Parental leave funds should go to childcare: Productivity Commission

A draft report from the Productivity Commission has questioned the benefits of the federal government’s paid parental leave scheme, recommending some of the funding for the scheme would be better spent if directed to supporting childcare.

The commission’s draft report into childcare and early childhood learning adds to the growing concerns about the government’s flagship policy, which has been a source of worry for many SMEs.

While Prime Minister Tony Abbott and Treasurer Joe Hockey reaffirmed the government’s commitment to the scheme when they delivered the government’s first budget in May, there has also been signs of unrest within the Coalition’s ranks over the policy.

In its current form, the proposed scheme would give parent’s six months or 26 weeks of parental leave based on the recipient’s full-time salary, plus superannuation, with the maximum payment capped at $50,000.

But the Productivity Commission says the benefits of the Coalition’s scheme are “unclear”.

“The commission considers that it is unclear that the proposed changes to the paid parental leave scheme—which is more generous than the existing scheme and that recommended in the commission’s 2009 report on paid parental leave—would bring significant additional benefits to the broader community beyond those occurring under the existing scheme,” said the commission.

“There may be a case, therefore, for diverting some funding from the proposed new scheme to another area of government funding, such as ECEC (early childhood education and care), where more significant family benefits are likely.”

“Such a move could add up to a further $1.5 billion per year to Australian Government assistance for ECEC,” said the commission.

Diversity strategy and compliance consultant Prue Gilbert told SmartCompany “any recommendations aimed at increasing female attachment to the workplace at a time when they are most likely to leave, are welcome”.

But Gilbert says it’s important to remember that paid parental leave is a form of childcare.

“So reducing the length of time women, or parents, can access paid parental leave, will have a direct impact on the cost of childcare,” says Gilbert.

And while Gilbert says the focus of these schemes is rightly on helping parents return to work, she says it is important that someone also stands up for the right of the child, whose development will benefit from spending more time with their parents in the first 12 months of their lives.

The government has consistently argued that its proposed scheme will benefit small businesses.

“I grew up in a small business family and my parents couldn’t afford to pay paid parental leave to a receptionist,” said Treasurer Joe Hockey at the Joint Economic and Social Outlook Conference in Melbourne earlier this month.

“My father had to endure a turnover of staff that went off to the public service to get paid parental leave, or went to a big business to get paid parental leave when he couldn’t afford to do it,” said Hockey.

“For the first time, we are putting [small business] on the same level playing field as big business, for the first time we’re putting them on the same level playing field as the public service.”

The Productivity Commission report looked more widely at the child care industry, recommending government support for childcare be streamlined into a single, per-child payment paid directly to child care providers. The payment would be means-tested and cover up to 100 hours of childcare a fortnight for families where at least one parent works or studies.

The report has also made recommendations relating to families who employ nannies or au pairs, suggesting families who employ nannies should gain access to the childcare subsidy and au pairs on working visas from other countries should be allowed to work for 12 months instead of six.

The commission said its recommendations would encourage up to 47,000 more mothers to return to work and increase the number of hours of childcare used each week, while also reducing the proportion of childcare fees paid by parents.