Pink vs blue tax: the case for taxing women lightly

If women were to be taxed differently to men, it wouldn’t be the first time.

Treasurer Scott Morrison says the idea is absurd.

“You don’t fill out pink forms and blue forms on your tax return. It doesn’t look at what your gender is any more than it looks at whether you are left-handed or right-handed,” he said last week.

He even said, wrongly, that Labor has been suggesting it.

But such a move has happened before.

In Britain right up until 1971, wives weren’t usually taxed on their income; their husbands were. A wife’s income was deemed to be “stated and accounted for by her husband”. It wasn’t until 1950 that wives ceased to be classified for tax purposes as incapacitated along with “infants, lunatics, idiots and the insane”.

South Australia broke ranks early, in 1884, taxing married women as individuals and giving them the right to own property. By the time the Commonwealth introduced national income tax in 1915, all the states had fallen into line.

What possible modern-day reason could there be for taxing women differently to men, as mentioned by Melbourne University tax expert Miranda Stewart in evidence to the Senate last week?

Morrison himself provided a clue while ridiculing the idea. He said the Tax Act was designed “to treat people’s income the same, and so you pay tax according to what you earn”.

But we don’t. Someone who earns $1000 from wages pays twice as much as someone who earns $1000 by making a capital gain selling an asset. Income from capital gains is taxed more lightly in accordance with what’s known as optimal taxation theory. It suggests taxing heavily things that tax is unlikely to stop, such as work, and taxing more lightly things that tax is more likely to stop, such as the movement of capital. It’s the basis of the argument for a lower company tax rate as well as a lower capital gains tax rate.

The concession isn’t “fair”, but it’s efficient.

As would be the logical extension, which is to tax female wages more lightly than male wages. Male work turns out to barely react to after-tax pay. Most men will continue to work full-time regardless of what happens to what they take home, regardless of how much they grumble.

Some will work a bit less if their take-home pay falls, because they are offered less of a reward. Others will work a bit more in order to get back the income they lost. On balance the “price elasticity” of their labour is close to zero.

Women are different. Most European and American estimates put the price elasticity of their labour between 0.4 and 1, meaning a 10 per cent boost in their take-home pay will lift their hours of work by between 4 per cent and 10 per cent.

The most efficient way to tax labour would be to heavily tax generally unresponsive male work and more lightly tax generally highly responsive female work, depending on elasticities. Economists Alberto Alesina from Harvard University and Andrea Ichino from the University of Bologna in Italy believe women should be taxed at no more than 80 per cent of male rates in the US, at no more than 68 per cent in Italy and no more than 91 per cent in Norway.

And there’s another argument for discriminating on the basis of gender. It’s that, for most of us, gender is innate. We won’t change it. Tax theorists say that, ideally, we should be taxed on our underlying ability to earn an income rather than the income itself. Otherwise some of us with ability will avoid tax by avoiding earning an income. Although the ability to earn is hard to measure, markers for it are easy to measure, such as height.

In a half tongue-in-cheek paper entitled The Optimal Taxation of Height, Harvard economists Gregory Mankiw and Matthew Weinzierl note that someone who is 183 centimetres tall can expect to earn $US5500 ($7300) more per year than someone 165 centimetres tall. They say tall people should pay several thousands more in tax than short people on the same income. It’s a way of getting at their earning capacity, as would be a higher tax on the earnings of men.

And there’s yet another practical reason to tax women more lightly. The withdrawal of family benefits and the imposition of childcare costs as mothers return to work mean some face extraordinarily high “effective” marginal tax rates of up to 90 per cent. If ever there were people who ought to be affected by high tax rates, it’s returning mothers.

But here’s what’s odd. Australian mothers are hardy. When the Productivity Commission recommended a new, simpler and more generous formula for childcare support along the lines of the one introduced in this year’s budget, it found it would boost employment by just 15,000 full-time worker equivalents in a workforce at present growing by hundreds of thousands per year. More than mothers in the United States, Germany and Britain, Australian mothers seem undaunted by tax rates. The case for treating them gently is strong in theory, weak in practice.

In The Age and Sydney Morning Herald

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Olympics Bettered. The benefits of same sex marriage

How on earth could same-sex marriage deliver 10 years' worth of economic benefits? And why on earth do 18 of Australia's leading economists expect it to?

The experts were surveyed this week by the Economic Society of Australia. Thirty answered this question: "Will changing the law to allow same-sex couples to marry generate net economic benefits for the nation as a whole over the next 10 years?"

Eighteen thought it would. Only seven thought it would not.

Almost always whenever someone claims something will benefit the economy they are wrong. Look at a graph of GDP either side of the Sydney Olympics and you won't see anything other than a drop in GDP during the Games. Tourism flatlined then fell after the Games. It didn't start growing strongly again until 2004. Even the Olympic Stadium, which we were told would be a lasting legacy, is, according to the premier, so clapped out it ought to be torn down.

