Tony Abbott is putting his body on the line for a generous paid maternity leave policy that no one seems to like.
Tony Abbott is putting his body on the line for a generous paid maternity leave policy that no one seems to like.
His colleagues are aghast, business is up in arms, the welfare lobby is opposed, and it is hard to find women who support it either. Even the sisterhood is against him.
The notion his is a "Rolls-Royce" scheme that gives greatest benefits to well-off women dominates public discussion. It is enough to condemn it in everyone's eyes.
Yet Abbott's maternity leave scheme is defensible. It is not perfect and suffers technical weaknesses in its design. But it's better than Labor's. Indeed it is the second most generous scheme of 28 countries in the Organisation for Economic Co-operation and Development.
Did he even realise he was proposing above-Scandinavian levels of generosity when he proposed a 100 per cent wage replacement rate? It's not often we're up there with the Swedes, Danes and Norwegians. A year ago, we had nothing.
And unlike Labor's scheme which started in January last year, it is not funded out of general revenue but from a levy of 1.5 per cent on the nation's 3000 or so biggest companies. It positions maternity leave as a workplace policy, not welfare. This is as it should be because it is normal for women workers to need time off and sustained wages when they have babies.
If Labor were proposing such a pro-working women social policy, the Coalition would be howling but the sisterhood would surely be ecstatic. Why shouldn't ordinary Australian women workers get a first-rate maternity leave policy instead of the stingy one delivered by Labor that we'll be stuck with for aeons? Any woman who earns more than the minimum wage will get more under Abbott's scheme, and no woman will get less. Superannuation will be paid under Abbott's scheme but not Labor's. And they'll get six months paid leave, not 18 weeks.
In terms of time off for parents, as distinct from mothers, it's not as good as the Swedes, for example, who provide up to 480 days parental leave, some of it at 80 per cent wage replacement rate, providing fathers also take 12 weeks off.
Abbott has proved a terrible salesman. He is an extreme social conservative in a conservative party proposing a radical feminist policy. He lacks credibility.
He has failed to convince the left and right that his scheme is akin to workers' compensation or sick leave, where people are paid a replacement wage. Women should not suffer a wage penalty relative to men.
He has failed to make the case that in Australia, more than most places, couples are reliant on two incomes given astronomical housing prices and rents.
On top of his credibility problem, he has failed to provide the supporting data that might counter the most telling criticism, that its main beneficiaries are the well-off.
l have turned to Professor Peter Whiteford, of the Social Policy Research Centre, to try to better understand the Coalition's policy. Whiteford is one of Australia's pre-eminent social policy analysts, with a background at the OECD in Paris.
Whiteford is no fan of Abbott's scheme and wonders if we need to go from the bottom of the OECD leagues table on generosity to near the top in one bound.
But his rough analysis shows that under Labor's scheme, which pays all eligible women the minimum wage of about $580 a week for
18 weeks, women on average earnings receive the second lowest paid maternity leave in the OECD. Low-paid women on about $30,000 before tax now get the ninth highest maternity leave pay of the 28 comparable countries.
Abbott's scheme, which pays women a full replacement wage for six months (up to a maximum salary of $150,000), means almost all women, including those on average earnings, would receive the second-highest maternity leave pay, in terms of replacement salary, along with Poland, Estonia, Slovenia and Luxembourg.
For those earning $150,000, it is true the maternity pay of $75,000 would represent virtually the most generous salary replacement rate in the world, Whiteford says. But only 200,000 women out of 4.5 million female employees earn more than $90,000. Many of them are older women with grown children. In other words, few women would qualify for the $75,000 that is the butt of so much criticism of Abbott's scheme.
On the other hand, more than 3 million women earn above the minimum wage and stand to be better off under Abbott's scheme 1.5 million earn less and would be no worse off than under Labor's scheme.
Whiteford's rough analysis - which covers all women, not just those of child-bearing age - is no substitute for the detailed breakdown the Coalition should provide to illuminate the distributional impact of its scheme.
Maybe Australian women don't need a first-class paid maternity leave scheme when the unemployed subsist on $243 a week, or when an employer levy might better be put towards the national disability insurance scheme.
But given Abbott has virtually signed a blood oath to introduce the scheme, Australia looks set to get Rolls-Royce paid maternity leave should Abbott prevail in the next election.
How bizarre is Australian politics that one of the most socially conservative politicians in recent times should champion such a generous scheme for women, especially since his poor salesmanship means no one seems to want or appreciate it.
Frequently Asked Questions about this Article…
What is Tony Abbott’s proposed paid maternity leave scheme in Australia?
Abbott’s proposal would pay women a full wage replacement for six months (100% of salary) up to a capped salary of $150,000. The scheme would include superannuation and be funded by a 1.5% levy on the nation’s roughly 3,000 biggest companies, positioning maternity leave as a workplace policy rather than welfare.
How does Abbott’s maternity leave proposal differ from Labor’s existing paid parental leave policy?
Labor’s scheme (already in place) pays eligible women the minimum wage—about $580 a week—for 18 weeks and is funded from general revenue. By contrast, Abbott’s plan pays full wage replacement for six months (with a $150,000 cap), includes superannuation, and is funded by an employer levy rather than general taxation.
Who stands to benefit most from Abbott’s maternity leave plan — is it mainly a benefit for high earners?
Critics call it a “Rolls‑Royce” scheme that could disproportionately help well‑off women. Expert analysis cited in the article notes very high payouts for those near the $150,000 cap would be unusual because only a small share of women earn that much. At the same time, more than 3 million women who earn above the minimum wage would likely be better off under Abbott’s plan, while about 1.5 million who earn less would be no worse off than under Labor’s scheme.
How is the Abbott maternity leave proposal funded and what does the 1.5% employer levy mean for big companies?
Funding would come from a 1.5% levy on Australia’s roughly 3,000 biggest companies. That levy makes the program an employer‑funded workplace policy rather than a welfare payment from general revenue. The article highlights this funding choice as a deliberate policy shift but does not provide detailed costings or company‑by‑company impacts.
How does Abbott’s plan compare to other countries’ parental leave programs?
The article states Abbott’s proposal would rank as the second most generous paid maternity leave scheme among 28 comparable OECD countries. However, in terms of broader parental leave (including fathers), it is not as generous as countries like Sweden, which offers longer parental leave and strong wage‑replacement rates for fathers taking time off.
Does Abbott’s maternity leave proposal include superannuation and why does that matter?
Yes — Abbott’s scheme would pay superannuation on top of the wage replacement, which the article notes is a key difference from Labor’s scheme that does not include super. Including super boosts long‑term retirement savings for women taking leave and is presented as an argument in favor of Abbott’s approach.
What are the main criticisms and political risks of Abbott’s paid maternity leave policy?
Criticisms include perceptions that the plan mainly benefits higher earners, a lack of published distributional data to back up claims, opposition from businesses, the welfare lobby and many women, and Abbott’s poor political salesmanship given his conservative profile. The article says these credibility and communication problems are important political risks for the proposal.
As an investor, what should I watch for regarding the proposed maternity leave levy and policy outcome?
Watch for further government detail and distributional data on the levy and eligibility, the official costings, and whether the policy is legislated after the next election. The immediate policy design — a 1.5% levy on the biggest companies and a high replacement cap — is the aspect most likely to matter for large employers and for market discussion until final decisions are made.
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