May 04, 2014

Horse 1668 - Paid Parental Welfare (and how to get free money for nothing)
"The important thing about paid parental leave is that it's not a welfare entitlement.
It's a workplace entitlement and if we get paid sick leave and holiday pay and long service leave at our wage, why shouldn't we also be paid parental leave at our wage? That's a fundamental principle and this government is absolutely committed to it."
- PM Tony Abbott on 3AW (Melbourne), 30 Apr 2014.

I don't want to denigrate the value of mothers of of the critical importance of the role of the family on society, do don't get me wrong here but unlike sick leave, holiday pay, long service leave, overtime and other penalty rates, the Prime Minister is critically wrong when it comes to the issue of his Paid Parental Leave Scheme because he has made a critical category error.

Firstly, for this I'm going to use the readily acceptable definition of welfare rather than the way it is used in economics; that is, a welfare payment is one which is made by the government. Technically they should be called transfer payments.
Anyway, unlike sick leave, holiday pay, long service leave, overtime and other penalty rates are workplace entitlements because they are spelled out either at law within the context of an award or through the instrument of an enterprise agreement. The proposed Paid Parental Leave Scheme is not a workplace entitlement because it is a government payment and not one coming from an employer. It's not a fundamental principle; so stop lying.

The other thing I have to say about the scheme which almost is never discussed is the way in which it is paid. The Paid Parental Leave Scheme is supposed to act as a replacement for income lost by a parent who decides to care for their newly born child; yes I understand that the jump from two incomes back to one is going to be immense but in principle, the proposed Paid Parental Leave Scheme makes a value judgement about the children in society.
That is, it directly say monetarily that the child of a parent who is on $100K is directly twice as valuable to society as the child of a parent who is on $50K. It directly says that richer people are worth more to society than poorer people and then rewards them upon that basis.
Surely, those people at the bottom who find life already difficult, would appreciate the extra funds more than someone at the top. If income tax is a progressive system, then why is having children different?

Also, if you really were to think about it; provided you could set up a company on the cheap, you could simply just game the system by setting up a wage arrangement to pay wages from the company in the previous financial year, to then collect the Paid Parental Leave Scheme money at the highest possible rate. At very worst, you'd be assessed at 30c in the dollar for that previous financial year but every single dollar that you'd collect in the Paid Parental Leave Scheme would be effective tax free.
Basically if you do intend to have a child, then pay the parent at the highest possible rate whilst you can; even if the money passes from one hand to the other, it still creates a PAYG Summary statement an at the end of the financial year; that's all that counts.

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