KPMG, which wanted work associated with the Games, produced a much-hyped study for the NSW government saying the Olympics would boost economy growth by $7 billion. A decade later, an examination of what actually happened found it had clipped economic growth. Like countless expressways, stadiums and mega projects before and after it, it had cost more to create than it could ever produce in benefits.

One of the reasons the spruikers almost always get it wrong is that they add up the costs of the project (that's the easy bit) and then subtract them from the project's benefits. For sports events, those benefits include extra spending as people pour into Olympic Park or into Melbourne Park for the tennis. What the spruikers forget, often, is that the people who spend at big events would have spent something anyway, perhaps in their own suburb or at another sporting event or at the theatre. They forget to subtract the spending that won't be done in order that the spending at the big event can be done.

It's a trap for people expecting benefits from same-sex weddings. Professor Kevin Davis from Monash University put it this way in response to the Economic Society survey: "There may be more expenditure on weddings etc, but there is no obvious reason this would not be at the expense of other expenditures."

There can be a localised benefit in a country town. A really big wedding or special event can draw people into the town who never would have spent there. But the gain to that town will be a loss to the region or town from which those people have come.

So why are the experts so sure there will be benefits from permitting same-sex marriage?

Partly, because it's cheap. Passing a law costs nothing compared to building a stadium.

And partly because there will necessarily be benefits.

Here's how Lin Crase of the La Trobe University puts it: "Constraints that impinge on individuals' full participation in society necessarily reduce economic welfare. It follows that removal of those constraints should lead to some gains."

This would be true even for people in same sex relationships who decided not to take advantage of the opportunity to marry.

Professor Mardi Dungey of the University of Tasmania says that when we remove impediments to improving people's ability to satisfy their wants, with no material harm to others, we necessarily improve people's welfare.

And Curtin University's Professor Margaret Nowak identifies broader benefits: reduced health costs, especially in the area of mental health, reduced suicide rates among youth, and reduced discrimination in the workforce "resulting in more optimal allocation of workers".

For what it's worth, married couples also spend more. Dr Gigi Foster from the University of NSW says married heterosexual couples invest more in the kind of things that shacked-up couples don't. And she says something else.

Legalising same-sex marriage will allow politicians and the public to move on and focus on other things that could produce further economic benefits. There's a chance.

In The Age and Sydney Morning Herald

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By award. 'Fair work' gives women less than men

The Fair Work Commission is itself responsible for much of the gap between male and female wages, a landmark study has found.

The typical wage gap is 18 per cent, much of it due to decisions by employers paying men and women above the minimum wage. But a substantial gap – up to 10 per cent – is due to the minimum wage itself, which varies for different occupations and years of experience.

"At first glance, one might expect the gender pay gap to be zero among minimum-wage workers, since by definition they are all being paid the minimum wage," said Barbara Broadway, one of the authors of the Melbourne Institute study, to be released on Monday.

"However, there are in fact many different minimum wages in Australia. There are currently 122 federal awards, covering a variety of industries and occupations, and with each specifying numerous different minimums depending on things like the tasks and duties of the job and the qualifications and experience of the employee.

"This, combined with the fact that men and women differ considerably in the types of jobs they do, means that it is still possible for a gender pay gap to exist among minimum-wage workers."

The examination of 37,000 records from the Household, Income and Labour Dynamics survey finds that men hold 91 and 95 per cent of Australia's construction and road transport jobs respectively. Those paid the minimum typically get $22.58 and $20.43 an hour.

In contrast, women hold 79, 82 and 84 per cent of the retailing, accommodation and social services jobs. Those paid the minimum get between $15.67 and 18.27 an hour.

"Unlike market wages, the gap among minimum-wage workers cannot stem from employer discrimination, superior negotiating skills of men, or higher productivity of men, since everyone is being paid the minimum permissible rate of pay," Dr Broadway said.

"But is not immediately clear whether this job-femaleness penalty can be interpreted as discrimination.

"In principle, the job-femaleness penalty could result from the commission taking into account factors other than the required skill level, such as 'dirtiness' and 'danger'.

"However, this argument seems less compelling in a comparison of, for example, the average wage for truck drivers ($21.65) with that of hospitality workers ($15.97), where the latter group of employees would often perform physically demanding work in hot and/or loud environments."

The study concludes that the most likely explanation for the apparent discrimination is that the commission has been indirectly influenced by historical perceptions of what is "appropriate".

"Male-dominated fields might have benefited from a long history of strong unionisation that led to higher average wages – a history not shared by service jobs," the study says.

Nevertheless, it finds that the Fair Work Commission's decisions are far fairer than those made outside the commission. For jobs that require university education, the commission appears not to discriminate at all.

