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Community Affairs Legislation Committee—Senate Standing—Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 [Provisions]—Report, dated March 2020


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March 2020

The Senate

Community Affairs Legislation Committee

Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 [Provisions]

© Commonwealth of Australia 2020

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iii

Committee Members

Chair Senator Wendy Askew LP, TAS

Deputy Chair Senator Rachel Siewert AG, WA

Members Senator Malarndirri McCarthy ALP, NT

Senator Andrew McLachlan CSC LP, SA

(from 11 February 2020) Senator Helen Polley ALP, TAS

Senator Dean Smith LP, WA

Former Members Senator Hollie Hughes LP, NSW

(until 11 February 2020)

Secretariat Jeanette Radcliffe, Committee Secretary Kathleen McGarry, Acting Senior Research Officer Sarah Batts, Research Officer Carol Stewart, Administrative Officer

PO Box 6100 Parliament House Canberra ACT 2600 Phone: 02 6277 3515 Fax: 02 6277 5829 E-mail: community.affairs.sen@aph.gov.au Internet: www.aph.gov.au/senate_ca

v

Table of Contents

Committee Members ........................................................................................................................ iii

Abbreviations ................................................................................................................................... vii

List of Recommendations ................................................................................................................. ix

Chapter 1—Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 ...................... 1

Purpose of the bill ................................................................................................................................ 1

The proposed amendments ................................................................................................................ 2

Overview of key changes ......................................................................................................... 2

Flexible paid parental leave ..................................................................................................... 3

Impact on parents ..................................................................................................................... 3

Impact on employers ................................................................................................................ 4

Commencement and financial impact ................................................................................... 4

Legislative Scrutiny ............................................................................................................................. 5

Conduct of the inquiry ........................................................................................................................ 5

Submissions ............................................................................................................................... 5

Evidence to the inquiry ....................................................................................................................... 5

Provision for greater flexibility .............................................................................................. 6

Supporting small business owners and self-employed women ........................................ 7

Supporting and promoting shared care ................................................................................ 8

Further enhancements to the PPL scheme ............................................................................ 9

Committee view ................................................................................................................................. 14

Additional comments by Labor Party Senators .......................................................................... 17

Additional comments by the Australian Greens ........................................................................ 21

Appendix 1—Submissions and additional information ........................................................... 25

vii

Abbreviations

AASW Australian Association of Social Workers ACT Paid Parental Leave Act 2010

ACTU Australian Council of Trade Unions Ai Group Australian Industry Group ANMF Australian Nursing and Midwifery Federation ASBFEO Australian Small Business and Family Enterprise Ombudsman bill Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 committee Senate Community Affairs Legislation Committee DAPP dad and partner pay

DCA Diversity Council Australia

DSS Department of Social Services

Explanatory Memorandum Explanatory Memorandum, Paid Parental Leave Amendment (Flexibility Measures) Bill 2020

FSUA Finance Sector Union of Australia ILO C183 International Labour Organisation Maternity Protection Convention, 2000 (No. 183) NFAW National Foundation for Australian Women PFA Police Federation of Australia

PLP Parental Leave Pay

PPL Paid Parental Leave

QNMU Queensland Nursing and Midwives’ Union SDA Shop, Distributive and Allied Employees' Association the Act Paid Parental Leave Act 2010

VWL Victorian Women Lawyers

WBA Women Barristers Association WGEA Workplace Gender Equality Agency WESP 'Women's Economic Security Package'

ix

List of Recommendations

Recommendation 1

1.67 The committee recommends that the Senate pass the bill.

1

Chapter 1

Paid Parental Leave Amendment (Flexibility Measures) Bill 2020

Purpose of the bill 1.1 The Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 (bill) introduces changes to the Paid Parental Leave (PPL) scheme that seek to better support working mothers and families and provide greater flexibility in

accessing PPL.

1.2 The bill amends the Paid Parental Leave Act 2010 (Act) and makes consequential amendments to the A New Tax System (Family Assistance) Act 1999 and A New Tax System (Family Assistance) (Administration) Act 1999.

1.3 Under current arrangements, eligible working parents can access up to 18 weeks of parental leave pay (PLP) in a continuous period, at a rate based on the national minimum wage. The 18 weeks of leave must be used within the first 12 months after the birth or adoption of a child and before the parent has returned to work. While the current scheme allows the transfer of all or part of a primary carer's PPL to an eligible partner, this transferred leave must still be taken in a continuous period within the first 12 months after birth or adoption.1

1.4 The changes proposed in the bill are intended to make the PPL scheme more flexible for eligible working parents by introducing:

 an initial 12 week block of entitlement to be used within the first 12 months after the birth or adoption of a child (PPL period);  the ability to use up to six weeks (30 days) at any time within the first two years (Flexible PPL); and  the ability for claimants to make more than one transfer of PPL to an eligible

partner (Enhanced Transfers).2

1.5 The bill builds on amendments made to the Act by the Paid Parental Leave Amendment (Work Test) Act 2019 and introduces further key aspects of the 'Women's Economic Security Package' (WESP) measure announced in the 2018-19 Mid-Year Economic Fiscal Outlook.3

1 Department of Social Services (DSS), Submission 7, p. 1.

2 DSS, Submission 7, p. 1.

3 Explanatory Memorandum, Paid Parental Leave Amendment (Flexibility Measures) Bill 2020

(Explanatory Memorandum), p. 1.

