Mother and child at a park.
Super payments during paid parental leave will help women in their retirement, the government says. Image by David Crosling/AAP PHOTOS
  • politics

Super on paid leave kicks off broader equality push

March 7, 2024

Australian women will be thousands of dollars better off in retirement under a pledge to pay super on government-funded paid parental leave.

The policy was announced as part of the first-ever gender equality strategy launched by Minister for Women Katy Gallagher in a national address on Thursday.

Government purchasing power will also be used to reward firms committed to tackling gender equality, and to weed out big businesses without targets to improve, the minister confirmed in her speech.

There were two main reasons to pay the 12 per cent super contribution on commonwealth paid parental leave, Senator Gallagher said.

The first was the need to close the “gender super pay gap” that opens up when women take time out of the workforce to raise children, leading to smaller retirement balances.

On average, women end up with about 25 per cent less super than men.

“But it’s also about sending a message that we value the care that you are doing when you chop in and out of your career,” Senator Gallagher said.

“And we don’t think you should be financially penalised for it.”

Finance Minister Katy Gallagher
 Katy Gallagher says paying super on parental leave will help women balance care and work. Image by Lukas Coch/AAP PHOTOS 

The super changes have been welcomed by the industry, with Super Members Council chief executive Misha Schubert labelling the move as historic.

“This watershed reform will make a powerful difference to the lives and retirement incomes of generations of Australian women in the decades ahead,” she said.

Yet criticism was levelled at the start date well in the future, with the measure scheduled to begin in mid-2025.

Greens leader Adam Bandt said there was no justification for the delay. 

“This situation has gone on for far too long and Labor could have fixed this much earlier and stopped women retiring in poverty,” he said.

Treasurer Jim Chalmers defended the decision to have the super changes start in mid-2025.

“We’ve got to get the systems right, we’ve got to work out the most effective way to pay this benefit,” he told ABC Radio.

Shadow women’s spokeswoman Sussan Ley said she agreed in principle with move but wanted to know how much it would cost federal coffers.

“We will work with the government on its proposal, but this commitment made in good faith is not a blank cheque,” she said. 

“Conservative estimates are that this will cost almost a billion dollars over the forward estimates, with a potential medium-term cost of over three billion.”

Senator Gallagher said the final cost was yet to be determined but it would be funded in the federal budget and not tied to an election commitment.

The super contribution will help 180,000 families that receive the benefit each year.

A mother pushes a stroller.
 Adding super to paid parental leave was recommended by the women’s economic equality task force. Image by Dan Peled/AAP PHOTOS 

While some employers already pay super on top of any paid parental leave, the changes would ensure all people using the leave would be able to access it.

The benefit in retirement of the scheme depends on individual salaries and whether women work part-time or full-time, but Senator Gallagher said it would be in the “thousands of dollars for an average income”.

Other measures announced on Thursday included a commitment to using purchasing power to support gender equality outcomes.

Senator Gallagher said the procurement rules would be more carrot than stick, but big businesses would need to commit to targets to improve gender equality in their workplaces in order to win government work.

“These targets will focus on the gender makeup of their boards and the workforce, equal pay, flexible working arrangements, workplace consultation on gender equality, and efforts to prevent and address sexual harassment,” she said.

Stronger targets for women on government boards and advisory bodies will also be enforced.

There are already 50 per cent targets in place but in fields such as economics and science, Senator Gallagher said there was room for improvement.