More time off for new mums and dads will be good for the economy

Officially announcing the new policy on the weekend, he confirmed that it was about both boosting women’s workforce equality, and getting more men to take that time off.

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“It’s a modern policy, for modern families,” he said.

The focus on getting more men to take it is important, for a couple of reasons.

As Chief Executive Women’s president Sam Mostyn pointed out, 90 per cent of parental leave is currently taken by women. And only half of all eligible men take the two weeks of secondary carer parental leave they are entitled to.

Generally speaking, this means that when baby arrives mum will take time out of work for a few months, while dad will keep on working. Say mum takes a year off – in that time, maybe dad got a promotion, and is earning more, while mum’s career was put on ice as she focused on child caring.

While this is a very general, heterosexual example, what it illustrates is that having a big difference in time off early on can shape the way families think about whose career is more valuable, and who is responsible for childcare.

As the Grattan Institute report said: “These heavily gendered patterns of time use also undermine women’s economic security, through reduced pay and lower lifetime earnings.”

That “motherhood penalty” has been more recently quantified. A recent study by two Treasury economists found women end up earning on average less than half of their pre-birth wage for the first five years after childbirth – even if they were originally the main breadwinner.

As a result, women work less. The current workforce participation rate for women 62.3 per cent according to the Australian Bureau of Statistics while for men, the participation rate is 71 per cent. But only 37 per cent of full-time jobs in August were done by women, the same data showed.

The Grattan report said increasing the amount of paid parental leave would boost women’s lifetime earnings by $30,000, and could boost GDP by about $900 million a year thanks to better workforce participation.

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It would also help normalise the role of men in child caring roles, the report said, and studies have shown it’s generally just good for men.

“Fathers who use dad leave tend to have increased job and life satisfaction. Dad leave gives fathers an opportunity to understand themselves better, to reflect, and to mature,” the report said.

Australia has only had a government-funded parental leave scheme since 2011, and this is the first major change to it – changes that have been called for by parenting groups, women’s organisations like Chief Executive Women and economic experts for years.

The next job, before the scheme is expanded, is to work out exactly how the leave should be split between parents, and what flexibility is needed to ensure it does what the government and experts want it to do.

Ross Gittins is on leave.