2

The proposed amendments 1.6 The bill comprises two schedules: Schedule 1, which includes provisions to enable greater flexibility in accessing PPL, and Schedule 2 which includes transitional, application and saving provisions.

Overview of key changes 1.7 The following table summarises the key changes between the current PPL policy and the flexible PPL measures set out in the bill.

Table 1.1 Overview of key changes - Paid Parental Leave Amendment (Flexibility Measures) Bill 20204

Current policy Flexibility policy

Payment period A PPL period of up to

18 weeks to be taken in a continuous period within 12 months of the birth or adoption.

A PPL period of up to 12 weeks to be taken in a continuous period within 12 months of the birth or adoption; and

Six weeks (30 days) of Flexible PPL to be taken in blocks as small as one day within two years of the birth or adoption.

Employer role Employers must

provide PLP to eligible long-term employees for the 18-week PPL period.

Employers must provide PLP to eligible long-term employees for the 12-week PPL period and any Flexible PPL days taken in a continuous period immediately following the PPL period within 12 months of the birth or adoption.

Eligibility after return to work No eligibility for the 18-week period after

returning to work.

No eligibility for the 12-week PPL period after returning to work.

Eligibility for six weeks Flexible PPL retained

4 DSS, Submission 7, p. 9.

3

after returning to work. Can be eligible for Flexible PPL even if not eligible for initial 12 week period.

Transfers Primary claimant can

transfer all or part of the 18-week PPL period to a secondary claimant.

Once transferred, the primary claimant can no longer access PLP. The 18 weeks must be taken in a continuous period within 12 months of the birth or adoption

The current transfer rules apply to the 12-week PPL period.

The primary claimant can give permission for a secondary claimant to claim some or all of the Flexible PPL entitlement. The Secondary claimant can claim Flexible PPL in blocks as small as one day within two years from the birth or adoption. Primary claimant can still access remaining Flexible PPL days.

Flexible paid parental leave 1.8 As noted above, the changes set out in Schedule 1 will enable eligible claimants to claim two types of PPL: an initial 12 week PPL period and a flexible PPL period of six weeks.

1.9 The bill does not increase or decrease the PPL entitlement. The maximum duration of a person's PPL remains 18 weeks. However, the bill will enable people to elect to split their PPL and keep a flexible component of up to six weeks of their entitlement to be used within the first two years after the birth or adoption.5

Impact on parents 1.10 Approximately 178 000 primary carers received PLP in the 2018-19 financial year. DSS submitted that around 4 000 parents can be expected to take their PLP flexibly each year. DSS states that this estimate is based on data collected

by Services Australia in relation to the number of parents who currently:

 return to work before they have received their full PLP entitlement;

5 DSS, Submission 7, p. 1.

4

 return to work before claiming PLP; or  receive less than their full entitlement before their child turns one.6

1.11 In particular, the changes are expected to better support self-employed women and small business owners who cannot afford to leave their businesses for 18 consecutive weeks.7

Impact on employers 1.12 DSS explained that the flexible component of the scheme has been designed to minimise impacts on the role of employers.8 For example, where a claimant elects to claim 18 consecutive weeks of PPL, and the employer would pay for

all of the person's PLP under the current scheme, the employer will continue to pay for all 18 continuous weeks.9

1.13 Alternatively, if a parent initially claims 12 weeks consecutive PPL and enters into an agreement with their employer to access flexible PPL days in instalments once they return to work, the employer will stop making payments when the parent returns to work and the payments will be made by the Government.10

Commencement and financial impact 1.14 The amendments are intended to commence from 1 April 2020, but the new flexible measures will start operating from 1 July 2020.

1.15 The explanatory memorandum explains that the earlier commencement date will enable parents to make pre-birth claims.11 However, under the transitional provisions, parents of babies born before 1 July 2020 will have their claim treated under the old scheme.12

1.16 The bill is estimated to cost $25.183 million from 2019-20 to 2012-22.13 Total DSS funding for measures in the WESP is $17.9 million.14

6 DSS, Submission 7, p. 3.

7 DSS, Submission 7, p. 2.

8 DSS, Submission 7, p. 6.

9 Explanatory Memorandum, p. 2.

10 Explanatory Memorandum, p. 2. Item 47 of the bill inserts a new subsection 84(2A).

11 Explanatory Memorandum, p. 4.

12 Explanatory Memorandum, p. 50.

13 DSS, Submission 7, p. 5.

14 Explanatory Memorandum, p. 4.

5

Legislative Scrutiny 1.17 The Senate Standing Committee for the Scrutiny of Bills and the Parliamentary Joint Committee on Human Rights made no comment on the bill.15

Conduct of the inquiry 1.18 The bill was introduced in the House of Representatives on 6 February 2020.16 On the same day, the Senate referred the provisions of the bill to the Senate Community Affairs Legislation Committee (committee) for inquiry and report

by 19 March 2020.17

1.19 Details of the inquiry, including a link to the bill and associated documents, were placed on the committee's website.18 The committee resolved to conduct the inquiry on the papers.

Submissions 1.20 The committee wrote to a range of interested parties inviting written submissions by 6 March 2020. The committee received 22 submissions. A list of submissions received can be found on the committee's website and at

Appendix 1 to this report. The committee thanks those submitters who contributed to the inquiry.

