Topics: Paid parental leave and superannuation
GREG JENNETT, HOST: Now, earlier this afternoon, the Senate passed, with bipartisan support, a number of changes to paid parental leave that had been promised by Labor when in opposition. These changes will broaden and streamline access to the scheme before eventually enlarging it. Social Services Minister, Amanda Rishworth is in charge of all of that she joins us now. Welcome Minister. We will talk about super cap numbers in a moment, but why don't we work sequentially through your day? This PPL change that passed the Senate does expand access. Just explain for those not familiar what happens and when this comes into force?
AMANDA RISHWORTH, MINISTER FOR SOCIAL SERVICES: What this paid parental leave change means is that firstly, more families will be able to access it through the establishment of two different means tests. So, at the moment there's a means test if you're the birth mother of $150,000 - that's the maximum you could earn. But under these new changes that will still remain, or if it's more favourable if the family income is $350,000 and you apply under that, you may also be eligible as well. So that's a really important part. It also de-genders a lot of our paid parental leave scheme. We are putting together dad and partner pay along with paid parental leave to give an entitlement of 20 weeks for people who can split it in different ways over a longer period of time so it's more flexible and provides more ability to do shared care than we ever have had before.
GREG JENNETT: And how many additional people do you estimate are brought into this scheme?
AMANDA RISHWORTH: There's about 180,000 people a year that use paid parental leave. They will benefit from the improvements. In terms of the means testing arrangements, that's approximately an extra 3000 people, so more people get to access it, but everyone getting paid parental leave will have more weeks that can be flexibly cut up between parent A and parent B. So really good outcomes for families and they've been calling for this for a very long time. The reason why it was also very important to pass is obviously this comes in on the first of July, but families can pre-claim three months out from the birth of a child especially good for the complexities when a child is born …
GREG JENNETT: … When looking after a new-born.
AMANDA RISHWORTH: Yeah, that's right. We are now on track, with this legislation passing the parliament for that pre-claiming to the start at the end of March for that first of July implementation date.
GREG JENNETT: Now as is always the way with these things, as soon as you tick off one item, the demands come from the next. And so some parties in the parliament are already moving on to paid superannuation whilst on paid parental leave and asking when conceivably can the Government move ahead on what you've already stated is an ambition. What is the likely timeline for that?
AMANDA RISHWORTH: Our first priority is now moving the new scheme from 20 weeks to 26 weeks and that's our priority. We've made a commitment that we will start increasing it by two weeks of the first of July next year, up until 2026. Two weeks each year. So we've committed to that, of course, that is our priority. Looking at superannuation on paid parental leave, that goes to a really big agenda for the Government which is reducing the gender pay gap. That's both in retirement savings, and also in of course paid work and of course if we're able to close the gender pay gap with work then that will flow on to retirement savings. We're looking at all of these issues, obviously superannuation on the paid parental leave scheme that the Government offers is one of the issues that we will continue to look at, but there's many other issues when it comes to pay equality and pay equity that we're focusing on.
GREG JENNETT: I think the observation is made by the Greens and others that at $200 million I think maybe $220 million. It's not exactly a budget breaker…
AMANDA RISHWORTH: Well $200 million dollars is a significant impact on the budget, especially when you're looking at a range of other competing measures. But it's something that in the broader context of women's pay equity, which we've already done significant work on. We've had some real wins when it comes to gender equity as a principle of the Fair Work Act and there are many other things that we're doing. So we'll keep working on it, but getting to 26 weeks is absolutely our priority.
GREG JENNETT: Okay, let's take you to the super cap. We did just hear from Katy Gallagher and Jim Chalmers. When you announced this last week, it was stressed that it would only capture half of one per cent of all account holders. And yet, as is the nature of accrual superannuation accounts, which are indexed this grows we discovered to one in ten in 30 years. That's a much bigger net, isn't it? Why not index it?
AMANDA RISHWORTH: Well firstly we are talking about 0.5 per cent of people being affected in 2025. So still a number of years off, but I think most people would assume that having $3 million in your super is very significant. And what our proposal does is still give those people concessions, but not at the lowest rate. So they're still getting concessions on that. But I would point out there's many aspects, thresholds within the tax system that are not indexed. Personal income tax is just one example…
GREG JENNETT: But If you are a 20 year old worker now starting off on your journey of life and contributing. It's quite obvious from these numbers that many of them, one in 10 of them, are by 30 years’ time going to be caught up in ways that they might not appreciate today.
AMANDA RISHWORTH: As with the personal income tax system, we have moments where thresholds have moved but it is not regularly indexed that actually is through the whole taxation system. To assume that in 30 years’ time, nothing will have changed in the superannuation system is probably making a lot of assumptions. But we've got to get superannuation sustainable. And I think when we look at the budget pressures, if we're really saying, look, you're still going to get a concession if you've got $3 million in your super, it's just not going to be as big as it has been…
GREG JENNETT: …[Interrupts] but isn’t the difference – sorry to interrupt, Amanda – but isn’t the main difference between tax and super is that the latter is built on certainty. It's not the sort of system that you want to go tweaking every three, four or five years whereas as you say, it's commonplace on the tax side. That’s what governments do.
AMANDA RISHWORTH: We're not talking about two, three, four, five years we're talking 30 years. And that's what the figures are based on and let's be clear, it is still not capturing the vast majority – 90 per cent of Australians. So I think we need to be in proportion here. There is still a concession for those with a balance of more than $3 million. It's not as big as what people with a lower balance have, but I think when most Australians are looking at this – super is absolutely important for a comfortable retirement – but this is about taking a modest responsible measure, and that's what we've been elected to do.
GREG JENNETT: And there was certainly a bit of polling out today that suggested you have a solid base of support among respondents there for the changes – I suppose there's some encouragement in that. Amanda Rishworth there's more we could talk about today but time has beaten us. Thanks so much for scrambling up after Question Time to join us on Afternoon Briefing.
AMANDA RISHWORTH: Thank you.