Labor Pledges to Pay Superannuation on Top of Paid Parental Leave

Australian dollars are shown in Sydney, Australian, on March 10, 2015. (Dominic Lorrimer/Getty Images)

The federal Labor government has promised to pay superannuation to people who receive Paid Parental Leave (PPL) support in a move to “close the super gap” between men and women.

On March 7, the government announced that it would include superannuation in support payments for parents starting next year.

Currently, eligible parents are entitled to a weekly payment of $882.75 (US$580) for up to 20 weeks.

Under the new change, they will be able to get an additional amount of 12 percent, or $106, paid to their super accounts per week starting July 1, 2025.

The government stated that the move would help normalise parental leave as a workplace entitlement, like annual and sick leave.

In addition, Minister for Women Katy Gallagher said the scheme would reduce the disparity in retirement savings between the two genders, which was around 25 percent on average.

Related Stories

Some Loopholes in Australia’s ‘Gender Pay Gap’ Report

2/27/2024

Australia Publishes ‘Gender Pay Gap’ Data of 5,000 Public and Private Companies

2/26/2024

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

It was estimated that 180,000 Australian families would benefit from the scheme.

While the government did not specify how much the policy would cost taxpayers, an initial calculation showed that its annual cost would be over $200 million.

Treasurer Jim Chalmers said improving the economic standing of women was a priority of the Albanese government.

“A stronger paid parental leave system is good for families and good for the economy as well,” he said.

“In the long-term, this important change means a more dignified and secure retirement for more Australian women.”

For the new policy to pass the parliament, Labor will need support from either the Opposition or the Greens.

However, it is likely that Labor will need to strike a deal with the Greens and crossbenchers.

Apart from the super scheme, Labor has introduced another piece of legislation to expand the PPL program by another six weeks starting in July 2026.

Opposition’s Response

In an interview with Sky News, Shadow Home Affairs Minister James Paterson said parental leave was not meant to be a wage replacement when it was conceived, and thus had not been paid with superannuation so far.

“We will look very carefully at the details and particularly the costings and make sure the government has done their homework here and that the full cost is being transparent and clear,” he said.

Meanwhile, Greens Leader Adam Bandt questioned why the Labor government had not introduced the super scheme earlier.

“There’s absolutely no justification for delays,” he told reporters.

“Because we know that if we make the big corporations pay their fair share of tax, we can ensure everyone is able to retire with dignity.

“This is a reform that is not only overdue, but there shouldn’t be delay.”