Some of the discrimination against women subject to Fair Work awards isn't the result of the awards themselves.

Men are more likely to be paid above the award – 87.6 per cent compared with 81.5 per cent – and the women forced to rely on it are likely to have had better education and more work experience than the men who rely on it.

"Women might be 'pushed' on to award wages, whereas comparable men are more likely to receive an individually or collectively negotiated (and higher) wage," the study says.

Awards are also structured so that wages increase faster for each year of experience in male-dominated jobs than in female-dominated jobs.

Virginia Haussegger, director of the gender equality initiative 50/50 by 2030 Foundation at Canberra University, said the figures confirmed what many women already knew.

"It shows the gender pay gap is entrenched, multi-factorial, and is not easily bridged," she said. "Fixing it involves looking beyond the numbers in awards to the weightings given to work itself."

The female penalty

Accommodation (82 per cent female): Average award wage $15.67 per hour

Retailing (79 per cent female): Average award wage $16.61 per hour

Social assistance (84 per cent female): Average award wage $18.23 per hour

Residential care (90 per cent female): Average award wage $19.82 per hour

Road transport (5 per cent female): Average award wage $20.43 per hour

Construction (9 per cent female): Average award wage $22.58 per hour

Source: Probing the Effects of the Australian System of Minimum Wages on the Gender Wage Gap, Barbara Broadway and Roger Wilkins, Melbourne Institute Working Paper, December 2017

In The Age and Sydney Morning Herald

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Sexism. It's in the name, Keith

Who wouldn't rather be a man? Perhaps a man like Keith Mann, who makes things happen.

Here's Keith, chasing up a web developer: "You guys said this would be done, what's the status?"

His partners in a technology startup, Penelope Guzin and Kate Dwyer, had tried to negotiate with contractors by themselves. "It would take days to get a response," Dwyer told Fast Company this week. "But Keith could not only get a response and a status update, but also be asked if he wanted anything else or if there was anything else that Keith needed help with."

Contractors often referred to Mann by name and to Guzin and Dwyer not at all. One began a reply to the two senior partners with: "Okay, girls..."

Keith didn't exist. Guzin and Dwyer made him up to help get their startup off the ground. They even invented a life story. He was a "dude's dude", he played football in college. He was devoted to his wife and he couldn't wait to be a dad. "He doesn't really understand Kate and I," Gazin admitted. "But he's been happy to help us with our project before we find husbands."

A few months earlier two resume writers, Nicole Hallberg and Martin Schneider, accidentally swapped genders. They were working on the same project when Schneider mistakenly used Hallberg's signature block. The client became "rude, dismissive, ignoring my questions, telling me his methods were the industry standards (they weren't) and I couldn't understand the terms he used (I could)".

 

So one day I'm emailing a client back-and-forth about his resume and he is just being IMPOSSIBLE. Rude, dismissive, ignoring my questions.

— Martin R. Schneider (@SchneidRemarks) March 9, 2017

 

Hallberg told him it was always like that for her, so they did an experiment. For two weeks they switched names. He signed emails as her and she signed them as him.

It was like getting a vacation, it was amazing," Hallberg said. "Everyone thought I was a lot smarter, instantly. It's like I just woke up and was better at my job – I didn't have to prove anything, I didn't have to argue with clients, I didn't have to deal with the mansplaining and little digs and the little subtle sexist comments. No one was calling me 'sweetie' any more, that was great."

"They were calling me sweetie though," Schneider adds in a podcast about the experiment. "I realised it was taking me longer to finish with each client because I was having to prove myself. I was having to spend a lot of time just explaining that I knew what I was doing. And I was getting, not outright mean, but small, little condescending comments like explaining terminology that I had just used in a sentence."

 

I was in hell. Everything I asked or suggested was questioned. Clients I could do in my sleep were condescending. One asked if I was single.

— Martin R. Schneider (@SchneidRemarks) March 9, 2017

 

"I realised the reason why it had been taking Nicole longer to finish with clients than me was because in the time it normally took me to get half way through, Nicole had just got the client to believe she knew what she was talking about."

"Suddenly I saw that it wasn't because I was better at my job than Nicole, it was because I'd had an invisible advantage I'd never seen before."

The advantage might have been worth paying for. Schneider was paid more than Hallberg, even though when he was handicapped by her name he didn't do as well.

It's rarely possible to tease out the effect of gender and gender alone on pay. "I don't pay you less because you are a woman, I pay you less because you are less senior," an employer of mine once explained to a colleague, in a circular piece of reasoning.

But it's sometimes possible. In 2006 American economists Kristen and Matthew Wiswall performed perhaps the ultimate test. They examined what happened to the pay of and status of employees who'd changed sex.

Although unchanged in any other respect, the women who had become men got paid slightly more, and got more respect. The men who had become women saw their average pay fall by one-third. Many were harassed, some were fired.

