New Changes To Paid Parental Leave

  • Parents Only

In the biggest change to the taxpayer-funded paid parental leave scheme since 2011, Prime Minister Anthony Albanese has committed to giving new parents a total of 26 weeks of paid leave. Up from the 18 weeks of leave offered under the current scheme, parents will be able to share the entitlements between them offering greater equity and flexibility.

Adding an extra six weeks of paid parental leave means Australians who have a child will receive support payments for a full six months. The government will begin a staged rollout of the upgrade in July 2024, adding two weeks every year until it reaches the full 26-week entitlement in July 2026. Unfortunately, this means those expecting children in the near future will miss out on the windfall.

Paid Parental Leave is currently based on the national minimum wage of  $812.45 per week, so parents will pocket an extra $6500 in government payments when the changes unfold.

New Changes To Paid Parental Leave
A longer period of paid parental leave will come into effect in 2024.

Why The Change?

Aiming to close the gender pay gap, boost women’s workforce participation and bolster productivity, the PM labelled the increased entitlements a key economic reform, claiming that investing in new parents would provide a long-lasting economic return. Experts added that six months’ leave for mothers to bond with their newborns delivers myriad health benefits, like allowing them to be exclusively breastfed.

"This is a modern policy to support modern families. We know that investing in parental leave benefits our economy. It is good for productivity and participation, it's good for families and it's good for our country as a whole," Prime Minister Anthony Albanese said.

"More generous and more flexible paid parental leave rewards aspiration and provides every parent of a new baby with greater choice and better support."

The extended 26-week leave entitlement will be able to be shared among parents, while a single parent is eligible to use all 26 weeks. There will also be more flexibility around when you claim paid leave, with the option to take breaks in between periods of paid work. The current “use it or lose it” rule will remain in place to encourage more parents, especially fathers and partners, to take advantage of the paid time off.

While the actual cost of the new measure is yet to be released, early calculations suggest it will be in excess of $900 million a year when once it is fully implemented. Next week's federal budget will deliver the true figure.

What's The Catch?

While the change sounds positive on paper it is not without its flaws, the most notable being that eligibility for PPL hinges on the mother's salary, not the household salary.

When a family applies for the payment, they must take the government's income test, however, it only applies to the mother. If she has an income over $156,000, the family is not entitled to the payment, no matter how much the father earns. That's a huge loss for 'unconventional' families with stay-at-home dads where the mother is the sole or primary breadwinner.

Conversely, if a mother earns less than $156,000 her family will receive full income support from the government, even though her spouse could be raking in much more than her, a glitch that has labelled the scheme discriminatory but is not expected to change with the rollout.

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