Evidence to the inquiry 1.21 All submitters to the inquiry expressed support for the measures in the bill and for the broader aim of increasing women's workforce participation.

1.22 Submitters were strongly supportive of the proposal to make the PPL scheme more flexible, noting that the measures in the bill recognise the diversity of family and work circumstances in Australia and would increase the options available to eligible families.19 Submitters recognised that increasing flexible access to PPL would provide benefits for employees, employers and the wider community.20

15 Senate Standing Committee for the Scrutiny of Bills, Scrutiny Digest 2/20, p. 5; Parliamentary Joint

Committee on Human Rights, Human rights scrutiny report, Report 2 of 2020, p. 9.

16 House of Representatives, Votes and Proceedings, No. 38, 6 February 2020, p. 652.

17 Journals of the Senate, No. 38, 6 February 2020, p. 1247.

18 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Community_Affairs.

19 See, for example, Diversity Council Australia (DCA), Submission 8, p. 5; Australian Association of

Social Workers (AASW), Submission 13, p. 4; Early Childhood Australia, Submission 14. p. 2; Shop, Distributive and Allied Employees' Association (SDA), Submission 21, pp. 2-3.

20 See, for example, Queensland Nurses and Midwives' Union (QNMU), Submission 2, p. 4;

Australian Nursing and Midwifery Federation (ANMF), Submission 11, p. 4; Australian Council of Trade Unions (ACTU), Submission 16, p. 1; Workplace Gender Equality Agency (WGEA), Submission 17, p. 2.

6

1.23 The Sex Discrimination Commissioner, Kate Jenkins, described the proposed amendments as 'a further step forward in bringing the scheme of paid leave in Australia in line with international best practice, by increasing flexibility, broadening eligibility and encouraging greater economic independence of women.'21 Ms Jenkins noted that the proposed changes would meet key national public policy objectives as outlined in the WESP aimed at improving women's economic security, facilitating greater workforce participation and advancing gender equality.22 Ms Jenkins also noted the measures in the bill will serve to enhance Australia's ability to meet its international human rights obligations.23

Provision for greater flexibility 1.24 Submitters noted that the current requirement under the PPL scheme to take PPL in a single block means that parents who need to return to work, whether for financial or other reasons, forfeit the balance of their leave.24 Submitters

noted that under the measures proposed in the bill, parents will have greater flexibility to manage their financial, career or business needs while caring for their child. 25

1.25 The Sex Discrimination Commissioner submitted that these changes 'demonstrate a more contemporaneous understanding of how modern parenting and work interact'.26

1.26 The National Foundation for Australian Women (NFAW) expressed concern that the provision for a 12 week PPL period may have the effect of lowering expectations around how long parents will spend caring for their new child. 27 However, DSS submitted that currently thousands of new parents return to work before they have claimed and used all of their PLP. The flexibility arrangements in the bill will provide parents with the ability to choose when and how to use the remaining six weeks of their entitlement before their child turns two.28

21 Sex Discrimination Commissioner, Submission 19, p. 1.

22 Submission 19, p. 2.

23 Submission 19, p. 6.

24 See, for example, NCWA, Submission 1, [pp. 1-2] and National Foundation for Australian Women

(NFAW), Submission 3, [p. 4].

25 See, for example, NFAW, Submission 3, [p. 4]; Police Federation of Australia (PFA), Submission 15,

p. 3 and SDA, Submission 21, p. 3.

26 Sex Discrimination Commissioner, Submission 19, p. 2.

27 NFAW, Submission 3, [p. 4].

28 Submission 7, p. 2.

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1.27 Submitters noted the importance of ensuring that both parents and employers understand the operation of the flexible PPL measures.

1.28 Submitters noted that greater clarity may be required to understand how the process of claiming flexible PPL days will work in practice, particularly for shiftworkers, contractors or self-employed workers.29 The Police Federation of Australia (PFA) submitted that it is 'a common feature of police work that shifts and duties are unpredictable, and subject to variation.' The PFA questioned whether administration of payment for flexible PPL days may be smoother in the case of shift workers if it were administered by the employer.30

1.29 Early Childhood Australia submitted that a significant communication and outreach effort will be required from Services Australia, together with appropriate support for claimants.31

Supporting small business owners and self-employed women 1.30 The proposed changes are intended to recognise the particular demands on small business owners and self-employed women. In its submission, DSS explained:

For many small business owners and self-employed women, 18 weeks is a significant amount of time to be away from their work. Under these changes, mothers will be able to take an initial period of 12 weeks PPL before returning to run their business. They will then be able to choose when to take the remaining six weeks of their entitlement before their child turns two, at a time that suits their personal business needs.32

1.31 The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) submitted that the proposed amendments would support small business owners and self-employed workers who are disadvantaged under the current scheme. The ASBFEO noted that the proposed changes would:

 improve a business' ability to retain valued employees;  improve the ability to maintain employee-client relationships;  decrease recruitment costs due to capacity to retain staff; and  decrease employee turnover and resulting on-boarding and training costs.33

1.32 Victorian Women Lawyers submitted that the introduction of the new flexible arrangements would help attract and retain female barristers as it would

29 See, for example, PFA, Submission 15, p. 4 and Women and Work Research Group and

Work+Family Policy Roundtable; Submission 20, p. 7.

