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Senate Inquiry recommends lowering admin burden for Small Business

ACT Independent Senator David Pocock has welcomed the findings tabled today of the Senate Education and Employment References Committee inquiry into the potential impacts of the Commonwealth Paid Parental Leave (PPL) scheme on small businesses and their employees.

The inquiry was stood up following concerns Senator Pocock raised on behalf of local small business people regarding the burden they faced administering the government payment.

All witnesses to the inquiry agreed that Commonwealth paid parental leave was a very valuable measure that was helping to boost female participation in the workforce. Senator Pocock re-affirmed his previous strong support for extending the length of the payment and adding superannuation.

However small business people and their representatives were also unanimous in their testimony to the committee requesting an option to have Services Australia directly administer the payment to employees, as they currently do in 37% of cases, rather than continuing to require small businesses to serve as a financial intermediary between the government and parents taking leave.

Senator Pocock supported the majority committee report which recommended small businesses be exempted from being forced to play this role while still being able to opt-in to administer the government parental leave payment.

“Small businesses employ almost half (42%) of the private sector workforce and we need to be making it easier, not harder, for them to employ and retain staff,” Senator Pocock said.

“Commonwealth Paid Parental Leave is a fantastic initiative and I fully support plans to further extend it. 

“Equally though I don’t think it’s fair, or good for productivity, for small business people to shoulder the admin burden when Services Australia can administer this government payment directly - and already does so more than a third of the time.

“Small business owners often have to do extra work at night and on weekends to make their business succeed. The Government shouldn’t be adding to that, especially when women are the fastest growing cohort of entrepreneurs and small business owners.

“Government policy should be boosting productivity growth for small businesses, not hampering it.

“Framing this in ideological terms as the government is seeking to do in their dissenting report will lead to policy outcomes that are contrary to the objectives of the scheme. 

“Far from preserving a positive connection with staff, the inquiry heard testimony that having to administer the payment on behalf of the Commonwealth could generate frustration and ill will due to delays in Services Australia releasing payments.”

Mr Daniel Hodges from MTAA gave evidence that the employer role in administering the Commonwealth PPL payments was contrary to the aims of the program: “... rather than acting as an incentive to boost female workforce participation, the requirement to act as administrative intermediary can be a significant disincentive for smaller businesses.”

Local Canberra hairdresser Mrs Emmalene Mahar told the Committee “… issues and delays with [the] Commonwealth or myGov administering the payment can cause frustrations for the employee, which they may show towards the employer.”

This feedback was also echoed by ACCI’s members who said that, “Staff get very frustrated at the delay/timing of receiving the payment and they blame the business even though we haven't received the funds from the government.”

Senator Pocock said the evidence showed that what was most important was receiving the payment, not who administered it.

“Small business people told us about having to forgo time with their children and their families while they tried to navigate a difficult interface with Services Australia and set up more complex payroll arrangements to pass on this payment,” Senator Pocock said.

“Regardless of who administers the payment, new parents already have to interact with Services Australia to claim it.

“We have strong protections in the Fair Work Act to ensure employees have their jobs held by their employers while they’re away on parental leave, including through keeping in touch days.

“This is an issue uniquely facing small business. Big businesses with their dedicated payroll teams have less difficulty administering the payment. 

“A range of exemptions already exist for businesses having to administer the payment, for example if an employee has been employed for less than 12 months. All the committee is recommending is to extend this exemption to small businesses and give them the choice about whether they, or Services Australia, deliver the government payment.

“We should be proud to have such a generous government-funded parental leave payment and this small change will make it stronger.”

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