In The Age and Sydney Morning Herald

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Same-sex marriage.The one good thing about the survey

The ABS is fighting back.

Forced to conduct a survey that its staff know will almost certainly be unreliable and possibly wrong, it has planted a time bomb.

First, some history. The Bureau of Statistics is the best organisation in the country at getting at the truth, whatever the statistical question.

It does it in census by taking the extraordinary step of surveying the entire population, and making answers compulsory.

It does it in surveys like the employment survey by sampling a portion of the population (26,000 households) and multiplying the results by around 300 to develop a picture of the entire nation.

But it doesn't simply multiply by 300. The sample will be biased. Some groups will be under-represented, such as women in their 60s. Where that happens, the Bureau gives the responses of women in that age group extra weight to compensate for the bias. If there are half as many women aged in their sixties as you would expect from the Australian population, the Bureau counts their responses twice to make the survey representative. If there is twice as many 20-something men as you would expect, the Bureau averages their responses and applies them to half the number of men.

It's important. In a fortnight the Bureau will release the results of its long-awaited six-yearly survey of household expenditure. It will update our views about how much we spend on technology, how much we spend on electricity and so on. It's a survey of 9800 households. But unless those households contain exactly the right mix of teenagers, pensioners and every other type of Australian they won't tell us much or be comparable to previous surveys unless they are adjusted to properly represent the population.

That's what the Bureau usually does, and what it did the last time it was asked to conduct a plebiscite-like survey, in 1974. It surveyed 60,000 Australians to in order to find out what national anthem we preferred, and – just as with the employment survey – it weighted the results. The man who ran the poll, the then assistant statistician Bill McLennan, says anything else – anything uncorrected for bias – would have been "rubbish".

I've seen McLennan's printout, broken down by age and gender. You can tell how men aged 18 to 24 voted, and how women aged 65 to 69 voted. And you can see the totals after they have been adjusted to remove bias and accurately represent the entire Australian population.

This time there are exceptionally good reasons for removing bias. Malcolm Turnbull expects roughly half of those eligible to respond. But it won't be just any half. History suggests it'll be predominantly older Australians. ABC election analyst Antony Green says the last time we conducted a voluntary plebiscite, in 1997 to select delegates to the Constitutional Convention, younger Australians were almost half as likely to take part as older ones.

We know from the privately-conducted surveys that younger people are far more likely to support same-sex equality an older Australians.

And this time they may be even more poorly represented than in 1997. Many don't know how to post letters, many more don't know where to find them.

Best practice as normally applied by the ABS, even in the hugely representative census, is to give a greater weight to the under-represented responses and a lesser weight to the over-represented ones.

But the Bureau can't do it. It's been ordered not to. The ballot has to be secret, which makes it impossible. It will open envelopes that will have all the information needed to identify each type of respondent, and then separate them from the responses, which will be pooled electorate by electorate, making them indistinguishable.

Australian National University demographer Liz Allen says of all the methods available to work out what Australians really think about same-sex marriage, a voluntary postal survey is the least likely to produce the right result.

Even if the Bureau knows the responses are chronically biased, there's nothing it can do, except wish it had resisted.

McLennan believes it could have. He acknowledges that the Census and Statistics Act allows the treasurer to direct the statistician to collect statistics on a specific topic, but he says after that it's up to the statistician to decide how to do it and when and how to publish the results.

Mr Morrison has directed the statistician to collect "statistical information from all Australians on the electoral roll as to their views". McLennan believes best way to ascertain the views of all Australians on the roll is to survey them and weight the results to represent the roll.

Or it can passively resist. Buried within the Bureau's rundown of how it will go about the poll is its decision to publish response rates by electorate, gender and age. On November 15 when the results are out it'll be instantly apparent whether the poll is representative; whether older Australians, or women or men or West Australians are over or under represented. If they are, if the results are "rubbish", the Bureau will have made sure we know.

In The Age and Sydney Morning Herald

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Flawed by design: why superannuation fails women

Labor has a blind spot with women. In 1983 the newly elected Hawke government ratified the United Nations Convention on the Elimination of Discrimination Against Women as it had to, but entered two reservations. It wouldn't ratify the bit about employing women in combat roles, and it wouldn't ratify the bit about guaranteeing women paid parental leave.

That's right. Australia put itself in the unlikely company of Swaziland, Lesotho, Papua New Guinea and the United States as being the only countries of any size not to ensure that women who had children got paid while on leave.

Labor left it to the unions to pursue, which they did with greater and lesser degrees of vigour, occasionally going soft in their demands for paid maternity leave in return for other gains. It was an approach to delivering an essential provision that wouldn't have been tolerated for sick leave or annual leave.