30 PFA, Submission 15, p. 4.

31 Submission 14, p. 2.

32 Submission 7, p. 2.

33 Australian Small Business and Family Enterprise Ombudsman, Submission 18, [p. 1].

8

enable parents to take paid work leave following the birth or adoption of a child at times that suit their work flow and capacity.34

1.33 The Women Barristers Association (WBA) of the Victorian Bar also expressed support for the measures in the bill, but submitted that further measures may be required to address the particular needs of some self-employed women and small business owners. WBA noted that some self-employed women, such as barristers, will continue to incur significant business expenses throughout the PPL period. WBA proposed amendments to the bill to address what it described as the inbuilt structural disadvantage in the current PPL scheme.35

Supporting and promoting shared care 1.34 Submitters noted that the proposed changes to the PPL scheme will make it easier for families to transfer PPL entitlement to eligible partners.36 NFAW stated:

The enhanced ability in the Bill to transfer flexible PPL days to a secondary carer is consistent with changes in community expectations in respect of the role of the secondary carer. The introduction of “Dad and Partner Pay” (DAPP) has recognised the role of partners when a child is born or adopted. However, there is a growing recognition that parenting is a shared role, and employers are increasingly promoting flexible work arrangements for both parents. The ability to share the flexible portion of PPL will facilitate and accelerate such arrangements, strengthening the bond between the second parent and their child.37

1.35 The Workplace Gender Equality Agency (WGEA) submitted:

Research finds that fathers are more likely to take parental leave when it is flexible, incentivised, and shorter in length, and they can maintain contact with the workplace.

1.36 WGEA and SDA also noted research indicating that when fathers and partners take parental leave there is more equal distribution of unpaid work at home and their involvement in childcare and unpaid domestic work is likely to continue following the parental leave period, assisting a smoother transition back to work for women after parental leave.38

1.37 However, some submitters expressed concern that some elements of the bill may detract from this goal. For example, the PFA submitted that measures in

34 Victorian Women Lawyers (VWL), Submission 22, [p. 2].

35 Women Barristers Association (WBA) of the Victorian Bar, Submission 10, pp. 4-5.

36 See, for example, National Council of Women, Submission 1, [p.2] and QNMU, Submission 2, p. 5.

37 NFAW, Submission 3, [pp. 9-10].

38 WGEA, Submission 17, p. 2; SDA, Submission 21, p. 5.

9

the bill to implement a 90-day cap on eligibility to claim PLP may act as a barrier for men to become primary caregivers.39

1.38 The explanatory memorandum to the bill clarifies that the measures are intended to manage the circumstances in which a person might seek to claim both PLP and dad and partner pay (DAPP) to ensure that a person:

 cannot be paid DAPP on a flexible PPL day on which they are paid PLP (new subsection 115CB(FA)); and  is not eligible to claim DAPP if they have already claimed a combined total of 90 days' PLP in relation to a child, whether those days are made up of

days in the PPL period, flexible PPL days or DAPP days (amended subsection 115CB(7)).40

Further enhancements to the PPL scheme 1.39 A number of submitters suggested ways in which the PPL scheme could be further enhanced.41 Submitters noted that it has been ten years since the Paid Parental Leave Act 2010 was introduced and suggested that it is timely to

consider how to ensure that Australia's system of paid parental leave is consistent with modern parenting arrangements and workforce needs'.42

1.40 NFAW noted that the International Labour Organisation Maternity Protection Convention, 2000 (No. 183) (ILO C183) provides a benchmark of minimum standards for maternity leave.43 While Australia is not a signatory to the convention, NFAW noted that Australia does meet the minimum criteria of ILO C183 in most areas.44

1.41 However, submitters noted a range of ways in which they consider Australia's support for families caring for new babies could be enhanced. These are discussed below.

39 PFA, Submission 15, pp. 4-5.

40 Explanatory Memorandum, pp. 47-48.

41 See, for example, Women and Work Research Group and Work+Family Policy Roundtable,

Submission 20, p. 2; SDA, Submission 21, p. 3.

42 See, for example, Sex Discrimination Commissioner, Submission 19, p. 9; NFAW, Submission 3, [p.

10]; SDA Submission 21, p. 14.

43 Submission 3, [p. 5].

44 NFAW, Submission 3, [pp. 5-7].Submitters recommended that Australia should sign the ILO

Maternity Protection Convention, 2000 (No. 183), see, for example: Women and Work Research Group and Work+Family Policy Roundtable, Submission 20, p. 2.

10

Extend the period of PPL 1.42 A number of submitters suggested extending the period of PPL.45

1.43 The NFAW recommended that the Government increase the period of PPL to a total of 22 weeks, with ten weeks available as the flexible PPL term.46 Early Childhood Australia recommended the extension of PPL to at least 24 weeks, noting the critical role of development of a secure attachment between a child and its parents for the child's ongoing development, health and wellbeing.47

1.44 Other submitters recommended that the period of PPL be extended to provide a statutory period of at least 26 weeks leave, consistent with World Health Organisation recommendations.48

1.45 The Sex Discrimination Commissioner submitted that internationally recognised evidence on the benefits to maternal child health and development suggests 26 weeks PPL should be provided, to allow for breastfeeding. Ms Jenkins further recommended the introduction of an additional four weeks of paid leave for the supporting parent, consistent with the recommendation of the Committee on the Elimination of Discrimination Against Women.49

