Peter Strong: The government’s paid parental leave system encourages small businesses to break the law

Some years ago, the then Labor Government announced it would make paid parental leave (PPL) available to everybody.

Those of us in the small business community thought that was pretty good. Finally, universal paid parental leave. Excellent!

Then the government said Centrelink would not pay the eligible people directly but would send the money to the employer, who would then have to pay the employee, by putting the money into their bank account via each pay run.

We thought that was pretty stupid. Nobody unnecessarily includes a third party in a payment process. Nobody who understands business does that. 

Basically, Centrelink would approve the eligibility of the person, then send that person’s funds to the business, and then the business would give those funds, through a pay run, to the eligible person.

We complained about the extra unnecessary red tape, but were told it would “only take five minutes”. In small business, when we are told something will only take five minutes we know to ring our partners and tell them to put our dinners in the oven because we will be late. It doesn’t matter whether you are a worker or a business person, five minutes is never five minutes.

We explained this process would create problems for a small business person, particularly with managing inputs to their ‘chart of accounts’ and entering information through the accounting and payroll software. 

The public servants, and I’m pretty sure the minister at the time, didn’t know what a ‘chart of accounts’ was and had definitely never used one. It is an integral part of a business and if you get it wrong there will be a lot of confusion and mistakes – ask any accountant.

To assist in understanding, we then explained the PPL payment is not a grant or income from sales or a loan. So just what is it? For the purposes of bringing the funds into the business through the chart of accounts, it must be listed as ‘Other (PPL)’. But how would you take it out at the other end?

For the pay run, we pointed out a person would have to manually process that pay or it would cause mistakes to be made with the Business Activity Statement (BAS) and the end-of-year tax payment summaries (the old group certificates) as well as with superannuation, leave accrual and other leave.  

It was suggested by the minister’s office that a simple Q&A be provided via a website that would help a small business person complete the pay run. We explained to no avail that was not possible as there are many different types of software and different formats of charts of accounts. We also pointed out that once you need a Q&A, it means the process isn’t simple.

​The Paid Parental Leave ‘Employer Toolkit’

So, we assume under direct pressure from the Minister, the public servants came up with a so-called ‘PPL Employer Toolkit’. For a process that would ‘only take five minutes’ we ended up with an instruction that is 50 pages long, with the last four pages consisting of HTML and XML code that a small business person can use in their software. 

That’s right – the small business person is supposed to hack into the software and replace the code that currently exists with the suggested code.

It’s not just crazy but also illegal and irresponsible. A government agency is telling small business people to break the law and hack into proprietary software (somehow or other) to satisfy a plainly stupid idea. How would the small business owner hack into an online accounting program, even if they wanted to? Would they get arrested if they actually tried?

The solution is simple: pay the money directly from Centrelink to the eligible person. Tell them it’s tax-free, don’t bother mentioning it on their tax return. All good.  

You can see the PPL Employer Toolkit HERE but just for making a point, I’ve included below one of the pages of code for your amusement.

From page 47 of the Toolkit:

“XML sample file—one customer only

The following XML sample file shows the format of the file and where each section repeats with additional employees and Payment Groups.

XML sample file—complete example

The following XML sample file shows a full example of an employer with multiple employees and Payment Groups.​

<pplTrnData>

<payDestRpt>

<batchHdr>

<trnType>PYI523</trnType>

<tpId>123456789X</tpId>

<rptFmt>XML</rptFmt>

<rptDate>2011-02-28 </rptDate>

<payDestDesc> FORTNIGHTLY NIGHT STAFF</payDestDesc>

<busName>BEST FOODS PTY LTD</busName>

<emplyrABN>12345678912</emplyrABN>

<dlvryDate>2011-02-28</dlvryDate>

<pplPayFreq>2WE</pplPayFreq>

<acctName>BEST FOODS</acctName>

<acctBSB>123456</acctBSB>

<acctNum>123456789</acctNum>

</batchHdr>

<batchData>

<payGrp>

<payTrn>

<trnType>PYI522</trnType>

<envId>A</envId>

<empName>WHITE MARY M</empName>

<empId>123456789</empId>

<pplClaimRef> PA00000068T/001</pplClaimRef>

<dlvryDate>2011-02-28</dlvryDate>”

Peter Strong is the former chief executive of the Council of Small Business Organisations Australia.