AUDIT COMMISSION: Paid Parental Leave Should Be Capped At Average Weekly Earnings

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Paid Parental Leave should be capped at average weekly earnings, the Commission of Audit has recommended.

Releasing its plan to deliver savings today, the commission said while it recognises Prime Minister Tony Abbott’s signature policy, the Paid Parental Leave Scheme, has the potential to support women and children, it needs to be balanced and targeted.

“The benefits of Paid Parental Leave have to be balanced with the cost to the Commonwealth Budget and the principle of targeting expenditure to those most in need,” the commission said.

To achieve this the razor gang recommends payments be capped at average weekly earnings, in a package that contrasts starkly with the generosity of the government’s proposed maternity scheme, which pays half of your salary, to a threshold of $100,000. So $50,000 would be the maximum payment.

According to the Australian Bureau of Statistics’ average weekly earnings as of November 2013 was $1437 for an adult working full-time.

The current scheme will be funded by a tax levy on big business of about 1.5 per cent. The commission agrees with this but said child care assistance should be factored into the plan.

“The Commission considers that the company tax surcharge intended to partly fund the Scheme be retained, with savings from the lower cap redirected to an extended form of child care assistance,” the report said.

Longer term child care assistance would include in-home care including nannies as well as other types of child care that are not currently subsidised.

“Child care assistance more generally should be simplified and broadened by replacing the current dual assistance system with a single, means-tested payment reimbursing all parents for a proportion of their child care costs.”

Abbott has already dropped the cut off threshold for the scheme to $100,000 this week. There’s more on that here.

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