Increase the rate of PLP 1.46 A number of submitters proposed that the rate of PLP should be increased. The Australian Council of Trade Unions (ACTU) and SDA submitted that Australia's full-rate equivalent weekly PLP is one of the lowest in the OECD.50

1.47 The NFAW submitted that the Government should consider increasing the rate of PLP 'to wage replacement or the average weekly ordinary time earnings, whichever is the lesser'.51 NFAW noted that ILO 183 establishes the payment rate as two thirds of the usual payment earned by the parent,

45 See, for example, PFA, Submission 15, p. 3 and VWL, Submission 22, [p. 3].

46 Submission 3, [p. 3].

47 Submission 14, p. 2.

48 See, for example, QNMU, Submission 2, p. 4; FSUA, Submission 4, p. 6; DCA, Submission 8, p. 6;

ACTU, Submission 16. p. 4; SDA, Submission 21, p. 12.

49 The Committee on the Elimination of Discrimination Against Women's concluding observations

on the eighth periodic report of Australia in 2018 welcomed Australia's adoption of the PPL scheme in 2010 and the 'dad and partner' pay program in 2012 and recommended that Australia: guarantee a minimum of 26 weeks' paid maternity leave, which should be remunerated at the mothers actual revenue level, introduce at least an additional four weeks of paid leave to be taken by the supporting parent, and count the entirety of such period of leave towards superannuation benefits. Submission 19, p. 8.

50 ACTU, Submission 16, p. 4; SDA, Submission 21, p. 10.

51 Submission 3, [p. 2].

11

whereas the rate of PLP is wage replacement to the level of the minimum wage.52

1.48 The Finance Sector Union of Australia (FSUA) and SDA also recommended that the rate of PPL payment be increased to average weekly earnings.53 The FSUA submitted that this would help make PPL more attractive to parents who traditionally take on the 'secondary' caring role,54 while the SDA submitted that this would be more reflective of a worker's actual wage.55

Superannuation 1.49 Submitters recommended the inclusion of superannuation in PPL payments, noting that superannuation is included in other leave entitlements.56 NFAW noted that in its 2009 report, Paid Parental Leave: Support for Parents with

Newborn Children, the Productivity Commission supported payment of superannuation contributions while parents are on PPL.57

1.50 SDA noted that the Productivity Commission had recommended that the introduction of payment of superannuation contributions on PLP be delayed for three years in recognition of the impact of the global financial crisis and uncertainties for employees transitioning to the PPL scheme. SDA submitted that it was now ten years since the introduction of the PPL scheme and recommended the extension of the Superannuation Guarantee to payment of superannuation on both paid and unpaid parental leave for up to 12 months.58

Promoting shared responsibility through gender-neutral policies 1.51 Submitters advocated that the Act and the PPL scheme require further amendments to remove gender stereotypes that underpin the concepts of 'primary carer' and 'secondary carer'.59 Submitters noted that gender-neutral

policies are more reflective of contemporary society and family structures.60

52 Submission 3, [p. 7].

53 FSUA, Submission 4, p. 6; SDA, Submission 21, p. 12.

54 Submission 4, p. 6.

55 Submission 21, p. 12.

56 See, for example, National Council of Women Australia, Submission 1, [p. 1], NFAW, Submission 3,

[p. 3]; economic Security4Women, Submission 5, [p. 1]; PFA, Submission 15, p. 6; ACTU, Submission 16, pp. 4-5; Sex Discrimination Commissioner, Submission 19, p. 8.

57 Submission 3, [pp. 7-8].

58 Submission 21, pp. 14-15.

59 See, for example, Australian Women Lawyers, Submission 12, [p. 2]; ACTU, Submission 16, p. 5;

VWL, Submission 22, [p. 3]; SDA, Submission 21, p. 9.

60 See, for example, WGEA, Submission 17, p. 3; DCA, Submission 8, pp. 6-7; Sex Discrimination

Commissioner, Submission 19, pp. 7-8.

12

1.52 Submitters noted that leading practice internationally and in the private sector demonstrates that flexible, gender-neutral parental leave policies benefit organisations, employees and families.61 The FSUA submitted that increasingly employers in the finance industry are moving away from rigid definitions of 'primary' and 'secondary' carers and are instead offering paid parental leave regardless of gender or the traditional 'primary' or 'secondary' carers roles.62

1.53 WGEA also provided examples of private sector employers who have committed to equal access and flexibility in their parental leave policies, citing that within the first two years of engineering company Aurecon introducing its policy, the number of men taking parental leave tripled.63

Increasing incentives for men to participate in care 1.54 Submitters commented on the potential for the PPL scheme to more actively influence gender norms and behaviours around paid work and unpaid caring. 64 Submitters recommended that consideration needs to be given to

providing incentives for men to take leave to care for their children.65 NFAW submitted:

In the light of increasingly rich policy environment among Australia’s OECD peers, and 10 years after the first introduction of Australia’s scheme, it is important to assess how the scheme could be reviewed to encourage more men to take leave to care for babies and children and to remain engaged in direct care and unpaid labour to support their families as their children grow.66

1.55 NFAW submitted that this could include:

 introducing ‘use it or lose it’ elements for fathers and partners;  empowering fathers and partners to access leave benefits; and  removing the conceptual divisions between primary and secondary carers.67

