Long overdue: The macroeconomic benefits of paid parental leave

by David Richardson and Tully Fletcher

In responding to the release of the recent Productivity Commission (PC) draft report into paid parental leave, Prime Minister Kevin Rudd stated: ‘This Australian Government believes the time has come to bite the bullet on this and we intend to do so’. He did not however commit to addressing the issue before the 2009 Federal Budget. Despite these comments, in recent months the Rudd Government has begun to suggest that the arrival of the global financial crisis could delay the introduction of a paid parental leave scheme. The argument for delay is based on the slowing rate of economic growth and declining government revenue, which ostensibly make paid parental leave less affordable. This paper argues that the opposite is true. Given that the objective of recent stimulus measures is to inject additional money into the economy, it is contradictory to suggest that saving measures must now be found in the 2009-10 Budget.

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