Cost to small business of paid parental leave to be investigated

The costs and benefits of paid parental leave for small and medium enterprises will be a focus of the Productivity Commission’s inquiry into paid parental leave, which was announced yesterday.

The Federal Government has set wide-ranging terms of reference for the Productivity Commission’s inquiry, which is due to report by February 2009.

These include analysis of:

• The economic, productivity and social costs and benefits of providing paid maternity, paternity and parental leave.
• The post-birth health of the mother and the development of young children.
• Paid leave models that exist around the world and their suitability for Australia.

“Any policy reforms in this area will be aimed at ensuring strong and sustainable economic growth, take into account our ageing population and the importance of early childhood development, and support Australian families to balance work and family responsibilities,” Treasurer Wayne Swan said in a statement.

Small business is worried about the costs of funding paid parental leave.

It is a crucial that any paid parental leave scheme should by funded by the Government, not employers, says Council of Small Business Organisations of Australia chief executive Tony Steven.

“We were concerned that a scheme could impose a big cost for small business, but the Rudd Government has given us a guarantee that that won’t be the case and certainly we will be arguing that in our submission to the inquiry,” Steven says.

But there are big potential benefits for small and medium businesses in a Government funded scheme, with many big businesses and the public service currently enjoying a recruiting advantage because of their ability to offer paid maternity leave.

“There are cost issues that have to be dealt with, but in these times of skills shortage the benefit of paid maternity leave lies in retaining staff, especially in the more highly skilled areas that most small businesses operate in,” Steven says.