Paid maternity leave scheme won’t mean cost burden for business

The introduction of a taxpayer-funded paid parental leave scheme should not result in a big increase in labour costs for small business.

Treasurer Wayne Swan ended months of speculation yesterday by announcing that the paid parental leave scheme will be included in Tuesday’s federal budget. The Government will provide a child’s primary carer with 18 weeks of paid leave at the minimum wage. That equates to $544 a week.

But while details remain scarce ahead of the budget, it appears Swan’s scheme is a chopped-down version of that recommended last year by the Productivity Commission.

It has been reported that a proposed two week payment for the partner of the primary carer has been scrapped. Even more crucially for small businesses, companies will not be required to pay superannuation contributions on the 18 weeks of parental leave.

In order to limit the impact of the new scheme on this year’s budget, paid parental leave will not be introduced until January 2011 and it will not be available to primary care givers who earn more than $150,000.

“The scheme must be introduced in a measured and responsible way, particularly taking into account the global recession,” Treasurer Swan said yesterday.

The chief executive of the Council of Small Business Organisations of Australia, Jaye Radisich, has welcomed Swan’s announcement, although she questions why it needs to be delayed until 2011.

“We’re pleased that it’s happening and generally disappointed about the delay. In terms of small businesses, the difference between now and two years time would have been negligible.”

But chief executive of the Australian Industry Group, Heather Ridout, has supported the Government’s decision to delay the scheme.

“The means testing of paid maternity leave is consistent with the need for fiscal caution and is supported by AIG,  as too is the delay in its start date, which will give time for businesses to prepare and understand the scheme.”

She has also dismissed concerns that the delay may encourage companies who were set to introduce their own maternity leave policies to hold back until 2011.

“Business will look at their own schemes and see how it integrates, and this is part of the phase-in process which I think is quite sensible.”

Peter Anderson of the Australian Chamber of Commerce and Industry has also cautiously welcomed the scheme, although he is keen to see more details around whether SMEs will be compensated for the cost of administering it.

But Radisich expects any costs to be minimal. “What this scheme means is that life is going to be easier for a lot of people. We can do nothing but support that.”

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