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Opening statement to the Inquiry into the Fairer Paid Parental Leave Bill 2016

Discrimination Sex Discrimination

Senators, I am very grateful for the opportunity to appear before the Community Affairs Legislation Committee today.

As Sex Discrimination Commissioner, I have a particular concern for ensuring that legislative reforms support and advance gender equality and women's rights.

Clearly, this Bill raises important issues relating to the workforce participation and economic security of Australian women.

As I commenced my role in 2016, it was quickly apparent to me that one of Australia’s biggest challenges in closing the gender gap is addressing economic security for women. The World Economic Forum recognises Australia as a leader in education, but as a country we rank poorly in economic participation and opportunity, and this is reflected in the experiences I have heard from Australian women. Research also tells us that increasing women’s workforce participation is a key mechanism to secure women’s retirement incomes, reduce reliance on the aged pension, improved corporate performance and boost our GDP.

Addressing gaps in women’s workforce participation, wages, retirement savings and incomes are not only fundamental to gender equality in this country, they are also fundamental to its long term economic success. The provision of adequate paid parental leave plays a central role in addressing these gaps.

The Commission does not support the Bill in its current form. 

This is because of the likely negative impact of this Bill on the equality and economic security of women. It is also because the evidence before the Commission, and in the submissions to this Committee, suggests that the Budget savings from the Bill will be outweighed by the longer-term economic costs.

There is no economic modelling in existence to counter this evidence. To pass the Bill in the absence of such research therefore presents an unacceptable risk both to gender equality and the broader Australian economy.

The Commission’s position on the Bill

I refer you to the Commission’s submission to the Committee on this Bill, which reflects its position on the 2015 Bill.

The Commission welcomes the proposed changes to the Paid Parental Leave (PPL) work test, which create flexibility that will help to ensure that government-provided PPL is more accessible to working parents. However, the Commission has strong concerns about the Bill’s limitations on the availability of PPL, which will result in a reduction in current payments for many women who have access to employer-provided PPL.

The reduction in income support will negatively impact the economic security of women and their families. The extent of available PPL for most women will fall well below of recognised international standard of 26 weeks, which is considered necessary for maternal and child health and development.

Shorter parental leave periods more often place caring responsibilities in conflict with work responsibilities, discouraging continued workforce participation for many women. Consequently, greater availability of PPL is shown to increase the likelihood of a mother returning to work after 12 months, and to maintain her workforce participation in the longer term. This makes PPL a critical workforce participation issue for women.

In addition, the Bill’s measure to shift the paymaster role from employers to government, will increase the likelihood of a woman on parental leave becoming disconnected from her workplace, and so place her ongoing workforce participation at greater risk.

The Commission notes that, for these reasons, the Bill’s proposed limitations to PPL do not align with Australia’s obligations to progressively realise women’s rights under the International human rights conventions. It must be noted that these consequences of the Bill seem to sit in stark contrast with the commitment of G20 leaders, under Australia’s presidency, to work towards reducing the gender gap in workforce participation by 25 per cent by 2025.

The evidence from consultations since commencing as Sex Discrimination Commissioner

These concerns reflect the Commission’s long-term position on the importance, as a matter of fundamental human rights, of preventing discrimination against pregnant women and supporting the parents of young children.

The Commission’s 1999 report “Pregnant and Productive: It's a right not a privilege to work while pregnant”, made a number of recommendations aimed at improving the availability of PPL, and found that it was a “significant factor that contributed to the decisions now being made by Australian women”.

Progressing this issue has been the key focus of successive Sex Discrimination Commissioners since then – from Susan Halliday, to Pru Goward, to Elizabeth Broderick. Not surprisingly then, this issue has been no less important since I commenced as Sex Discrimination Commissioner in April last year.

In the consultations I have held with women around Australia in recent months, I have heard a consistent story about the gap between the economic security of men and women in this country.

Women told me how this economic disadvantage accumulates over a lifetime, including during pregnancy, parental leave, and on return to work.

Clearly, the reduced income support during this critical time could potentially exacerbate the gender pay gap, workforce participation, and women’s retirement savings and incomes.

When you examine the “cradle to grave” story of a women’s engagement with society, you can see how women’s economic insecurity accumulates:

  • It starts at school, where girls are often guided into subject choices that result in lower paying career paths, and into lower-paid female dominated industries.
  • Even before kids the gender pay gap means that women are paid less than men.
  • Once women become parents, social norms, economic pressures and lack of affordable, accessible childcare results in mothers bearing the unpaid caring roles while fathers become the primary breadwinner. 
  • As time goes on this situation worsens, with women significantly underemployed after the arrival of children, and often in part-time or insecure employment. One in two mothers and one in four fathers experience workplace discrimination.
  • At this point, the woman’s current poor economic position starts to project into the future.
  • She is not accumulating any or as much super in her early working life, at the time when compounding has the greatest benefit for long-term savings.
  • And, once the children have left home, and the woman’s opportunity to re-engage in employment and regain economic security briefly re-appears, this is often swept away by the need to care for ageing relatives.
  • At the end of all this the facts are stark: on average women retire with half the retirement savings of men and are two-and-a-half times more likely to live in poverty in old age than men.

When one considers this context, it is clear that having children is a critical turning point in the economic life of a woman.

The availability of PPL at that time when her career is in its early days, and her continued workforce participation is at its most tenuous, can be the critical factor in a woman’s lifetime economic security.

Can the Bill achieve its economic aims?

So, the Commission considers that the human rights concerns about this Bill, and its negative impact on many Australian women, are in themselves strong reasons why it should not be passed by the Parliament.

To the extent that the Bill purports to create a “fairer” PPL system, we believe that it will clearly fail to achieve that aim. However, the Bill is also intended as a fiscal measure, that will positively impact Australia’s budget bottom-line.

The Commission recognises that governments must always balance expenditure on social justice measures with responsible economic management. It is common sense that a sustainable budgetary position into the future is necessary to fund such expenditure.

The question, therefore, is whether the projected savings from the Bill do, in fact, equate to a more sustainable future budgetary position. The Bill was introduced without the evidence necessary to answer that question.

The submission from the Department of Social Services notes only that the financial impact of the Bill over the forward estimates is $1.2 billion.

There is, however, no analysis of the cost to the Budget of the Bill’s impact on women’s workforce participation and economic security, and the flow-on impact of this on the broader economy. The Government’s Statement of Compatibility with Human Rights states that 47 per cent of the 300,000 new mothers each year will be impacted by the PPL limitations. However, as many of the submissions on the Bill have explained, the broader ongoing economic impact of reducing women’s workforce participation is much more complex and far-reaching.

The government’s workforce participation policy statement also suggests that this is the case. It states:

“Women’s workforce participation is an economic and social imperative, and is essential to building the workforce required to support economic growth and Australia’s future prosperity.”

Or, in other words, reducing women’s workforce participation will damage the economy.

In my view, the unintended consequences of the Bill may be to:

  • reduce women’s connection with the workplace;
  • reduce their workforce participation;
  • reduce their economic security; and
  • reduce collaboration between the Government and business to address this significant problem.

The actual impact on the Budget of this Bill would require detailed economic modelling, which accounts for all of the resulting costs of that immediate saving.

The Commission’s conclusion, therefore, is that the Bill should not be passed at this time.

The negative impact on gender equality and on the rights and economic advancement of women is, on its own, a compelling reason for this conclusion. Furthermore, unless comprehensive economic modelling is carried out, we will not know the consequences that this Bill will have on women’s participation in the workforce and the Australian economy.

Kate Jenkins, Sex Discrimination Commissioner