House of Representatives

Second Reading Speech

Ms RISHWORTH (Kingston - Minister for Social Services)

I move:

That this bill be now read a second time.

That this bill be now read a second time.

Improving paid parental leave is critical reform. It's critical for families, it's critical for women and it's critical for the economy.

The Albanese government know this.

We know that paid parental leave is vital for the health and wellbeing of parents and their children.

We know that investing in paid parental leave benefits our economy.

And we know that if done right, paid parental leave can advance gender equality. We heard these messages loud and clear at our very successful Jobs and Skills Summit in September, where gender equality and economic reform went hand in hand.

Businesses, unions, experts and economists all understand that one of the best ways to boost productivity and participation is to provide more choice and more support for families - and more opportunity for women.

That is why Paid Parental Leave reform was a centrepiece of our government's first budget and supported by our whole government because of the clear benefits it will bring.

The Prime Minister himself said at the time, 'A parental leave system that empowers the full and equal participation of women will be good for business, good for families and good for our economy,' and we are starting that reform now.

This bill, the Paid Parental Leave Amendment (Improvements for Families and Gender Equality) Bill 2022, implements the first tranche of the government's Paid Parental Leave changes announced in the budget.

It introduces a range of important structural changes to modernise the Paid Parental Leave scheme to ensure it better meets the needs of Australian families. Crucially, the bill will give more families access to the government payments, provides parents more flexibility in how they take leave, and encourages them to share care to support gender equality.

These changes, to commence from 1 July 2023, are the first stage of the government's reforms and lay the foundation for our commitment to expanding Paid Parental Leave. The government will bring forward more legislation, that will start on July 2024, which will progressively increase the scheme by six weeks until it reaches 26 weeks in 2026 - a full six months of leave. This is the largest expansion of Paid Parental Leave since Labor established the scheme in 2011.

I am pleased that our changes have been widely welcomed by family and gender advocates, and employer and unions groups, including the ACTU, the Business Council of Australia, the Parenthood, Minderoo's Thrive by Five Foundation, Chief Executive Women and the Equality Rights Alliance. I also want to take this opportunity to recognise all of those, many I just listed but many I haven't listed, that for many years have been advocating for an expansion and modernisation of paid parental leave in this country, and thank them for all their advocacy and commitment to this.

This is a significant reform, driven by our commitment to get the settings right to maximise women's economic equality. That is why we are introducing the reform in two stages - this bill, to take immediate steps to improve the scheme, but also to allow the Women's Economic Equality Taskforce to have a look at our expanded six weeks and look at how it best maximises women's economic participation.

This bill, and the expansion to 26 weeks by 2026, reflects the g0overnment's commitment to deliver better outcomes for families and advance women's economic participation. The roughly 180,000 families who receive the payment each year will benefit from a fairer, more flexible and more generous scheme. Not only will our changes help families better balance work and care; they will also support participation and productivity over the longer term, providing a dividend for the Australian economy.

Australians need a Paid Parental Leave scheme that reflects the needs of modem families.

The current scheme does not do enough to provide access for fathers and partners. Currently, dads take government paid leave at roughly half the rate of mums. The scheme as it stands today is built on gendered assumptions of 'primary' and 'secondary' carers which limit parents' ability to share care. Our bill fixes this.

The current scheme does not treat families equally. The eligibility rules are unfair to families where the mother is the higher income earner. You could have two families with a household income of $200,000 - one family is eligible because the father is the primary income earner; the other is ineligible because the mother is the primary income earner. That is unfair, and our bill fixes this.

Under the current scheme, a father or partner who is a citizen or permanent resident can be ineligible purely because the birth mother doesn't meet the income test or residency requirements. Our bill fixes this.

From 1 July 2023, the bill delivers six key changes:

1.

combining the two existing payments into a single 20-week scheme;

2.

reserving a portion of the scheme for each parent to support them both to take time off work after the birth or adoption;

3.

making it easier for both parents to access the payment by removing the notion of 'primary' and 'secondary' carers;

4.

expanding access by introducing a $350,000 family income test, under which people can qualify if they do not meet the $156,647 individual income test;

5.

increasing flexibility for parents to choose how they take paid parental leave days and transition back to work; and

6.

allowing eligible fathers and partners to access the payment irrespective of whether the mother or birth parent meets the income test or residency requirements.

It is critical this bill passes both houses by March next year so parents expecting to give birth or adopt on or after I July 2023 have the option of pre-claiming three months in advance so they can receive their government entitlement as soon as they are eligible.

Currently, there are two payments from the government. Parental leave pay, which provides up to 18 weeks of payment, is primarily targeted to mothers, while dad and partner pay provides up to two weeks of payment to fathers and partners.

Under this bill, parental leave pay and dad and partner pay will be combined to form a single 20-week payment that can be shared between both parents.

This will give parents more choice and flexibility in how they use and share care, better reflecting how Australian families want to parent.