A decade later, Hawke's successor, Paul Keating, introduced compulsory superannuation. As it grew, the pension was to become a mere back-up. Income in retirement was to be driven by lifetime earnings. If he had thought for a second about what that would mean, he showed no sign of it.

One in every two Australian women works part-time, compared to only one in every five men. And still more are employed away from the formal workforce where they don't get superannuation. On average those who are employed full-time get 20 per cent less than men. All up, it means women get 33 per cent less than men while in the workforce, and a lot less overall because they are often out of the workforce having children, caring for children or caring for relatives.

Super works well for high earners (who are mainly men) and the associated tax breaks make it work better for them still.

But low-earners and non-earners (who are overwhelmingly women) get next to nothing.

The Per Capita study Not So Super released on Thursday finds that women's balances on retirement are typically 47 per cent lower than men's. Seven out of 10 women have less than $150,000, compared to only four out of 10 of men. As the "independent progressive think tank" delicately puts it: "Superannuation was designed around a model of employment that is rapidly disappearing."

It was designed by men whose views were little affected by the changes going on around them. One was that menfolk would look after women. The women who had men wouldn't need that much super, because their men would hand over theirs. If the man died, they would inherit his super, and if he left them, they could go to the Family Court and demand their share.

A man was a financial plan, and the better-off the better. In the words of advice offered by a friend's grandma, "It is just as easy to love a rich man as a poor man."

But in the complicated, imperfect world in which we live, it's not that straightforward.

"Now at age 50 I have the grand total of almost $27,000 in my super," wrote one of the respondents to the Per Capita survey. "There is no possible way that in the working time I have left I am going to be able to provide funding for my retirement, and due to raising two children on a single income the possibility of owning a home was not an option either as we did not own when we separated."

"There are many like me who, after a mid-life divorce, accepted extra in the equity of their home so that the children were not disturbed rather than a share of his super," wrote another. "My husband had a for-life government pension which, after 20 years of support, I could not make a claim on. I maintained the home and full-time care of our child while he went offshore."

The Coalition wants to make it easier for women to top up their super, believing that will help. But it's hard for most women to do that, precisely for the reason that it's hard to accumulate employer contributions. They don't earn enough. In opposition Tony Abbott had a better idea than either the Coalition in government or Labor in government or opposition. It was to give women properly-funded paid parental leave and pay their super contributions while they are on it.

He was ridiculed. There was something about super he didn't get. It was that super was designed to be unfair. If it was designed to be fair it would take from everyone according to their ability to pay and give to everyone according to their need. Instead it takes from everyone (via their employer) whether they can afford it or not and hands out the most to the people who will need it the least.

In preparing their report Per Capita toyed with the idea of suggesting the system be scrapped and replaced with something that paid out according to need. Then it thought about the lobbyists who would be arrayed against it. There's $2.3 trillion in super, more than Australia's annual GDP, much of it sticking to the fingers of the finance industry. It concluded that it was too late.

In The Age and Sydney Morning Herald

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'I will be stuffed': How super sells women short

Australia's superannuation system is failing in its primary goal of providing universal benefits and is systematically biased against women, a major study has found.

Twenty-five years after its introduction, women are on track to retire on roughly half the superannuation balance of men, with the typical woman's balance on retirement just $80,000, enough to live on for just three years, even on the most basic of living standards.

Conducted by David Hetherington from progressive think tank Per Capita and Warwick Smith for the Australian Services Union, the study polled 4000 union members and used data from the Household, Income and Labour Dynamics survey to track how superannuation balances were changing over time.

"I will be stuffed," said one. "I expect to be poor, I may become functionally homeless," said another.

"Women continue to be financially penalised across our lifetime because of our reproductive capacity, our lower wages and because of deadbeat dads who refuse to pay their share of the financial burden of raising their children (not all dads are like this but, by God, there's a lot of them)," said another respondent.

At age 25, women have roughly similar superannuation balances to men. By the prime child-rearing ages of 35 to 44 their balances are 30 per cent lower, and by ages 45 to 64 they are 45 per cent lower.

The report says superannuation is predicated on the notion that every worker is an employee. But the rise of non-standard work means almost a quarter of female workers aren't in a traditional permanent jobs and are instead working as casuals, contractors, subcontractors, for themselves or on zero-hours contracts.

One in every two employed women works part-time compared to only one in every five men. On average, women employed full-time earn 20 per cent less than men.

Because superannuation builds up with wages and because women spend more time out of the paid workforce than men they accumulate much less.

Noelene Mayne is one of them. At nearly 65 she is due to retire next March but like many women her age isn't confident she will able to do so comfortably.

"Hopefully I will be able to retire then but I don't know if circumstances will allow it," she said.

Ms Mayne, who works in a nursing home, only received super for the last 15 years of her working life.

She estimates that her super amounts to $50,000.

"I stayed home and raised four kids as a single mother. So financially I'm not probably set up but financially I don't worry about those sort of things until it happens," she said.

