Economy

Support builds for Government-funded paid maternity leave, but employers still worried

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The peak small business lobby group has backed union arguments that a Government-funded paid maternity leave scheme is affordable, but warns measures to impose additional costs on business owners would be counter-productive.

The Australian Council of Trade Unions yesterday told a Productivity Commission inquiry that a scheme providing 14 weeks paid maternity leave at the minimum wage would require a gross annual spend of $1.74 billion by the Federal Government.

Once increased tax inflows and the ACTU’s proposed abolition of the baby bonus are taken into account, however, the blow to the budget bottom line falls to $518 million per year.

ACTU president Sharan Burrow says the forecast shows that a paid maternity leave scheme is a “realistic and immediately affordable solution”.

This view is backed by Tony Steven, the chief executive of small business peak advocacy group the Council of Small Business of Australia.

“Given that the budget has just put away $20 billion in the budget surplus, an investment of the order suggested is not unreasonable,” Steven says. “For small businesses, the big advantage with the scheme is that it puts us on an equal footing with big business in attracting good staff.”

Other aspects of the ACTU paid maternity plan are not backed by business, however. The union group proposes that employers should be required to make a top-up payment to women whose pre-maternity leave incomes were above the minimum wage, with an average cost to employers of around $5000 per employee on leave.

At a PricewaterhouseCoopers breakfast yesterday, two female entrepreneurs talked about the impact any additional maternity leave costs could have on small business.

Both entrepreneurs employ many young women and go out of their way to provide flexibility and benefits for families. But while they support the Government funding maternity leave, they felt that small business could not afford the cost and it would have a negative impact on the advancement of females’ careers. Naomi Simson, founder of RedBalloon Days, says: “It’s sexist. If a company interviews an A-grade woman and a B-grade man, they might employ the B-grade man to avoid the expense.”

Simson says she invests heavily in her people. But introducing any legislation so something becomes prescribed instead of a choice is a backward step, she says. “We’re the clever country and we can come up with something smarter than that.”

Carolyn Creswell, founder of Carman’s Fine Foods, says it’s a lot of responsibility for small business. Yesterday her financial controller rang and said her daughter was sick, Cresswell says. Normally she would not be able to come to work. “But we have a room with a bed and DVD, so she will bring her child in and we will get a full day’s work from her,” she says.

Creswell, pregnant with her third child, says: “Look at me. That’s a lot of money I would have to have been paid by an employer.”

COSBOA’s Steven agrees, arguing the optimal policy setting would leave any additional leave payment to be negotiated between employers and employees. “Many small businesses just don’t have the capacity to meet those costs.”

Other union claims, such as strengthening proposed rights to request flexible work arrangements or parental leave by giving employees the ability to have any employer refusal reviewed by a tribunal, are also opposed by employer groups.

“If you regulate conditions, like flexible work arrangements, you undermine any productivity gains that could be negotiated to offset these benefits and that will hurt the economy, employment levels and small business,” Steven says.

The risk with measures such as the ACTU’s employer contribution to paid maternity leave is that, by imposing costs on employers, the scheme could disadvantage the very women it was designed to help, Steven says.

“It could act as a disincentive to small business owners to employ young child-bearing age women. It may be illegal under anti-discrimination laws, but some people may ignore those rules and that would be unfortunate,” he says.

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