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Invisible ink

Image from abc.net.au

Image from abc.net.au

If you are looking for Tony’s signature PPL policy in the budget you will need “a scanning electron microscope” according to John Daly of the Grattan Institute. It only appears in one paragraph.

We are told that the government will cut the company tax rate by 1.5 percentage points (to 28.5%) from 1 July 2015. For large companies, the reduction will offset the cost of the Government’s 1.5% Paid Parental Leave levy but we are not told how much the levy will raise. We are told that provision has been made for PPL in the contingency reserve, a bucket of money reserved for decisions taken but as yet not announced by government, decisions too late to be included in portfolio estimates and so on, but no specific figures. We are told the cap reduction to $100,000 has made a small change in the cost, but not how much.

And that is the only thing that you will find in terms of references to paid parental leave – apart from a single line in the Treasurer’s speech – in literally hundreds and hundreds of Treasury documents about the budget.

Tony’s signature policy is written in invisible ink.

The official Treasury explanation is the Commonwealth is still negotiating with the states about their contribution to the scheme, and the funding is included in the budget’s contingency reserves. The same response has come from Treasurer Joe Hockey.

“We are still negotiating with the states about the scheme and, as you know, we’ve reduced the threshold from $150,000 to $100,000 in relation to the PPL,” he said. That might prove a little more difficult than expected considering how the Premiers are feeling right now.

Mr Daley does not buy this excuse.

“I would note that there are lots of other things about which there are uncertainties which, nevertheless, go into the budget, particularly at the point that they are formally government policy. What that doesn’t explain is why there is so little airplay for an important policy. Even if there are plenty of uncertainties around it, it’s already in the numbers in effect.”

When costing the Coalition PPL scheme, the Parliamentary Budget Office said that its estimate of the cost of the paid parental leave scheme is only of low to medium reliability because it is subject to assumptions including working women’s fertility rates, female labour force participation, the wages parents earn and how much leave parents take after the birth of their children.

The Productivity Commission found that PPL schemes like Abbott’s with “full replacement wages for highly educated, well-paid women, would be very costly for taxpayers and, given their high level of attachment to the labour force and a high level of private provision of paid parental leave, would have few incremental labour supply benefits”.

Studies done by the Grattan Institute showed that for every dollar you spend on paid parental leave, you would get double the impact on female workforce participation if you spent it subsidising child care.

A study last year by the OECD on drivers of female labour participation found PPL schemes definitely did improve participation, but the increase in participation from increased spending on such leave schemes is less tangible.

What it did find, however, was that the link between increased spending on childcare and improved female participation was “unambiguous”.

It compared spending on PPL and childcare and noted that “policies to foster greater enrolment in formal childcare have a small but significant effect on full-time and part-time labour force participation – and these effects are much more robust than the effects of paid leave or other family benefits”.

This reflects the work of the IMF last year, which found that “if the price of childcare is reduced by 50 per cent, the labour supply of young mothers will rise on the order of 6.5 to 10 per cent.”

But participation isn’t everything. If female participation is high, but women are mostly working in low-paying jobs with little chance for advancement, that is hardly a good result. A 2012 study attempted to examine the situation from a broader context.

It looked at the “inputs” each country had in place to improve female participation – from steps that governments and the private sector did to improve the economic position of women to the education attainment of women as well as maternity leave and childcare access.

It then looked at the “outputs” of women’s participation in the national economy – such as the ratio of pay between women and men, as the proportion of women among technical workers and also numbers of senior business leaders.

According to these measures Australia, it may surprise you to know, is ranked equal highest with Norway.

On the “Access-to-Work” input, which included pay childcare access and maternity leave provisions, Australia ranked 6th.

The current PPL scheme is not poor in comparison to most other nations. And some nations with smaller PPL schemes like Canada and New Zealand actually have higher female participation rates among 15-64 year olds than does Australia.

Currently 58.4% of all adult women participate in the labour force (ie. as workers, or looking for work); compared with 70.9% of adult men.

The reason for the gap is because of the decline in participation of women aged 25-34 compared to men.

