Stay-at-home versus working mums, feminism versus patriarchy, big business, big government, fertility and even super-sized mortgage repayments are all factors

Cradling cost of maternity leave | NEWS.com.au

Cradling cost of maternity leave

By Jessica Brown

September 30, 2008 10:50pm

THE battle over paid maternity leave is raging and this debate has it all.

Stay-at-home versus working mums, feminism versus patriarchy, big business, big government, fertility and even super-sized mortgage repayments are all factors.

But the real issue boils down to one simple question - who pays?

In yesterday recommending 18 weeks of parental leave for working mums, the Productivity Commission is trying to orchestrate a carefully balanced tightrope walk.

On the one hand, fiscal conservatives argue that the world is in financial meltdown - do we really want to be spending more of our taxpayers' (quickly dwindling supplies of) money?

On the other hand the unions, women's groups and assorted cheerleaders of big government spending are crying out for more taxpayer dollars.

How can we continue to undervalue the needs of our children, they argue.

While the Productivity Commission report resists some of the more outlandish claims to pay women - including those on well-above average incomes - their full salaries for six to 12 months from the public purse, it still calls for an extra $450 million per year from taxpayers.

Given that the Government signalled cutbacks on so-called "middle class welfare' in the May Budget by means testing the Baby Bonus and Family Tax Benefit B, this extra spending represents a contradiction in terms of both policy and principle.

The 18-week scheme will cost an extra $280 million when compared to the 14 weeks that the commission was expected to recommend.

Of the report's additional spending, $61 million will fund two weeks of paternity leave, reserved specifically for dads on a "use it or lose it" basis.

While it seems like a great idea to give mums extra support after the birth and to get dads more involved in child-rearing, the commission's report acknowledges that overseas versions of this policy haven't had the desired effect with the dads.

Is it really appropriate to use such a large sum of taxpayer dollars for what is essentially a feminist feel-good policy?

It's a lot of our money to be spending on something that we know from the research overseas doesn't work.

On the positive side, the commission argues that 18 weeks of paid leave will allow most parents to take the six to nine months off work which child health experts say is optimal.

This can be achieved through a combination of the paid leave component as well as parents using their own savings and other entitlements such as annual leave.

It's positive because it gives mums a chance to breastfeed their babies and recover from childbirth.

Parents will be able to provide one on one care at the most important time.

Importantly, this move also sets out a principle of shared responsibility.

Sure, it's helpful for the community to ease the burden on new parents through taxpayer subsidies but it also makes it clear to parents that the ultimately responsibility lies with them.

Paid parental leave is about supporting healthy babies and women's employment - not about subsidising mega-mortgage repayments or the infamous Baby Bonus plasma TV.

If new parents want to keep the same standard of living, they'll need to plan and save for it themselves.

It also helps the Government to resist the inevitable push which will come for longer periods of paid leave.

Australia already spends well over the OECD average on families, and any push for a bigger slice of government funding than that recommended by the Productivity Commission will be extremely hard to justify.

In terms of financial support from the Government, Australian parents aren't exactly doing it tough.

If longer periods of parental leave are demanded, a fair solution is to help parents fund it themselves.

It's called income smoothing: making sure that money you have had in the past, or will have in the future, is available when you really need it - such as when you're on parental leave.

For most Australians, the concept isn't new.

We already do it with HECS, mortgages, superannuation and insurance.

Why not for parental leave too?

Parental Leave Saver Accounts could allow parents to save for their parental leave, rolling unused savings into super or another asset.

The infrastructure for this system already exists, evident in First Home Saver Accounts and superannuation.

If families had not saved, or if their savings ran out, they could apply for an income-contingent loan.
Repayments would increase as family income increases, ensuring that loan repayments did not have a significant negative impact on household budgets.

The concept of both the community and individual parents meeting the cost of having a child is fair, but we need to keep in mind that Australian families already get it pretty good.

While some families will benefit from the new parental leave scheme, everyone will have to pay.

Jessica Brown is a policy analyst at the Centre for Independent Studies. Her paper Baby Steps Toward Self-Funded Parental Leave was released by CIS last week