1.56 WBA also expressed support for the introduction of government initiatives to encourage fathers to take more parental leave, including consideration of 'use it or lose it' entitlements.68

61 See, for example, SDA, Submission 21, p. 10; WGEA, Submission 17, pp. 3-4.

62 Finance Sector Union of Australia (FSUA), Submission 4, p. 4.

63 WGEA, Submission 17, p. 4.

64 See, for example, FSUA, Submission 4, p. 6; DCA, Submission 8, pp. 6-7; AASW, Submission 13, p. 4;

PFA, Submission 15; p. 5;

65 AASW, Submission 13, pp. 4-5.

66 NFAW, Submission 3, [p. 10].

67 NFAW, Submission 3, [p. 10].

68 WBA, Submission 10, p. 5.

13

Negotiating access to flexible PPL 1.57 Some submitters noted that there is currently no obligation on an employer to provide flexibility to a worker after the birth of a child and expressed concern that employees who lack bargaining power and agency at work can be left in a

vulnerable position.69 The explanatory memorandum to the bill acknowledges that if an employee wishes to access flexible PLP they will need to negotiate time off work or a part time return to work with their employer.70

1.58 The Australian Nursing and Midwifery Federation (ANMF) expressed concern 'that the burden of claiming the flexible component of PPL may be too great for individual claimants'. ANMF noted that many people, particularly people in low paid roles, from culturally and linguistically diverse backgrounds or who are vulnerable in their employment, may have limited ability to negotiate a flexible work arrangement.71 Some submitters recommended that consideration should be given to strengthening formal avenues for resolving disputed flexible work applications.72

1.59 The Australian Industry Group (Ai Group) noted that the proposed amendments 'support, and are consistent with, greater parental workforce participation and the desire by many businesses to provide wider return to work options for employees returning from parental leave.' Ai Group submitted that it is important that any associated legislative changes take account of the needs of employers to manage their businesses effectively.73

Removal of limitations on timing and duration of concurrent leave 1.60 The FSU submitted that the limitation of concurrent leave to two weeks for the 'secondary carer' can place unnecessary stress on families. The FSU sited examples of circumstances in which women may need additional support in

the home post-birth, noting:

Employers in the finance industry have recognised that there are a variety of reasons that families might need additional concurrent leave and have increased flexibility of accessing this leave to allow families to make decisions that are best for their individual circumstances.74

Broaden eligibility for PPL to permanent carers/foster parents 1.61 The PFA submitted that the eligibility requirements should be extended to include care of newborns through care orders. The PFA provided the example

69 See, for example, FSUA, Submission 4, pp. 5-6 and ANMF, Submission 11, p. 4.

70 Explanatory Memorandum, p. 3.

71 Submission 11, p. 4.

72 See, for example, FPA, Submission 15, p. 7 and SDA, Submission 21, pp. 5-7.

73 Submission 9, p. 3.

74 Submission 4, p. 4.

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of one of its members who unexpectedly received custody of her newborn niece and needed to use carer's leave and annual leave to care for the child. The PFA stated that this was not the first example of this within its membership and submitted that excluding care of newborns in such circumstances appeared to be incongruous with the intention of the Act. 75

Committee view 1.62 The committee notes the clear and widespread support for the measures proposed in the Paid Parental Leave Amendment (Flexibility Measures) Bill 2020. Submitters to the inquiry have emphasised the positive impact the bill

will have on the range of options available to working parents accessing paid parental leave and the flow on consequences of this for women's workforce participation.

1.63 The committee notes that currently thousands of new parents return to work before they have used all of their parental leave. The provision of a six week period that parents can use in blocks as small as a day at a time, at any time before their child turns two, will better support parents to balance work and family responsibilities. This increased flexibility will also better support parents who wish to share the care of their child, by making it easier for mothers to transfer their entitlement to their partner.

1.64 The committee also notes the significance of this flexibility for small business owners and self-employed women who may not be able to contemplate a continuous 18-week period of time away from their work. Submissions to the inquiry indicate that this flexibility will go some way toward addressing the challenges that parents in this position face.

1.65 Notwithstanding the high level of support for the measures in the bill, the committee notes the practical proposals put forward by submitters to further enhance the paid parental leave scheme. These submissions highlighted that at this ten year anniversary of the introduction of the Paid Parental Leave Act 2010, it is timely to consider avenues for ensuring that Australia' paid parental leave scheme continues to improve over time.

1.66 The committee recognises that this bill is part of a suite of measures designed to implement key aspects of the Women's Economic Security Package announced in the 2018-19 Mid-year Economic and Fiscal Outlook. The bill builds on the amendments made to the Act by the Paid Parental Leave Amendment (Work Test) Act 2019 which extended access to the paid parent leave scheme. Subject to the passage of this bill, the government intends to make complementary amendments to increase the flexibility of the existing unpaid parental leave entitlement in the Fair Work Act 2009.

75 PFA, Submission 15, p. 5.

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Recommendation 1

1.67 The committee recommends that the Senate pass the bill.

Senator Wendy Askew Chair

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Additional comments by Labor Party Senators

1.1 While the changes proposed in the bill will increase flexibility for families, the Department of Social Services expects only around 4,000 parents to use the flexible paid parental leave (PPL) measures each year.1 This equates to just over 2 per cent of the 178,000 primary carers (mainly mothers) who accessed PPL in 2018-19. In this context, many submissions also noted that the changes proposed in the bill are modest, and have called for significant further improvements to Australia’s PPL scheme.

