Review of Australia’s paid parental leave changes.

  • PublishedJune 8th, 2023
Review of Australia’s paid parental leave changes.

Yes! Finally, some overdue policy changes towards support and flexibility for families in relation to paid parental leave changes for Australians.

Are they as progressive as they appear?

Changes to Services Australia’s Paid Parental Leave (PPL) Scheme aim to give families more flexibility to manage work and care arrangements.

The changes take effect from 1 July 2023 and apply to people whose child’s birth or adoption was after this date. 

Employers may need to review and update their paid parental leave policies.  

Parental leave, Mother and Father/Partner pay are being combined into one payment of a maximum of 100 days, or 20 weeks based on a five-day work week – to be shared between parents. 

Currently, paid parental leave offers the birth mother 90 days or 18 weeks and the father or partner two weeks.  

A combined family income is being introduced – so for those who do not meet the individual income limit of $156,647, a combined family income limit of $350,000 will apply instead. This also applies to people who are single or partnered. Parental leave pay is paid at the national minimum wage.  

As of the date of this article, the National Minimum Wage June 22/23 is $812.60 per week, calculated on a 38-hour week or $21.38 per hour. 
Please see Fair Work Commission link for up-to-date annual wage reviews.

Parents can access parental leave pay until their child turns two years old. Parents can share their leave with each other and take days at the same time. The birth mother or first adoptive parents must give the approval to share any parental leave paydays.  

Unused parental leave paydays will be lost after the child turns two, with the aim to encourage both parents to access the payment for said date. Single parents will have access to the full amount of leave pay.  

There are more proposed changes subject to legislation passing, such as increasing the total parental pay leave available to families to 26 weeks by 2026.  

An increase toward 26 weeks is 182 days, would be a significant improvement, if it happens, as it's still only a proposal,  and if passed won't occur for another 3 years depending upon which Government is in power at the time.

Although these initial and proposed changes are welcomed, are they progressive?

Let's review by 1st dreaming it is 2026 and the proposed PPL changes have commenced

Then let's compare these 2026 proposed PPL benefits against all already established benefits of say, Sweden, rated as the 3rd best Scandinavian country when it comes to parental leave entitlements (Finland being No 1).

Sweden V Australia

Parents in Sweden are already entitled to 480 days of paid parental leave (68.5 weeks) when a child is born or adopted. Each parent – should there be two – is entitled to 240 of those days (42.28 weeks). If the child is born in 2016 or later, each parent has 90 days reserved exclusively for him/her/they.
Swedish parents have had access to these PPL benefits since 2016.

Yes, that's right, they already have equal paid parental leave since 2016. Guess what, they attribute this equal parental leave as a key factor in addressing Sweden's gender pay equality issues in Sweden.

Side note: The overarching Swedish principle is that everyone, regardless of gender, has the right to work and support themselves, to balance career and family life, and to live without the fear of abuse or violence. Gender equality applies to equal distribution between men and women in all domains of society.

Sweden V Australia PPL continues

During the child's first year, there is an opportunity for both parents to take parental leave benefits in the same period for no more than 30 days (so-called 'double days'). 384 days of parental benefit must be taken before the child's fourth birthday. The remaining 96 days can be saved and taken - at the latest - before the child turns 12 years old or until the child finishes the fifth grade. Also, in Sweden's cases of multiple births (twins etc) an additional 180 days are granted for each additional child.

Sweden's current entitlement is 68.5 weeks 480 days V’s Australia July 1, combined parents' payment of a maximum of 100 days, or 20 weeks based on a five-day work week – to be shared between parents falls significantly short of EU & Scandinavian standards.

In comparison, Sweden already has an additional 298 days or 42.57 weeks

Sweden's cut-off age is 4 years V’s Australia’s cut-off age of 2 years. Plus, each parent has 90 days reserved exclusively for him/her/they to use, and each parent can save 96 days of PPL to use at any time before the child turns 12 years 

I know what you’re thinking, Sweden is a rich country, and their tax rates are higher, hence they have more money to spend on social services.

Let’s compare the economic factors between each of these countries.

Sweden’s population is only 10.42 million – GDP $635.7 Billion (USD) 2022

Australia’s population is 25.69 million – GDP 1.553 trillion (USD) 2022

Making Australia's Population 5.27 million higher, than Sweden, with a GDP $917.3 Billion (USD) higher than Sweden’s GDP. 

That's right, $917,300,000,000,000.00 Billion.

Yes, Sweden’s top income tax rate is high at 55.3 % compared with Australia’s 47% as of 2022

When you compare Sweden’s net average tax rate is 24.5%, its only 1.3% higher than Australia's net average of 23.2% 

Sweden’s unemployment rate is 3.4% higher than Australia's at 7.1% compared with Australia's 3.7% as of April 2023.

Yet, the Swedish Government's expenditure per capita is slightly less than Australia's at $26,858.00, compared with $26,957.00 (2022). 

You might perceive using Sweden as an unfair comparison.

When you consider the above data, compare the additional benefits Swedes already receive compared to what the Australian government proposes to implement.
When comparing Australia's financial means, employment rate, opportunities, National GDP,  National debt, budget surplus, the government expenditure per capita, our financial capabilities far exceed Sweden's.

How would we pay for it, I leave that to the economists and with this final data comparison:

As of 2023, Australia has 47 Billionaires ranked 12th in the world.
Sweden has only 38 Billionaires ranked 39th in the world.

If you still perceive Swedens PPL as an unfair comparison

Let's compare Belarus V Australia.

Belarus in principle and legislatively has a better Paid Parental Leave scheme than Australia.
That's right, Belarus! You know, the country with an authoritarian communist government. Where President Lukashenko has ruled for the last 29 years unopposed. According to the United Nations has been curtailing the press, removing Belarusian's basic human rights freedoms, while imprisoning and "disappearing" persons or parties critical of his leadership, since 1994.

Yet, Belarus provides 126 days of paid parental leave for each parent paid at 82% of their annual income for the first 30 days and then paid at 75% of their annual income thereafter.  Australia provides 100 days of shared PPL paid at the minimum wage.

The Australian government's July 1, 2023, & proposed 2026 Paid Parental Leave reforms, although long overdue, must come as a welcomed relief to all Australian parents, as well as soon-to-be or those even considering becoming parents. While these recent steps help to address some of the parental and gender equality issues. Australia clearly has a long way to go before we can call its Paid Parental Leave scheme "progressive".

See the below links pertaining to sourced data used in the article.

Economy Compare

International Labour Organization

Sweden taxing wages

See the link to EU Commission Employment, Social Affairs & Inclusion

Billionaires per country

Image credit to Daniel Thomas