Australia's Productivity Commission proposes new maternity leave arrangements

Australia's Productivity Commission has released a draft report proposing new maternity leave arrangements.

For the benefit of international readers, the Commission is an independent official economic advisory body funded by the Australian Government.

The Commission's proposals involve a taxpayer-funded parental leave scheme of 18 weeks at the adult minimum wage ($A544 per week) that would benefit around 140,000 mothers and their newborn children each year and yield community-wide gains in the long term. The scheme also provides for two weeks paid leave to over 225,000 eligible fathers.

The Commission suggests that its proposed scheme is designed to integrate with existing workplace practices. Thus, it requires genuine attachment to work as an eligibility requirement and a capped superannuation contribution from employers for most employees. Typically, initial payment of the leave benefit would be by the employer, with early reimbursement by government. Importantly, the scheme covers full time, part time and casual employees, as well as the self-employed and contractors.

The scheme would cost the government budget around an additional $A450 million annually - after offsets from taxing the benefits and reduced social transfers, including removing eligibility for the baby bonus for those who take paid parental leave. Business would put in a net $A74 million a year through superannuation contributions, whilst benefiting from greater retention rates of women employees.

The low cost of the scheme means that it has been generally welcomed by business groups.

The Commission is now seeking responses to its draft findings, including through public hearings before submitting its final report to the Australian Government in late February 2009. Those who are interested can find the draft report here.