Paid Parental Leave

PAID PARENTAL LEAVE – April 2010

The question of paid parental leave (PPL) has been simmering as an issue for some time now. However, it has more recently been added to the auction of promises of both our major political parties as we enter into the, as yet unofficial, election campaign.

Given the reasons offered up by our political leaders for PPL as being essentially economic rather than idealogical, wouldn’t it be worthwhile asking why we need such a policy. In other words let’s look at the cause rather than band aiding the symptoms, which is what populist policies tend to do.

We are told that paid parental leave would assist families to cope with the financial stress of living on one wage when ( usually) the mother leaves the workforce to have a baby. This begs the question, why does it take two wages to raise a family in 2010 whereas only a generation ago one wage was generally sufficient?

Could it have something to do with the price of houses in our capital cities and the large mortgages relative to wages which are needed to achieve the “Australian dream?”

According to Suncorp-Metway, in 1960 it took 3.4 times the average wage to buy the median priced home. In 1990 it was four times. By 2000 it was five times and in 2010 it takes around eight times the average wage to buy the median priced home.

The average mortgage for first home buyers is around $300,000 which costs, at current interest rates, around $490 per week after tax to service. This equates to gross annual earnings of $35,000.
If the gross average wage is around $50,000 per annum it is easy to see why there is not much left every week once the mortgage is paid, hence the need for two wages.

Of course it doesn’t help matters when we have populist tax payer funded policies such as the First Home Buyers Scheme, correctly described by Professor Steve Keen as the First Home Vendors Boost, negative gearing, and a capital gains tax which, since 1999 has encouraged speculation in property.
At least it keeps the voters happy when they see their most valuable asset increasing in value every year out of all proportion to wages and the general cost of living. God help the government which presides over a falling property market.

Too bad if you can’t afford to own a property, you are still paying for those who can, even if you can’t afford to own a house, as a taxpayer, you are subsidising wealthy invstors who own multiple properties.

Add to this the additional debt we have taken on via credit cards and lines of credit etc to buy things we do not need, and it is rather obvious why it now takes two wages to fund the average family budget.
Anyway back to PPL. The whole idea of getting women back into the work force flies in the face of what women, and men, would naturally choose given the financial freedom to do so.

My research shows that most women would prefer to spend the first four or five years caring for their children if it wasn’t for the financial pressures of keeping a roof over their collective heads and putting bread on the table.

Of course that leads to the question of the social consequences of putting babies into child care after six months once the PPL runs out; but that is a topic for another day.

Bernie Kroczek

Bernie Kroczek Real Estate

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