One of the features of the current scheme is a period of leave for exclusive use by fathers and partners in the form of dad and partner pay. Our changes preserve this important feature by reserving two weeks of the payment for each parent. By incorporating this reserved portion under a single scheme, rather than as a standalone payment, we are making sharing of parental leave between parents a central part of the scheme. This bill supports both parents to take leave beyond the two-week reserved period. Importantly, single parents will be eligible for the full 20 weeks.

Another significant benefit of the move to a single 20-week scheme is it allows fathers and partners to receive the government payment at the same time as their employer paid leave. While this is currently available to mothers under the Paid Parental Leave scheme, the legislation requires that those receiving dad and partner payments have to be on unpaid leave in order to receive their dad and partner pay.

Fixing this inequality removes a financial disincentive for fathers and partners to access the scheme to take time off work to care for a child.

Allowing both parents to claim the government payment alongside employer-paid leave makes it easier for them to maintain their income while caring for their child, and should result in more partners and dads taking leave.

The government has been very clear on the role employers should play - the government's 20-week scheme is really what should be seen as a national minimum. We are encouraged that there are already many employers across Australia competing to offer working parents the best possible deal, and, of course, provide government-paid leave. These two schemes should work hand-in-hand; it should not be an either-or. And so we would encourage employers to look seriously at how they can best complement the government scheme.

We know what happens when both parents are not supported to take time off paid work to care for their babies - usually mums work less, or leave the workforce altogether to take on caring responsibilities, while often dads remain in full-time work. This pattern persists for years after the child's birth and is a key driver of gender gaps in workforce participation and earnings.

The government supports dads and non-birth parents to share the load of caring responsibilities. We know that when they do, it benefits everyone. When fathers take a greater caring role from the start, this establishes patterns of care that continue throughout a child's life. In addition to benefits for women and their economic equality, there are also physical, mental and social benefits for men and children.

The changes in this bill send a clear message that the government values men as carers too, and we want to see this reinforced in workplaces and our communities.

This bill improves gender equality and inclusion under the scheme by removing the notion of 'primary' and 'secondary' carers and allowing all eligible parents to claim the payment. Currently, mothers must make a successful claim for their parental leave pay, and then they transfer the payment to their partner if they want to share some of it.

This process is complex, administratively burdensome and makes it difficult for fathers to take leave, even when it's in the best interests of their family. In 2021-22, less than one per cent of mothers transferred some of their payment to fathers or partners.

The new, simpler claiming process will also allow eligible fathers and partners to qualify if the mother or birth parent does not meet the income test or the residency requirements. Over 2,000 additional fathers and partners will have access to the scheme each year because of this change.

The shift to a gender-neutral claiming process is also important because it's more inclusive and recognises that Australian families are diverse.

To guard against any negative consequences for mothers resulting from the new process, the birth parent will have to approve the amount of leave claimed by the other parent.

The bill will also introduce a family income limit of $350,000, which will operate alongside the existing individual income limit (currently $156,647 per annum). Parents, including single parents, will be eligible for the payment if they meet either the individual income or the family income test.

With the introduction of the family income limit, families will no longer be denied access solely because of the income of the mother. This change is expected to particularly benefit families where the mother is the primary income earner, with nearly 3,000 additional parents becoming eligible each year as a result.

This change is long overdue - between the 2010 and 2017 financial years, the number of women with taxable incomes of more than $150,000 has more than doubled. The introduction of a more generous family income test will help ensure the scheme keeps up with the times.

The government is improving flexibility for families to balance work and family life in the way that best suits their needs. Currently, parental leave pay is split into a 12-week period that must be taken in a continuous block, within 12 months of the birth or adoption, followed by six weeks that can be taken flexibly, within two years of the date of birth or adoption.

Currently, if a parent returns to work before the end of their continuous 12-week paid parental leave period, they forfeit the remaining days of that period. This limits the choice for parents, and particularly mothers, in how they transition back to work.

Under these amendments, parents can take all of the payment in multiple blocks, as small as a day at a time, within two years of the birth or adoption of their child. This flexibility will support mothers to return to work whenever they wish, without the risk of losing their entitlements. This will particularly benefit parents who work part time or are self-employed to continue working after the birth or adoption.

Of course, some birth parents may still wish to take most or all of the payment in continuous blocks. The legislation supports parents to do that if they choose.

We know this is an important option to support physical and mental health and breastfeeding, particularly for mothers who do not have access to any employer-paid leave. Supporting maternal and child health and development remains an important objective of the Paid Parental Leave scheme.

In addition, both parents will have the option of taking the government-paid leave on the same day for up to 10 days of the payment. This will help parents share caring responsibilities from the start and help dads and partners care for mothers to support their health and wellbeing.

In summary, it is critical that our Paid Parental Leave scheme supports modem Australian families - a scheme that is flexible, fair and drives positive health, social and economic outcomes for both parents and their children. This bill does just that. Crucially, it gives more families access to the government payment, provides parents more flexibility in how they take leave and encourages them to share care to support gender equality.

This bill is good for parents, good for kids, good for employers and good for the economy.

I commend the bill to the House.

Debate adjourned.