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Paid Parental Leave Bill 2010; Exposure draft of legislation implementing the government's announced paid parental leave scheme

CHAIR —Welcome. Thank you for your submission and also for your engagement. We know that your officers have been engaged in this process for the whole period, and we know that you bring a lot of expertise to us. I know you have received information about the protection of witnesses and evidence. If you would like to, please make an opening statement, then we will go to questions.

Ms Broderick —Thank you. I will make a short introductory statement. Members of the Community Affairs Legislation Committee, thank you very much for the opportunity to appear before you today as we gather to discuss the exciting, thrilling and long-awaited introduction of a national paid parental leave scheme in Australia. As you know, the Australian Human Rights Commission has had a longstanding record of promoting the introduction of paid leave for working parents in Australia. We have undertaken substantial public consultation, research and modelling of possible schemes, as is evident in our two previous submissions to the Productivity Commission. I have also had the benefit of building on the work of my predecessor, the former Sex Discrimination Commissioner, Pru Goward, who presented options for paid maternity leave in two reports that she did. The first was called Valuing parenthood and the second was called A time to value.

The commission’s work over the last 10 years has made a compelling case for urgent action. In fact, I am the fourth Sex Discrimination Commissioner to advocate for paid parental leave in Australia, so I am extremely pleased to be here. Hopefully, I will be the last Sex Discrimination Commissioner to do so. The commission endorses the paid parental leave scheme which the bill seeks to implement as a sound first stage for achieving a beneficial and equitable scheme of paid leave entitlements for parents in Australia. The scheme is a product of significant consultation, research and analysis. Although not all our proposals were adopted by the Productivity Commission or the government, we endorsed and supported the Productivity Commission’s model, as a balanced and equitable scheme, as a good starting point.

Given the short time frame for submissions and some of our resourcing constraints, we have confined our submission to this committee to addressing two areas which we consider to be key. The first is the inclusion of a superannuation component in the scheme. The second is the need for a legislated, independent review to be conducted two years after implementation of the scheme. The significant disparity between women’s and men’s retirement savings and the high proportion of women with alarmingly low superannuation balances I think is one of the gravest aspects of gender inequality in Australia. So, whilst the commission does not have a firm view on the appropriate funding model for the inclusion of superannuation, we firmly believe that superannuation entitlements are an essential and fundamental component of addressing gender inequality and therefore should be included in the first stage of any new paid parental leave scheme.

As we have stated in our previous submission to the Productivity Commission, whilst the proposed scheme represents a sound first step, we believe that the initial scheme should be independently reviewed in two years time so that a more comprehensive package of paid leave for parents can be considered. There appears to be some confusion, when we look at the explanatory memorandum and some of the other collateral material, as to whether the review that is proposed by the government would be in two or three years. Our view is that any review should be conducted as soon as is practicable after the second anniversary of the commencement of the legislation. Such an independent review would provide scope for progressively realising a world-class s scheme of leave that would eventually provide for up to one year of parental leave, which is what we included in our initial submissions. The commission therefore recommends that a provision be inserted into the legislation which provides for this two-year review.

We look forward to the committee’s response to the public consultations that take place today and next week and to working with others to ensure that the scheme is implemented and improved over time. Thank you very much.

CHAIR —Thank you very much. Do you wish to add anything, Ms Buchan?

Ms Buchan —No, thank you.

Senator ADAMS —Thank you for your presentation. Firstly, there seems to be confusion with some of the witnesses as to the definition of ‘primary carer’. In your view, what would you consider a primary carer to be?

Ms Broderick —A primary carer is someone who is responsible for the care right from the beginning, as defined in the legislation. But it may not necessarily be the mother, if that is the question. I have it here. It is section 47. If the child is in a person’s care in that period and the person meets the child’s physical needs more than anyone else in that period. We do not have any particular issues with section 47 as it was defined in the exposure draft.

Senator ADAMS —We have heard other evidence that six months is generally regarded as the optimal time for a mother to stay at home with her baby, especially if she wants to breastfeed. But under this scheme it means that women would have to cobble together their entitlements to achieve that length of leave. Do you consider that the 18 weeks is the best time or would you consider a longer time?