1.2 Many submissions called for an extension to the period of PPL available to parents.2 The importance of paying superannuation on PPL, as a contribution towards closing the gender pay gap and the retirement savings gap, was also emphasised by many submitters.3 The Queensland Nursing and Midwives’ Union (QNMU) said:

The QNMU have long advocated for the period of leave be extended to provide a statutory period of at least 26 weeks leave. We continue to advocate for superannuation contributions to be paid by the government at the prevailing superannuation Guarantee (SG) rate, as part of the PPL scheme.4

1.3 Submitters also noted more recent policy developments in other countries, and in the private sector, which support a gender-neutral approach PPL. This has the benefit of supporting a more equal distribution of domestic and household work and parenting, by encouraging fathers to take more PPL. For example, the National Foundation for Australian Women stated:

Further thought is particularly required to ensure Australia’s PPL scheme is better able to advance gender equality and encourage the more equal division of paid and unpaid labour between women and men in Australian families… International experience, however, demonstrated that PPL is able to contribute to more equitable sharing of paid and unpaid labour between mothers and fathers, when it is designed specifically to do so.5

1 Department of Social Services, Submission 7, p.3.

2 See, for example, Queensland Nurses and Midwives' Union, Submission 2, p. 4; Finance Sector

Union of Australia, Submission 4, p. 6; Diversity Council Australia, Submission 8, p. 6; Australian Council of Trade Unions (ACTU), Submission 16, p. 4; Shop, Distributive and Allied Employees' Association (SDA), Submission 21, p. 12.

3 See, for example, National Council of Women, Submission 1, [p. 1], National Foundation for

Australian Women, Submission 3, [p. 3]; economic Security4Women, Submission 5, [p. 1]; PFA, Submission 15, p. 6; ACTU, Submission 16, pp. 4-5; Sex Discrimination Commissioner, Submission 19, p. 8. SDA, Submission 21, p. 15.

4 Queensland Nurses and Midwives’ Union (QNMU), Submission 2, p.5.

5 QNMU, Submission 2, p.5.

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1.4 Diversity Council Australia quantified the long-term impact of a gendered approach to PPL on women’s economic security:

The gendered nature of caring commonly kicks off with women being much more likely than men to access primary parental leave, and therefore to experience costly career interruptions. In 2016-17, just one in every twenty parents taking primary parental leave was a father. 85 per cent of fathers take fewer than four weeks leave. Career interruptions accounted for 21 per cent of the 2014 gender pay gap.

Encouraging men (in heterosexual families) to take parental leave means that they are more likely to take on a more equal share of parenting responsibilities.6

1.5 Under the provisions of the bill, parents will be required to negotiate with employers on arrangements for accessing flexible PPL after the initial 12-week block. The Australian Industry Group stated:

It is important that the employee reach agreement with the employer on when the flexible PPL days will be taken or, at the very least, that the employer has a right of reasonable refusal to a particular patterns of absences, consistent with the approach in sections 65 (Requests for flexible work arrangements) and section 76 (Extending period of unpaid parental leave) of the FW Act.7

1.6 On this issue, the QNMU stated:

The success of the proposed scheme lies with employers cooperating with employers to provide flexible return to work strategies. It should be emphasised that it is in employers’ best interest to offer flexible return to work arrangements, in order to attract and retain skilled staff who feel valued and recognised for their contributions to the workforce.8

1.7 Labor Senators note that while the vast majority of employers will seek to support employees to take flexible PPL in a way that works for their families, Government needs to closely monitor the operation of these arrangements. Government has a responsibility to ensure workers do not miss out on accessing their full PPL entitlements because they are unable to negotiate time off with their employer.

Conclusion 1.8 Labor Senators note that all submissions to the Inquiry supported the changes proposed in the bill - but note that the bill does not go far enough in improving Australia’s Paid Parental Leave system.

6 Diversity Council Australia, Submission 8, p.13.

7 Australian Industry Group, Submission 9, p.4.

8 QNMU, Submission 2, p.5.

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Recommendation 1

1.9 Labor Senators support the recommendation of the committee report that the Senate pass the bill.

Recommendation 2

1.10 Labor Senators call on the Government to bring forward significant improvements to Australia’s PPL system, in light of the evidence provided to the committee and reforms that have been implemented in similar countries.

Senator Malarndirri McCarthy

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Additional comments by the Australian Greens

1.1 The Australian Greens support the Paid Parental Leave Amendment (Flexibility Measures) Bill 2020 (bill). However, additional reforms are needed to facilitate gender equality, value care work, and maximise the flexibility parents have to determine care arrangements for their children.

1.2 The Greens have always been strong proponents for a paid parental leave scheme that is just and equal. A strong parental leave entitlement reduces the gender wage gap, encourages shared care, increases the number of women returning to the workforce, and allows for positive health, wellbeing and bonding between parents and children.

