Parents accessing the government-funded paid parental leave will receive superannuation on their payments from July next year, after the federal government’s legislation passed parliament on Thursday morning.
The federal government has argued that the changes will go some way to bridging the superannuation gap between men and women, which is partly the result of women taking more time away from work to care for children.
Under the changes, parents with babies born or adopted after July 1 will receive an additional 12 per cent of their government payment as a contribution to their nominated super fund.
Nearly all families would benefit from a lift to childcare subsidies recommended by the Productivity Commission, with free care for low-income families.
The payments will be calculated and administered by the Australian Taxation Office.
Currently, couples can access up to 22 weeks of paid parental leave (PPL) at the national minimum wage of $915.90 a week.
This will increase to 24 weeks for children born or adopted after July 1 next year, and to 26 weeks in 2026.
It’s estimated about 180,000 families receive the support each year.
The Senate passed the legislation without a vote, after the Coalition’s attempts to amend it were defeated.
The changes follow a recommendation from the Women’s Economic Equality Taskforce, which last year called for superannuation to be paid on “all forms” of PPL after it was asked by the government to consider how to improve the financial standing of women.
On average, women retire with about 25 per cent less super than men, according to the government.
But a Treasury review of retirement incomes in 2020 found paying superannuation on government parental leave would only have a small impact on women’s retirements, with the median female receiving just 0.17 per cent extra in their annual income.
Instead, it said the gender gap in retirement incomes was due to women earning less over their careers, which flowed through to their super.
The new superannuation payments will come at a cost to the budget of $1.1 billion over the next four years, according to the government.
Prior to the 2019 election, Labor had committed to including super on government-funded PPL, but dropped the proposal at the last election citing costs.
Earlier this year the parliament passed an expansion to PPL, paving the way for the number of days families are able to access the payments to gradually increase to 26 weeks.