Ms Broderick —The World Health Organisation does say that six months is optimal for breastfeeding. That is their guidance. In the proposal that we put to the Productivity Commission we had a short first phase at 14 weeks for women and two weeks for men—the paternity part. Then we moved to a second phase, which was to have the review and then to extend the scheme out over time. That is our position today: we start with a scheme and the scheme that is here is 18 weeks but over time move that out to a scheme that would be six months. That is why we are keen that the review would happen within two years of the implementation of the scheme.

Senator ADAMS —Thank you. If women wanted to go longer, do you know what percentage of working women would be eligible for extra leave? Casual people and the self-employed, of course, would not. If it came in at 18 weeks, as per the legislation, would that affect a lot of women?

Ms Broderick —Are you talking about the additionality?

Senator ADAMS —Yes.

Ms Broderick —I know the Productivity Commission said that the majority of women will be able to, as you say, put together six months through what they are calling ‘additionality’—that is, where they have got long service leave, paid leave, whatever. I cannot give you a figure around that. What I can say is that on average women spend 10 months on maternity leave. I will just dig that up for you, if I can. I have a statistic here. It matches up with the parental preferences for care. We know from the Parental Leave in Australia Survey—and we can get you a reference for that—that on average Australian mothers go back to work around 10 months after taking leave. They do this through a combination of different types of paid and unpaid leave. But I cannot give you a figure as to what percentage of women would be able to take the 18 weeks and then move it out to six months because of the other periods of leave.

Senator ADAMS —There has been quite a lot of criticism in the submissions about the discrimination against those women that stay at home. Could you comment on that for me, please?

Ms Broderick —Yes, I do want to comment on that. We have never said that the baby bonus should be removed. We think it should stay, because all women work. The question is whether they are in paid work or unpaid work—we all know that. But one of the key objectives of the scheme is to keep women attached to the labour market. I consider that to be a really important objective, because I meet so many women at the minute entering into retirement who actually have very little retirement savings. In fact, we know women have half the retirement savings of men, and the main reason behind that is they have chosen to care. So, until we start to value unpaid caring work in some more financial manner, I think to have a scheme which will keep women attached to the labour market is a really important objective. When you look at the three objectives, one is about maternal health and child wellbeing and development; another is workforce participation—what I see as keeping women attached to the labour market; and the third one is around gender equality. They are all important objectives.

Senator HANSON-YOUNG —Thanks, Ms Broderick, for your evidence and the submission. Firstly, if we follow on from the issue of workplace attachment and the issue of workforce participation, a number of the submissions that we have received, including the submission from the ACTU, criticised the legislation for not having a strong enough link with the Fair Work Act, as that is of course where the unpaid maternity leave provisions sit. Do you have similar concerns about the lack of link with that act? If this is meant to be an industrial issue about workplace entitlement issue—and even if we are to build and strengthen—how do we do that if it remains able to be dressed down as a social welfare payment as opposed to a workplace entitlement?

Ms Broderick —I think you are right. It is interesting, because there is potentially a group of women who will have access to paid leave but not unpaid leave because that is a different work test—it is 12 months continuous service under the National Employment Standards. So I do think there should be a link between this and the Fair Work Act. I have briefly read the ACTU’s analysis of that and I broadly agree with what they are saying—that the periods should align, because really paid leave should sit within the broader context of unpaid leave. I think there does need to be some alignment there—although, we have not specifically made a submission on it.

Senator HANSON-YOUNG —On the issue of superannuation, I must admit I am staggered that superannuation is not included. Except for the argument of cost, there seems to be no real understanding or explanation as to why superannuation is not included. At a time when we know that the retirement income for women is significantly less than that of men—and based on that period of child-bearing and being out of the workforce—you would think that we would take this opportunity to try to bridge that a little bit. Do you think that superannuation has to be included in the first stage? And do you have any other explanation as to why you think that it may not be included currently?

Ms Broderick —The modelling shows that it would be a maximum of $881 per woman which would be tax deductible which would bring it down to about $440. In fact, if women earn less than the federal minimum wage—and quite a number of them will—then it would be even less than that. I think the Productivity Commission recommended that, if they are earning less than the federal minimum wage, then it should just be nine per cent of whatever that lesser amount is. It is not a huge amount. I suppose you have a different perspective if you are coming from small business—I agree with that.