Mr Hetherington said the model of working men supporting homemaker women was fast disappearing.

"In that model household income was provided by one breadwinner, usually a man, via a job that was full-time and dependable," he said. "Implicitly, the benefits of superannuation would largely flow to women through their male partners."

"What has happened since is that many more women have entered the workforce to earn and save independently, but the nature of work available to them has been more intermittent and lower paid than men's. This, combined with the fact that women still do the overwhelming majority of unpaid housework, caring and parenting, means that the benefits of super, which move in direct proportion to base pay, have not flowed to female recipients as hoped."

The researchers recommend that each person's super be assessed against an "accumulation pathway" that would model the superannuation balance at each age needed to afford a basic retirement. The government would make top-up payments, of 2.5 per cent of income, to people falling more than 5 per cent below the pathway.

In The Age and Sydney Morning Herald

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Women half as likely to benefit from tax cuts as men

Male mining engineers, school principals, surgeons and anaesthetists will be the biggest beneficiaries of the high-end tax cut  before the Senate, with men more than twice as likely to benefit as women.

The analysis, by the Australian Greens, comes ahead of a vote on the $4 billion cut which is supported by both the government and the opposition.

Backdated to July 1, high-earning Australians will benefit from an increase in the second-highest tax threshold from $80,000 to $87,000; worth up to $6 a week. Australians earning less than $80,000 will miss out.

The Greens' analysis, based on the most recent Tax Office data, finds the cut will help 28 per cent of male taxpayers, but only 13 per cent of females. Nine in every 10 surgeons will get the tax cut, but only two in every 10 nurses. Eight in 10 school principals will get the cut but only two in 10 classroom teachers.

The workers least likely to benefit from what the budget describes as "targeted personal income tax relief" are kitchenhands, checkout operators, childcare workers and waiters, each of whom has a less than one in 100 chance of getting a cut.

"The bill will deliver an extra $315 a year to the top 20 per cent of earners, including some of the wealthiest people in the country," said Greens treasury spokesman Peter Whish-Wilson. "Many are well beyond the group most affected by bracket creep."

The tax cuts would "cancel out" two-thirds of the $6 billion in spending cuts agreed to by Labor and the government in the aftermath of the election.

They began flowing to high earners on October 1, ahead of their passage through Parliament, a decision for which a spokeswoman for the Tax Office could find no precedent. Tax Commissioner Chris Jordan at first refused a request from Treasurer Scott Morrison to bring in the cut on July 1, saying he was only able to adjust tax scales in accordance with "enacted law". He backed down in September, saying public statements by both Labor and the Coalition had given him "confidence that it is likely Parliament will pass the amendments".

A Senate inquiry into the cuts is due to report on Monday.

In The Age and Sydney Morning Herald

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If Lehman Brothers had been 'Lehman Sisters'... Harnessing the power of women

If Malcolm Turnbull wants to really unleash Australia's potential, he should hire Martin Parkinson.

Parkinson is the treasury secretary Abbott unfairly sacked against the wishes of his treasurer. Jetting in from a stint at Princeton University last week, Parkinson attended Turnbull's 61st birthday party in Sydney before returning to Canberra.

When he took over as treasury secretary in 2011, after a year away running the climate change department, he noticed that something was wrong.

"I realised that the nature of the policy discussions was quite masculine, whereas the nature of the policy discussions on issues – just as deeply technical and complex – in climate change were of a different style," he said later. "That's what made me start to think, what is going on here?"

What he did next is detailed in a riveting new book titled New Women, New Men, New Economy by corporate advisers Narelle Hooper and Rodin Genoff.

After seeking advice, Parkinson not only set targets for the proportion of women in the treasury senior executive (35 per cent by 2016, 40 per cent soon after) he set about changing what treasury valued to bring them about. When picking candidates for promotion or special projects, more weight was to be given to co-ordination and people skills and less to conceptual and analytic skills.

Because every enterprise needs both.

In example after example, Hooper and Genoff demonstrate that organisations that make good use of women perform better than those that don't.

When Credit Suisse examined the performance of 3000 companies in 40 markets over nine years it found that companies where women occupied half the top slots did 50 per cent better than those in which they didn't.

"It was such a consistent pattern that the researchers initially questioned their analysis and checked it again," Hooper and Genoff write. They were seeing what doctors call a dose effect. "The more women, the higher the performance".

McKinsey and Co reported this year that the 25 per cent of companies most likely to employ female executives did far better financially than the other 75 per cent. Those that were also racially diverse did better still.

Diversity matters because the more mindsets you can bring to creating something or solving a problem, the less likely it is you'll miss something out.

Google is renowned for being innovative, yet when it launched its YouTube app for iPhones in 2012, 5 to 10 per cent of the videos loaded upside down. Without knowing it, Google's mostly right-handed staff had designed an app for right-handers.

