A super idea for supporting new parents financially
There is no point in complaining to my parents about what the Rudd Government has done to people in higher income brackets. My parents paid 60 cents in the dollar, worked a six-day week, raised two kids, five cats (not at the same time) and a dog and still saved for their own retirement.
In fact, there is no point discussing any sort of paid maternity leave system with my parents or anyone else who had children more than 10 years ago. Many didn’t have access to one, they don’t see the need for one and they don’t think mothers today deserve one.
And don’t get them started on the Baby Bonus.
Tony Abbott’s maternity leave plan is a great scheme, finally offering something for women who aren’t low income earners and don’t work for Westpac. It’s non-discriminatory, reflects the income of the mother and it would encourage professional women to take time out to have a child or two.
But the impost on business is too much. How much more should business be asked to pay for schemes like this? They’re expected to employ people, train them, protect them against injuries and illnesses, not discriminate against them, give them a rewarding career, pay them and fund their super. Oh, and make a profit.
Abbott’s scheme would require business to pay twice. First when they’re levied to pay for the scheme, and second when they lose the employee to maternity leave and have to pay the cost of backfilling the position. Westpac, of course, would be paying the levy and maternity leave. Do you think the shareholders will tolerate that?
I worry that this could backlash against women of childbearing age. More than the backlash I’ve already experienced from my parents when I’ve complained about not having an income when I gave up work to have my own child. (The only thing I miss about not working.)
We have a fabulous superannuation system designed to help people be less dependent on the government when they reach old age, but we have nothing to get young women saving and thinking about having a baby.
It makes sense to me that I should be able to salary sacrifice part of my wage to plan my own maternity leave. If I was a low income earner, the government could provide a co-payment similar to that of superannuation one currently available. Penalties could apply for accessing the account for non-parental leave purposes. And because it’s a long-term saving plan, people using them would benefit from natural growth in these funds.
A thoughtful woman in her early 20s could start an account. She says she wants two children by the time she’s 35. So she puts away $10 for each child each week. By the time she’s off on maternity leave at the average age of 31, she’s had around10 years of saving.
Add to that, while she’s a low income earner, she has access to a co-contribution from the government and gets, say 25 cents for each dollar she contributes.
That would be ($10 + $2.50) x 2 x 52 x 10 = $13,000 by the time she’s ready for the first baby. She withdraws half of it, or none of it. If it’s a bad time in the investment cycle as it was from August 2008 through to June 2009, she could apply to defer access for a year or two.
Less thoughtful women could salary sacrifice in the years immediately prior to having a baby. This reduces their tax burden, and gives them some practice at living on one wage.
If the salary sacrificing contributions caps are the same as those given to people over the age of 55 to save for retirement, there is no partiality or special treatment. And women who earn $200k per annum, can’t stash it in and pay no tax in the year before the birth.
If the woman ends up not having children, she gets the money back with the usual capital gains tax applied (at the marginal rate). If she has babies, capital gains tax is waived.
Men could also have these accounts either to supplement their spouse or if they wish to be the stay-at-home parent. This type of savings plan would also cover off on small business owners – the majority of whom are… women!
But we can’t keep holding our hands out and expecting the government to give us money. If for no other reason than people planning for their retirement are being told to not expect a pension from the government in 20-50 years time.
It isn’t fair that we start up a welfare scheme for people who choose to stop work and have children. Not when age, and the debilitating effects of it, stops you from earning your living, and is unavoidable.
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