From where I sit, as the Sex Discrimination Commissioner, when you look at the human face of this gender gap in retirement savings, there are a lot of older women who are living in poverty, and part of the reason for that is that they have chosen to care. The Paid Parental Leave scheme is about caring. I have not done the modelling, but I think we know that superannuation becomes valuable because of maturation, so the earlier you put your contributions in, the better off you are later on. The other thing I would say is that it is quite symbolic. It is saying: ‘Women are disadvantaged in retirement. In introducing this scheme, we acknowledge that and we make a statement around superannuation—that it should include a superannuation layer.’ After thinking about it quite a bit, that is where I have come out. Yes, I see the Productivity Commission have said, ‘Let’s defer it until the scheme’s bedded down,’ and I understand that, but my clear preference would be to have it in the first iteration of the scheme.

Senator HANSON-YOUNG —In relation to the length of time, some people are very strong in saying that it needs to be a minimum six months, based on various world standards and the World Health Organisation being a key organisation. You have said that preferably it should be up to a year. In the absence of any commitment from the current government to deliver that, what type of time frame do you think would be acceptable to build on the draft?

Ms Broderick —If you started with 18 weeks—and there is broad consensus and it comes off the back of the Productivity Commission report; I acknowledge that. That is why I am so keen on having the two-year review legislated in, because I think at two years there would be the potential to say: ‘How is it working? Is it achieving the three objectives that have been outlined for the scheme? What would be the impact of extending it to, say, six months as the next stage?’ That would follow a lot of international experience. The UK and any number of countries have developed their schemes that way. At least you would have the evidence there to allow you to make a good assessment about that. We have said in our submission that at that time you may need to look at potentially a different funding model, if you are talking about taking the scheme out. That could be pooled funding. There are different funding models that the Productivity Commission looked at. We would not necessarily say that that had to be a taxpayer funded scheme out at six months. But I think the two-year review is important, to look at that.

Senator HANSON-YOUNG —That would then need to be amended, because the current review does not talk about the length of time. It is much more specific about the superannuation entitlements.

Ms Broderick —And about the pay for dads. We are very much in favour of the pay for dads. We had that in our original submission. Once again the international experience showed us that, if there was a period allocated for dads on a ‘use it or lose it’ basis and that period did not revert back to mum if dad did not take it—or the supporting partner in same-sex couples—then dads and supporting parents did start to take that up. There is a lot of research which shows that close bonding with your newborn baby from very early on allows you to continue to develop that close relationship over the child’s lifetime. So we are in favour of a period for dads and supporting partners.

Senator FURNER —I want to ask about enforcement or compliance. In a previous life I represented many female workers in times of attempts at discrimination over parental leave in relation to the unpaid leave provisions of awards and agreements. The proposed bill has compliance enforcement provisions. Do you think they adequately cover areas where workers may be discriminated against as a result of these provisions in the workplace?

Ms Broderick —We have not looked in detail at that aspect of it and we have not included that in our submission. I absolutely agree there need to be enforcement and compliance provisions, as you say. We have not had the opportunity to have a really detailed look at that, so I really cannot make specific comment in relation to that.

Senator FURNER —Because both the state and federal discrimination acts provide for attributes of discrimination on the basis of sex, race and parental needs, that requires a link to this act in endeavours of discrimination. Do you think that is an appropriate link between the two acts to ensure that people understand there are not grounds for discrimination in this particular area?

Ms Broderick —It is interesting; there are the adverse action provisions of the Fair Work Act, of course, and then there are the antidiscrimination acts, particularly our act, which is the Sex Discrimination Act. We actually see quite a number of complaints which, of course, are not attached to whether or not you have a paid parental leave scheme but are more around the return to work issues. This has the links back to the Fair Work Act and the Fair Work Ombudsman, particularly, and the role of the Fair Work Ombudsman.

As I said, we have not looked at the enforcement and compliance provisions in a whole lot of detail but the Sex Discrimination Act would still allow individuals who feel they have been discriminated against on the basis of their sex to once again come to the Australian Human Rights Commission or to a state based commission, as you say.

