2003-04 is $429 million and the net cost is $207 million.
15 Other savings
We have considered the effects on family benefits for one child only. If the family has more children, the higher income will mean that the amount of Family Tax Benefit for the older children will also be reduced and the total cost of the scheme will be lower.
In addition, if women remain out of the workforce for a longer period assisted by PML, they will have lower requirements for child care and this will be a further saving for the government in terms of Child Care Benefit.
16 Conclusion
The estimated gross cost to the government is $460 million. After taking account of clawbacks to the Federal government, via reductions in existing social security and family payments and increased income tax revenue, we estimate that the net cost will be $213 million. We estimate that the gross cost will increase by 4.57 per cent per year and the net cost will increase by 0.9 per cent. Therefore we estimate the total gross cost over four years to be $1 970 million and the net cost is estimated to be $864 million.
If we take account of the employees who currently receive paid maternity leave including those paid by the Commonwealth, the gross cost to the government in 2003-04 is estimated at $429 million and the net cost is $207 million.
References
ABS (Australian Bureau of Statistics) 2000, Births, cat. no. 3301.0, ABS, Canberra.
ABS (Australian Bureau of Statistics) 1999, Labour Force Experience, cat. no. 6206.0, ABS, Canberra.
ABS (Australian Bureau of Statistics) 1998, Career Experience, cat. no. 6254.0, ABS, Canberra.
ACTU (Australian Council of Trade Unions), ACTU Submission to HREOC's Paid Maternity Leave Inquiry, July 2002.
Bremner, K, Beer, G, Lloyd, R, and Lambert, S 2002, Creating a Basefile for STINMOD, Technical Paper No. 27- National Centre for Social and Economic Modelling, University of Canberra.
Attachment A
Structure of proposed paid maternity leave scheme
Funding
The national paid maternity leave scheme is to be funded by the federal Government. (Recommendation 1)
Coverage
Paid maternity leave is to be provided to women at the time of the birth of a child. The exceptions to this, where payment can be made to a woman's partner, will include: where the mother has died; where the mother is not medically able to care for the child (based on a doctor's opinion); or when the child has bee adopted. (Recommendation 2)
Paid Maternity Leave is to be available only to women in paid work. (Recommendation 3)
Paid maternity leave is to be available to the primary carer of an adopted child irrespective of the age of the child. (Recommendation 4)
Eligibility
In order to be eligible for paid maternity leave a woman must have been in paid work (including casual employment, contract work and self-employment) for 40 weeks of the past 52 weeks with any number of employers and/or in any number of positions. Access to this payment will not be means tested. (Recommendation 5)
Duration
The national scheme of paid maternity leave will provide for up to 14 weeks of paid leave to be taken immediately prior to and/or following the birth of a child. (Recommendation 6)
The paid leave must be taken as a continuous block. (Recommendation 6)
A woman may elect to take less than the full 14 weeks of paid maternity leave, but will only receive payment in the weeks taken as maternity leave. (Recommendation 6)
Payment Level
Government funded paid maternity leave is to be paid at the rate of the Federal Minimum Wage, or the woman's previous weekly earnings from all jobs, whichever is the lesser amount. (Recommendation 7)
Previous weekly earnings are to be calculated as the greater of either:
- a woman's weekly earnings from all jobs immediately prior to taking leave; or
- an average of her weekly earnings from all jobs during the time in employment over the previous 12 months. (Recommendation 7)
Payment mechanism
Paid maternity leave is to be paid as a fortnightly payment during the period of leave, administered by the federal Government and available through dual payment mechanisms. (Recommendation 8)
Specifically, an individual may elect to receive payment as either:
- a fortnightly direct payment from Government to the individual; or
- a payment from the employer to the individual with the employer reimbursed by Government (subject to the employer agreeing to offer this option). (Recommendation 8)
Role of employers
Employers should be encouraged to continue existing provisions for paid maternity leave and women, including public servants, will not be excluded from any government funded national scheme on the basis of receiving employer provided paid maternity leave. (Recommendation 9)
Employer top ups to a government funded paid maternity leave are to be provided for and encouraged. Such top ups should be negotiated through standard bargaining mechanisms. (Recommendation 10)
Employers may agree to take on the administration of paid maternity leave payments on behalf of the Government and may be required to play a role in validating entitlement to government funded paid maternity leave entitlements. (Recommendation 11)
Interaction with the industrial relations system
Current industrail arrangements in relation to maternity leave will continue. (Recommendation 12)
Payment level
A woman who receives paid maternity leave will not be eligible for the Maternity Allowance, the first 14 weeks of Family Tax Benefit Part A and Family Tax Benefit Part B, and the first 12 months of payment of the Baby Bonus. The maternity leave payment will be taxable. (Recommendation 13)
Individuals will have the option of taking other available social security payments where this would result in higher payments. (Recommendation 13)