In other spheres, the consequences of excluding insights can be worse.

Neelie Kroes, the European Union commissioner for competition during the financial crisis, put it this way: "If Lehman Brothers had been 'Lehman Sisters', would the crisis have happened like it did?"

She said the answer was No. "Women managers are naturally more risk-averse and they think about the long term. Generally women have a better ear to listen and they are less likely to pretend to know everything themselves. They are team players with less ego."

This isn't to say that women are always better at making decisions than men. In some spheres women might be, in others women might not. The differences are nowhere near as important as the enormous and demonstrable benefits of using the skills of both.

The treasury's target goes beyond ensuring that 40 per cent of its executives are women (already 52 per cent of its staff are women). Its deputy secretary Nigel Ray told a senate hearing last month that the target was better described as 40-40-20: 40 per cent women, 40 per cent men, and 20 per cent of either.

To get it, the treasury runs unconscious bias training sessions and uses its formidable analytical skills to monitor gender splits in performance ratings, promotion and pay. It's adopted an "if not, why not" approach to requests for flexible work. The onus is now on the treasury supervisor to explain why a request for reduced hours or working from home can't be accommodated rather than on the worker to explain why it should be.

Smart companies like Rio and Qantas get it. Rio finds women use less fuel when they drive trucks. And the Irish-born openly gay Qantas chief Alan Joyce says if someone like him can run an Australian airline, anyone should be able to do anything.

Australia is going to have to use every resource it has if it's to make the most of the decades ahead. Parkinson gets it, and he is a first class economist and administrator to boot. Turnbull could do far worse than put him and his insights to work.

In The Age and Sydney Morning Herald

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By design. Why super system hurts women

Women put away only half as much super as men, and suddenly we're concerned.

The Senate is holding an inquiry. The finance industry is talking stop-gap solutions. The ANZ wants to give its female staff a $500-a-year top-up. Rice Warner wants to pay an extra 2 per cent into their accounts. Westpac is paying their super while they are on maternity leave. Their umbrella body, the Financial Services Council, wants the law changed so that women can top up their accounts later in life, when presumably they've got income to spare. Other solutions are dafter.

The ANZ is offering free financial advice to female customers with less than $50,000 in super. The Association of Superannuation Funds wants women to "take an hour" to check their accounts each International Women's Day. Newspaper columns suggest skipping coffee, getting spouses to pay into super or working for a company that values women.

Oh, and lifting compulsory contributions from 9.5 to 12 per cent. The industry loves that one.

Every one of these suggestions misses the point. Low income earners get less super than high income earners by design. It's the way the system is set up...

Women are usually low income earners. It's a fact. On average women employed full-time get 20 per cent less than men employed full-time. And because so many are employed part-time, their total wages are on average 33 per cent less. And that's when they are working. Because so many have interrupted working lives their life-time incomes are lower still.

It means lower contributions. Our super system gives the most to those who contribute the most, and then accentuates the difference by giving the greatest tax concessions to those who earn the most. It supports most who need it least. And we are meant to be surprised that it isn't aimed at women.

According to Roy Morgan research, typically, an Australian woman holds just $35,200 in super while a man holds $62,900. A retired woman holds $129,100 in super; a retired man has $192,600.

And because women usually live longer than men, the woman's money has to last longer. It's often said that women are able to rely on their men to get them through retirement. It's one of the tips for how to cope. But many retire without partners. Marriages don't last.

As the Human Rights Commission says: "It is inequitable and impractical that a woman's expectations of financial security in retirement should fluctuate according to her relationship status".

And it's dangerous. The commission says depending on male income "makes the significant number of women in violent or abusive relationships financially vulnerable, particularly as they reach retirement age and the possibility of acquiring an independent income diminishes".

If we were going to devise a system that actually supported those who needed it the most, we would devise nothing like the one we have at the moment.

In large part that's because our system wasn't designed; it grew. In presenting the report of his financial system inquiry late last year David Murray pleaded with the government to define a purpose for super. Is it to help middle-income Australians save a little bit more to supplement the pension? Is it to provide a tax break for the investments of high earners? Is it to replace the pension for all but the lowest of earners?

The system began as a short-term fix for a short-term problem. Retirement incomes scarcely entered into it. Ralph Willis, one of Labor's Treasurers in the Hawke/Keating era, remembers that the building unions had just negotiated a massive pay increase outside of the so-called Accord, under which centralised wage rises were handed out. If the increase had spread to workers within the Accord it would have reignited double-digit inflation.

"It was an open invitation to everyone else to breach the Accord," he told ABC radio years after retirement. "The way of resolving it was to turn it into superannuation."