In the early 1980s the drop in participation for women after 25 years of age could be up to 18 percentage points. And it would never recover. Now there is virtually no difference – in fact the age bracket with the highest female participation rate is the 45-54 age group.

The reality is that given our current position, any gains in women’s participation are always going to be at the margin – our big steps in women’s participation occurred in the 1980s and 1990s owing to societal changes as much as anything else.

Despite all the evidence suggesting that affordable childcare is far more important than increasing paid parental leave, the current review of childcare conducted by the Productivity Commission stipulates any recommendation must “consider options within current funding parameters” – ie. no extra funding.

It seems apparent that in this, like so many other areas, we are ignoring the advice and experience of experts to waste a lot of money satisfying the PM’s vanity.

26 comments

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  1. DanDark

    I think the PPL was Ms Babbages signature policy, Hockheads wife
    She prefers a nanny because it fits in with her high flying, high earner lifestyle
    Childcare that would suit low to average earners/plebs
    would not benefit her lifestyle. or the most wealthiest of her friends

    That is why there is no considered policy that can contribute to the plebs
    It surprises me, as Margie has worked in childcare,
    and surely knows the struggles of everyday women,
    Tony is just the mouthpiece, he is not the PM many other faceless people are

  2. geoffreyengland

    This all makes a lot of sense but unfortunately our Minister for Women is, alas, a simpleton.

  3. Judith

    So, if business gets a tax cut to offset ppl levy, then who IS paying for ppl? Savings from welfare expenditure?

  4. Wayne Turner

    I’m surprised Abbott can write,he’s proven he clearly can’t read.Case in point (Commenting on a report he didn’t read):-

  5. Terry2

    The strategy changed today: it seems that with the budget not going down too well, the the coalition have today decided to change tactics and attack Shorten .

    It’s a “look over there”. “Look at him” strategy.

    Very clever , Peta.

  6. Joe Banks

    Nuff Said, I immediately thought of Kaye Lee as Senior Editor for the Labor Herald. But then I realised she couldn’t do that in her jimjams. Maybe we could talk her into it?

  7. Kaye Lee

    I do occasionally get out of my jammies but Canberra? Brrrrrr 🙂

  8. DanDark

    I second that, joe banks
    Kaye, nothing gained, nothing lost
    You will never know if you don’t have ago….

  9. The Trees

    KL if you take on the Editorship of the Labor paper I will happily buy you some warm undies to help ward off Canberra’s cold.

  10. Michael Taylor

    Canberra is a cold place, Kaye. Trust me on that one.

  11. Michael Taylor

    Dan, our poor leader is coming under a lot of attack. It’s telling that the Murdoch media is also joking in. However, I’m sure it’s just a lapse they’ll soon snap out of. Normally it’s start with a few shots of Tony with the family. Somehow I don’t think that going to work anymore. 😉

  12. DanDark

    LOL Michael god damn I think you are right
    We also have faceless people on our side
    they are called Angels, thank you Bernie Banton
    The good ghost always returns, to haunt the heartless beast….

  13. Terry2

    A momentous and, at the same time , immensely sad thing occurred in the Queensland parliament this week: a politician resigned from the parliament not because he was corrupt or had received dodgy payments from developers or for any other skulduggery but as a matter of principle.

    Dr Chris Davis the LNP member for Stafford and until recently the very effective assistant minister for health, resigned – not just to sit on the back bench as is usually the case but actually quit. He was frustrated at the direction the Newman regime is taking Queensland and the latest straw was the lifting of the limit for reporting political donations from $1000 to $12,400.

    Momentous because we finally find a politician with the integrity and fortitude to stand up for decency and for the fair minded people of Queensland and say, ‘enough is enough’: sad because we lose this principled man from our parliament.

    The News Ltd Courier Mail labelled him a ‘rogue politician’.

    If only there were principled politicians in our federal parliament, prepared to stand up to the Abbott regime and stop Australia descending into a mean and uncaring country whose only priority is looking after the wealthy and well connected.

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