Senator FURNER —I want to get some clarity around the review and what you are seeking. The second reading speech by the minister indicated that the government is committed to a review commencing two years after the commencement of the act.

Ms Broderick —It is interesting: that is in the second reading speech, but some of the explanatory notes say three years. I think it is confusing and that is why it needs to be quite clear. I would actually like to see something in the act which talks about the review.

There are some other acts which do that—they have provisions for a review after a period of time. Our legal department have been able to retrieve this one for me—a review by a parliamentary joint committee looking at ASIO, ASIS and DSD. It concerns the listing of terrorist organisations—absolutely nothing to do with the Paid Parental Leave scheme!—but it has a provision which allows a parliamentary joint committee:

… to review, as soon as possible after the third anniversary of the commencement of this section, the operation, effectiveness and implications of subsections …

In this part it is subsections or whatever, but that could be the effectiveness of the Paid Parental Leave scheme and whether it should be extended or enhanced and to report the results of a review to each house of parliament.

We said in our early proposals to the Productivity Commission that we think it is important that we put in place a good evaluation framework because the government has been quite clear about the objectives that they want. They have actually set aside money to do some evaluation. We need to be clear about the time frame in which that evaluation and review is done.

Senator HANSON-YOUNG —It is more of a specific sunset clause?

Ms Broderick —Yes, something like that.

Senator FURNER —Thank you.

Senator HANSON-YOUNG —I just have one final area that I want to ask your opinion on. This morning we have already heard from the ACTU and Unions NSW, and through their submissions and evidence today both organisations have clearly put on the table that they do not believe the legislation is perfect. They do not believe it goes far enough and they want superannuation. In relation to all of those issues, the argument put forward by the ACTU was, ‘But it’s all right. We’ll negotiate that through our industrial bargaining process.’ What is the position of the commission on how much government should really play that role in extending, strengthening and improving? Should we simply leave it to the marketplace and to the industrial relations bargaining process without government drive, coordination or commitment?

Ms Broderick —I think it is important to have the two-year review in place to see whether the scheme should be extended. The good thing about that review is that we will then know what private enterprises are doing with their paid parental leave schemes. At the minute we just do not know what will happen. We will know how the enterprise bargaining that has happened subsequent to the introductions of the scheme has progressed. So I think the review is important for us to understand how this scheme is operating. Many schemes have unintended consequences, and I would imagine that this scheme would be no different. We can look at refining the scheme over time. I think that if we take it out there is an argument that the current funding model, which is around a taxpayer funded scheme, needs to be reviewed. I know the Productivity Commission looked in some detail at that. There were a lot of quite different models happening there, some of them quite innovative. We will also be two years further on in terms of the international experience. Most countries are putting their schemes out but on different bases. I think the review is really important and we cannot just rely on the market.

CHAIR —Does your office have any comment on the issue of the use of the employer as the process for making the payments?

Ms Broderick —We do. We feel strongly that it should be the employer.

CHAIR —And why is that?

Ms Broderick —Because this is about a workplace entitlement. I think that if it is all through the Family Assistance Office it will be seen as a welfare payment, so we very strongly put the proposition that it should be paid by the employer. I understand why there is a six-month period while the scheme is bedded in and I think that is fine, but come 1 July the payments need to be made by employers. In fact, there is a significant benefit for the employer doing that. It allows them to keep in contact with their employees. I feel quite strongly about that.

CHAIR —It is just that, as you would know from looking at the submissions, it is one of the clear points of difference. In most cases there seems to be general approval of having some sort of scheme, but it is the most stated opposition issue coming up from employer groups. I wanted to know what your view was.

Ms Broderick —Yes. It is interesting. If one of the key objectives of the scheme is to keep women attached to the labour market generally and to workplaces in particular—particularly where there has been 12 months of continuous service, as I think that is the qualifying thing—then if we are serious about that objective, yes, it does need to be employers who pay. I think the financial modelling in one of the Productivity Commission reports talked about it being a cost of around $5 per person per week, so it is not a significant cost. I think absolutely it should be done that way.

CHAIR —Thank you both. I appreciate the fact that you have travelled—with difficulty due to the fog—to be with us today. Nonetheless, I think it is important to have your evidence in the process. Thank you.

 [11.16 am]