Small business and Paid Parental Leave

There's been a lot of noise made about the introduction of a Paid Parental Leave (PPL) scheme in Australia, but we've got a lot to sort out before the PPL scheme can work well and serve the interests of all employers.

We're one of the last so-called egalitarian nations to introduce a universal PPL scheme, which is intended to improve the wellbeing of newborn children and their parents.

It's disappointing that it has taken us so long to get our act together on PPL; though it may be more concerning that some of the biggest noise makers - including parts of the mainstream media, various government organisations and big corporates - continue to downplay the role of small business as the country's largest collective private sector employer.

Just as the corporates want their interests served, and are demanding PPL be made easy for them, the interests of the nearly two million small businesses employing 4.5 million Australians need to be seriously considered.

As the peak body in Australia representing small business, the Council of Small Business of Australia is working hard to persuade the Government to change its current thinking.

I think we can do better than the current proposal on the table from the Productivity Commission - which the Government currently supports - that insists employers act as paymaster for PPL.

The Productivity Commission's 2009 report Paid Parental Leave: Support for Parents with Newborn Children recommended that a fortnightly payment of the PPL be paid to employers by Centrelink - and that business owners should handle, or more accurately double-handle, all the admin tasks involved in making the payments happen.

If you were running a large business, you could easily absorb the extra costs and paperwork involved with this extra adminstrative work.

But think about what it would mean for you - as a small business owner - having to do it all yourself. It's a disproportionate cost for small business and yet more regulatory red tape.

Fortunately, there's a simple solution to streamlining PPL payments to employees on parental leave - the Government can pay the employee directly!

However the PPL comes through, we need public policy that better supports parents in small business. And we need business legislation that holds small business in higher regard.

Next Challenge

Looking forward, what can be done for small business owners following the birth of a child? All parents have limited childcare choices and typically need to commit to either full time or set days to access them. Not easy for those already struggling with extended working hours.

Big businesses can run their own childcare Centres with a Fringe Benefit Tax exemption if it's located at the place of business. There's another FBT exemption if the business pays a registered childcare provider to secure places for its employees' children.

What if you try to pay childcare costs through your business? Well, unless you set up your own childcare centre, all business funded childcare costs are subject to FBT as an expense payments benefit. FBT assumes the benefit recipient is taxed at the top marginal rate (46.5%, including Medicare Levy), so that, for example, if your business pays $100 (GST free) towards the cost of childcare, the FBT payable will be $86.91.

Very nasty - and not a realistic option for most small business owners. #