On the Draft Inquiry Report into Paid Parental Leave

http://www.pc.gov.au/projects/inquiry/parentalsupport/draft

The Productivity Commission (P.C.) has published its Draft Report into a paid maternity leave scheme. The report recommends eighteen weeks of taxpayer-funded leave, transferable between the mother and father (or the ‘two mums’ or ‘two dads’), with a further two weeks paid leave for the other spouse.

Let me begin by confessing my own prejudices in the matter. Now I am not an economic rationalist, so I have no problem with the government expropriating resources for the purposes of providing public goods or owning natural monopolies, for example. But I do have an a priori presumption against the government levying taxes simply for transferring resources from one citizen to another. This is because, for one thing, for each dollar transferred, the full dollar does not flow through to the intended recipient, because of the expenses involved in making the transfer. Given that even charities that use a lot of volunteer labour find it hard to crack the ninety-five cents per dollar barrier, one can expect that the final benefit to the recipient of government transfer payments will be considerably less than this. Or in other words, in order to give an extra dollar, the government must initially take more than one dollar.

Secondly, there is the question of the proper relationship between justice and charity. In an ideal situation in which Church and State are united, the Church would provide welfare payments through its charity arm. I explain more fully my thoughts on the implications for justice of the P.C.’s scheme in my previous post.

To sum up: taxation for nation building can easily lead to a contribution to the common good, whereas this is not necessarily the case with simple transfer payments, since they represent merely a different dividing-up of resources i.e. the former deals with the size of the ‘pie’, while the latter is just a different way of slicing it up.

I encourage you to read the report for yourself (or at least the Overview, Recommendations and Chapters 1 and 6) rather than relying on the largely uncritical, even unquestioning, reporting of the media. What annoys me the most about mainstream coverage of this issue is that opinion columnists, by the very nature of their work, are the ones who have the least difficulty combining family and paid-work duties.

As one reads the report, it is clear that the primary end of this scheme is to keep mothers ‘attached to the work-force’. This is clear also from the statements of the likes of Ms Broderick. Now the Report does not come right out and admit that ‘work-force attachment’ is the primary end. It lists several advantages of such a scheme. But maintaining work-force attachment is the only one of these advantages that cannot be achieved by other means. The advantage of a longer period of nursing, for instance, does not depend on who pays for the time off from work that is necessary to allow for it. Another of its supposed advantages is that it will

promote some important, publicly supported social goals, and in particular, the normalcy of combining a caring role for children and working.
(Overview, p. XIV)

But this really amounts to the same thing as maintaining attachment to the work-force. Now at least it cannot be said that the P.C. failed to recognise that support for such an aim has its limitations:

This rationale for paid leave is more contentious than others, because while survey evidence suggests most Australians would like to see the introduction of statutory paid parental leave, many also oppose it, especially when it is made clear that the scheme must be paid for. Nevertheless, it is an important rationale for the Commission’s approach.
(Overview, p. XVIII, my emphasis)

Note the presumably unintended humour of the highlighted portion! The Report elaborates a little on this end when it states its desire to

provide a strong signal that having a child and taking time out of the paid workforce for family reasons is viewed by the government and the community as part of the normal course of life, and work, for parents, rather than a nuisance. A scheme that intends to signal such normalcy should be structured like other normal leave arrangements, such as those for recreation, illness and long service leave, rather than being structured as a social welfare measure.
(Overview, p. XXIII)

But such a signal is quite artificial. A long period of maternity leave is a heavy burden for employers, particularly small businesses. Making the scheme taxpayer-funded is merely a transfer of (part of) the incidence of the burden from businesses to taxpayers. No doubt part of the necessity of trying to make it look like another entitlement of the same kind of ‘normal leave arrangement’ as holidays or sick leave is because of the contempt and resentment that many working mothers have for the present ‘baby bonus’ (I speak from personal experience). We can perhaps detect some of this resentment when we read that

Barb McGarity referred to the ‘false assumption’ that paid maternity leave is a ‘cash handout’, arguing that it is employment leave:
… just as paid sick leave or compassionate leave or paid long service leave are employment leave. It is not welfare. Nor is it a baby bonus, and the two should not be confused, as they are separate issues. (sub. 83, p. 2)
(Ch. 6, p. 13)

But a cash handout is exactly what this is, however you try to dress it up. It is a classic example of what one economist recently called ‘churning’, or ‘money in, money out’—you pay some tax, the public service skims some off, and then you get it back later (minus the public service’s take).

Furthermore, the P.C. did not fail to note that there are those who oppose this scheme not only for materialistic reasons (wanting to avoid extra tax) but also for the social implications:

While many participants in this inquiry say they would value these kinds of social impacts, not all agreed. Some prefer to organise their lives around a more traditional gender division of responsibilities or see having children as a private choice with parenting to be organised as individual parents feel is appropriate.
(Overview, pp. XXIII-XXIV)

Mr. Adam Johnston put it well in his submission to the Inquiry:

… my concern with the whole concept is that it makes yet another part of private family life a public commodity and public controversy. Additionally, it generates yet another transfer payment (if provided by the Government) or will involve the quarantining of still more of our income (if financed by superannuation-style contributions). (sub. 63, p. 1)
(Ch. 6, p. 14)

But we can hardly begrudge the P.C. for ignoring such concerns; it is just carrying out the will of Swan, Gillard and Macklin (the latter of whom describes it as a “personal crusade”). Nonetheless, I eagerly look forward to someone explaining to me how it is just that the taxpayer at large, rather than the father, should pay for mothers to discharge their maternal duties. My comment at Ms Dunlevy’s blog has been published but has received no response.

As for the notion of ‘giving mothers more choice’, some choice it is, when stay-at-home mothers get $7 000 less than their working counterparts. This is the ‘choice’: keep yourself ‘attached (chained?) to the work-force’ or be a second-class citizen, as implied by the $7 000 differential. What a joke. (Actually, stay-at-home mums would be third-class citizens, since the ‘first class’ is of mothers whose employers already have paid maternity leave, since they will get the eighteen weeks of taxpayer-funded leave on top of any present benefits!) The P.C. acknowledges that one of the submissions did indeed raise the point that

much of the talk around ‘choice’ with child care ignores the choice many parents want to make: that of being the primary carers for the babies and very young children. (sub. 197, p. 4)
(Ch. 6, p. 11)

But, again, we can hardly begrudge the P.C. for sweeping aside such objections. It was quite honest about its aims and intentions.

So the stars are really aligning for the neo-feminist intelligentsia. They will soon have their working mothers bonus (sorry, working mothers entitlement), and one from their ranks now occupies Government House. What next, one wonders?

Reginaldvs Cantvar