Super change flagged to give women better deal on paid parental leave

Minister for Women and ACT senator Katy Gallagher has announced that the Albanese government will move to legislate a 12 per cent super equivalent payment to a superannuation fund on behalf of parents receiving the payment.

With the full cost to be revealed in the May budget, the move that would start from July 1, 2025 so after the next election, will be outlined at the National Press Club in Canberra on Thursday as the minister releases Australia's first national strategy to achieve gender equality, called Working for Women.

The government's move comes after it began expanding the payment to a full six months by 2026.

"The Albanese Labor government is serious about making sure women are supported when balancing caring and working responsibilities," Senator Gallagher said in a statement.

"The data is clear - that when women take time out of the workforce to raise children it impacts their retirement incomes with women retiring, on average, with about 25 per cent less super than men."

Adding the super payment to commonwealth PPL is in Labor's national platform as well as being a key recommendation of the Women's Economic Equality Taskforce and pursued by the Greens, crossbenchers and super funds. It has been a long-time policy of the Association of Superannuation Funds of Australia (ASFA) along with the idea of a "super baby bonus" of $5,000 in the super accounts of women upon the birth of a child.

The Business Council of Australia has also urged in its Seize the Moment report the government to pursue super payments for PPL as well as investigate ways for women to catch up on lost superannuation while out of the workforce.

Government figures show around 180,000 families receive government-funded paid parental leave payments each year. Data from the Workplace Gender Equality Agency shows three in five employers offer paid parental leave and 81 per cent of companies that offer paid parental leave also pay superannuation as part of this leave.

"Paying super on government parental leave is an important investment to help close the super gap and to make decisions about balancing care and work easier for women," Senator Gallagher said.

ASFA cites data from the Australian Taxation Office that (at the end of June 2021) the average super balance for males aged 15 and over was $189,892 while for females it was $150,922. That's a super gap of 20.5 per cent.

For those aged 60 to 64, it was around $212,000 for males and $159,000 for females, a gap of 25 per cent.

ASFA's research showed that super on PPL at the current Superannuation Guarantee rate of 11 per cent would result in a superannuation contribution of $1,750. On retirement that would mean around $3,400 in today's dollars.

Research based on median income data by the Australia Institute's Centre for Future Work has found that women will retire with $136,000 less in superannuation compared to men. Apart from career breaks for caregiving and higher rates of part-time work for women, the biggest driver of the gap in retirement savings is the persistent gender pay gap.

The commonly cited gender pay gap based on average earnings data from full-time workers, published by the Australian Bureau of Statistics, came out in February at a record low 12 per cent. The Workplace Gender Equality Agency reported in November a gender pay gap of 21.7 per cent based on total remuneration data, while it also published in February a national median total remuneration pay gap, based on data for private companies with 100 or more employees, of 19 per cent in favour of men.

"Greater economic inclusion for women is at the centre of the Albanese government's agenda," Treasurer Jim Chalmers said.

It comes as the Australian Public Service Commission has proposed 18 weeks of paid parental leave for both caregivers as a common condition for thousands of public servants at more than 100 public service agencies.

It is an update of 50-year-old "dinosaur" entitlements in the public service.

Excerpts from Working for Women state the aim that "unpaid and paid care responsibilities need to be more equally shared, and care needs to be valued and celebrated."

"The government will prioritise policies that support families to make choices that work for them," the strategy reads.

"Equality cannot be achieved without addressing who takes on, and who is expected to take on, caring responsibilities. Nor can it be achieved without valuing the substantial contribution unpaid and low-paid care makes to families, the community and - notably - the Australian economy."

The Women's Economic Equality Taskforce, headed by businesswoman Sam Mostyn, had recommended in October 2023 that the government legislate the payment of superannuation on all forms of paid parental leave.

It also recommended gradually doubling the length of the scheme to 52 weeks, as well as bringing the payments to match lost wages and ensuring men are encouraged to use the scheme. Labor's national platform also states a full pay "goal" for parental leave through a combination of government and employer contributions.

The Greens have previously promised to support the taskforce's recommendations and said it will support the government to implement "any and all improvements to PPL."

Independent ACT senator David Pocock stated in March 2023 that he supported paying super on commonwealth paid parental leave as a "relatively modest investment" that would deliver a "huge dividend in future in terms of taking pressure off the aged pension and giving people - and women in particular - a better retirement."

The Jacqui Lambie Network senators have also the prospect of super payments for PPL as a "good thing".

Prime Minister Anthony Albanese has previously stated he would like to pay super on PPL when the budget allows, pointing to a trillion dollars in government debt.

"Paying superannuation on paid parental leave is another key step to prioritise gender equality, better value care work and improve women's workforce participation," the Minister for Social Services Amanda Rishworth said.

"It helps normalise taking time off work for caring responsibilities and reinforces paid parental leave is not a welfare payment. It is a workplace entitlement just like annual and sick leave."