Budget 2022: Changes promised to make paid parental leave “fairer”

The Morrison government has promised to make the paid parental leave scheme “fairer” for more Australian families by introducing more flexibility to the system and expanding the eligibility criteria. 

However, the government has stopped short of extending the total number of weeks’ leave available to families, or to add superannuation to parental leave payments, despite calls from business and industry groups to do so. 

Under the current paid parental leave scheme, primary caregivers are eligible for up to 18 weeks’ ‘parental leave pay’ at the national minimum wage, while ‘dad and partner pay’ is available for up to two weeks, also at the national minimum wage. 

Under changes outlined in the 2022 federal budget, the Morrison government is proposing to integrate ‘dad and partner pay’ with the ‘parental leave pay’ entitlement, to create a single scheme of 20 weeks, which can be fully shared between eligible parents. 

The 20 weeks’ entitlement would be able to be used at any time within two years of their child’s birth or adoption if both parents are working. 

Single parents would also be able to access the full 20 weeks’ entitlement, and both mothers and fathers would be able to access the government-funded scheme at the same time as employer-funded leave. 

The proposed reform is similar to a recommendation made by the Business Council of Australia last year.

At the same time, the government also wants to change the eligibility threshold for the paid parental leave scheme, by introducing a combined household income threshold of $350,000 per year. 

Under the current system, primary care givers who earn up to $151,350 per year can access the government payments, even if their partner earns a high income, but those who earn more than that amount are not entitled to receive the payments, even if their partner earns a much lower amount, or earns no income at all. 

The government claims “no household will be worse off under these changes”, which it says will result in an extra 2,200 more families becoming eligible for the payments. 

Approximately 260,000 parents currently access the government-funded scheme, according to the budget papers.  

In a statement accompanying the budget papers, Minister for Women’s Economic Security Jane Hume said the changes mean the paid parental leave scheme would better reflect Australian families. 

“Giving families greater choice and flexibility about managing work and care will boost women’s workforce participation, and enhance their economic security,” she said. 

If re-elected, the government is proposing to implement these changes no later than March 1, 2023, at a cost to the budget of $346.1 million over five years.