1.3 To strengthen the bill, we recommend the following further reforms:

 extending the period of paid parental leave to 26 weeks, with four weeks of paid leave for the supporting parent ;  increasing the rate of parental leave to be wage replacement for the relevant parent, up to a maximum of $100 000;  extending the Superannuation Guarantee to the statutory Paid Parental

Leave scheme; and  removing the discriminatory application of the primary carer income provisions.

1.4 We also note that lack of access to flexible and affordable childcare continues to hamper workplace participation for parents returning to work following leave.

1.5 The Committee Report notes the Government’s intention to make complementary amendments to increase the flexibility of the existing unpaid parental leave entitlements in the Fair Work Act 2009. Parliament must strengthen employee access to flexible work arrangements in order for the bill to achieve its aims.

Period of paid parental leave 1.6 The Greens support calls from numerous submitters to extend the period of paid parental leave (primary and secondary). Consistent with the recommendations of the World Health Organisation,1 we recommend that

paid parental leave be available for six months (26 weeks).

1 As endorsed in submissions from the Queensland Nurses and Midwives' Union, Submission 2;

Finance Sector Union of Australia, Submission 4; Australian Council of Trade Unions, Submission 16; Diversity Council Australia, Submission 8; and the Sex Discrimination Commissioner, Submission 19.

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1.7 Consistent with the flexibility introduced by the bill, we recommend that the first 12 weeks of the leave entitlement must be taken as a block within the 12 months following birth or adoption, with the balance able to be taken flexibly within two years.

1.8 We also support the extension of paid leave for supporting parents to four weeks. To assist in removing gendered stereotypes regarding typical care arrangements, these payments should also be renamed from 'Dad and Partner Payments' to 'Supporting Parent Payments'.

Rate of paid parental leave 1.9 In order to ensure that parents are not unduly disadvantaged by a decision to take leave to care for children, paid parental leave should serve as a fair wage replacement for the duration of the leave period.

1.10 We recommend that parental leave be paid at 100 per cent of the regular wage of the primary care giver, capped at $100 000 per annum.

1.11 Another issue arises regarding eligibility for paid parental leave in situations where the birth mother is the higher-earning parent. Currently, paid parental leave is available where a birth mother’s income is less than $150 000, irrespective of her partner's income. In contrast, leave entitlements can be transferred to a partner whose income is less than $150 000.

1.12 This results in the following discrepancy:

 Where a birth mother earns $155 000 and her partner earns $55 000, the family is not entitled to any paid parental leave.  Where a birth mother earns $55 000 and her partner earns $155 000, the family will be eligible for paid parental leave, provided the leave is taken by

the birth mother.

1.13 This appears to discriminate against women earning higher wages, and limits the shared care options available to families in these situations. We recommend that the Paid Parental Leave Act be amended to address the discriminatory application of the eligibility provisions.

Superannuation 1.14 The Greens are committed to addressing the gender pay gap and ensuring women are not worse off when they reach retirement. We support submissions calling for superannuation to be paid on statutory parental leave entitlements.

Communication and administration 1.15 As noted by the Early Childhood Australia (ECA):

[It] will be essential to ensure that parents, parents-to-be and employers understand the operation of the new PPL flexibility provisions. This will

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require a significant communication and outreach effort from Services Australia.2

1.16 ECA and the Police Federation of Australia also note the importance of user-friendly and well-adapted administration of the new measures.3 This is particularly true in relation to shift work, where leave attributable to paid parental leave may not be consistent. We support the suggestion that employers retain responsibility for the administration of leave entitlements for shift workers.

Other measures

Facilitating workplace participation 1.17 The Sex Discrimination Commissioner notes the importance of increasing women’s workforce participation. In addition to strengthening the paid parental leave framework, this can be facilitated by policies to encourage

greater uptake of paid parental leave by men and by improving access to child care.

1.18 We support calls to consider policies in Iceland, Norway and Switzerland that have significantly increased the uptake of paid parental leave by supporting parents.

1.19 And we need to urgently redesign the childcare system so it becomes free and universal for everyone to give parents the flexibility to return to work in a way that works best for their family.

Parental leave for foster parents 1.20 We support the recommendation made by the Police Federation of Australia to extend eligibility for paid parental leave to those people who undertake caring responsibilities subject to care orders, rather than adoption. The support

required to provide care to a child is the same irrespective of the basis on which the caring responsibilities are undertaken.

Senator Rachel Siewert

2 Early Childhood Australia, Submission 14, p. 2.

3 Early Childhood Australia, Submission 14, p. 2 and Police Federation of Australia, Submission 15,

p. 4.

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Appendix 1

Submissions and additional information

Submissions 1 National Council of Women Australia 2 Queensland Nurses and Midwives' Union 3 National Foundation for Australian Women 4 Finance Sector Union of Australia 5 economic Security4Women 6 Equality Rights Alliance 7 Department of Social Services 8 Diversity Council Australia 9 Australian Industry Group 10 Women Barristers Association 11 Australian Nursing and Midwifery Federation 12 Australian Women Lawyers 13 Australian Association of Social Workers 14 Early Childhood Australia 15 Police Federation of Australia 16 Australian Council of Trade Unions 17 Workplace Gender Equality Agency 18 Australian Small Business and Family Enterprise Ombudsman 19 Sex Discrimination Commissioner, Australian Human Rights Commission 20 Women and Work Research Group; and Work and Family Policy Roundtable 21 Shop, Distributive and Allied Employees' Association 22 Victorian Women Lawyers