Workers were given super in lieu of wage rises. Because they were unable to spend it until they retired, it didn't stoke inflation. Before long compulsory super accounted for 4 per cent of each wage, and then 9 per cent. Had the Rudd/Gillard Labor government stayed in office it would have climbed to 12 per cent (and there was talk of 15 per cent). All the while without an examination of what it was actually for.

It isn't supporting the retirements of those most in need. They are forced on the pension. It is helping middle-income Australians put away a bit more for retirement, but at the cost of leaving them with less than they could have in the middle of their lives. And it's serving as a tax dodge for high-wealth retirees who pay nothing on the earnings of their funds or on their payouts for the rest of their lives.

The best way to use super to help low income women would be to abolish compulsion, abolish the tax breaks, and let them access their income when they need it. The extra tax revenue could dramatically boost the pension, and better means testing could ensure the very well off still didn't get it.

It would help women because it would replace the system that hurts them rather than merely ameliorate its worst effects. The worst thing we could do would be to boost their compulsory super contributions, as the industry wants. It would further depress their incomes while leaving the differential on retirement in place.

In The Age and Sydney Morning Herald

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Why are there so few female chief executives? Why are there so many named Peter?

Fewer big Australian companies are run by women than by men named Peter.

The shocking finding after decades of talk about breaking the glass ceiling comes from a count of the 200 biggest public companies that constitute the ASX200 index.

Thirteen of the top 200 are run by men named Peter; among them Westfield, Woodside Petroleum and Macquarie Roads. Twelve are run by women; among them Coca-Cola Amatil, Cochlear and Harvey Norman.

Companies run by a Peter, a Michael, a David or an Andrew outnumber those run by women four to one.

The idea for the survey isn't original. It comes from the US economist Justin Wolfers who wrote in the New York Times this week that fewer large American companies were run by women than by men named John.

Wolfers is an Australian by birth and a visiting professor at Sydney University, so he'd probably be disappointed to hear that things are just as bad back home. Whereas in the US four chief executives are named John, Robert, William or James for every one who is a woman ("including every woman's name, from Abby to Zara") in Australia there are four named Peter, Michael, Andrew or David for every one who is a woman.

It's unfortunate, not just for women who might want to run organisations, but also for the organisations themselves. That's because there's good evidence that organisations run by women are better run. Really.

The most compelling evidence is brand new. It's from a 15-year study of Luxembourg banks published in January. The researchers compared the representation of women in the senior management of the 264 banks with their quarter-by-quarter financial performance reported to the regulator.

They found a 10 per cent increase in the proportion of women in the senior management ranks of a bank lifted its financial performance by more than 3 per cent per annum.

There's more. The 15-year period included the years of the global financial crisis. During those years, from 2007 to 2009, the effect almost doubled.

Women managed the banks better in the lead-up to and in times of crisis...

It's easy to guess why. Women are less inclined to take stupid risks. It's one of the reasons women live longer than men. Fewer die in accidents.

The study quotes Neelie Kroes, the European Union commissioner for competition during the crisis.

"If Lehman Brothers had been 'Lehman Sisters', would the crisis have happened like it did?" she asks.

"No," she replies. "Generally, women have a better ear to listen, and they are less likely to pretend to know everything themselves. They are team players with less ego."

It's not only attitudes to risk that can make women better at the top, it's also attitudes to women.

Another study finds that the performance of firms with women at the top increases with the share of women workers. Women taking over male-managed firms with at least 20 per cent of women in the workforce lift sales per employee by about 14 per cent.

Women are better at dealing with women.

I am sure you are about to scream that this is a generalisation, not true in every case and perhaps not true of someone you know. But most things about gender are generalisations. Not all women fail to make it to the top. Some (almost as many as men named Peter) do. But taken together women are more likely to fail to make it to the top than men. And taken together women are more likely to run certain types of firms better than men. Taken together that seems to be because women are more cautious and better at dealing with women.

So how do we get more women to the top?

A team led by Dr Danielle Merrett, of the University of Sydney, has come up with the simplest of easy fixes: when selecting candidates for a job (any job) make sure the shortlist contains an equal number of men and women.

Its experiments suggest that doing no more than that can lift the proportion of women chosen to 60 per cent.

It opens up the possibility of a new type of quota - not one that insists on a certain proportion of women being appointed, but merely one that insists on there enough women available so that choosing a woman doesn't look unusual.

What if that's all it takes? What if instead of being chosen from a panel with names like Peter, Michael, Andrew and David the next head of BHP is chosen from a panel where half have names are like Peta, Michelle, Andrea and Davinia. What if it could lift BHP's performance?

In The Age and Sydney Morning Herald






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It's reigning men. How our convict past explains our glass ceiling

Why does Tony Abbott have only one woman in his Cabinet of 18 men? Why does BHP has only 2 women on its 12-man board? Why does Australia itself have one of the lowest rates of female company directorships in the world?  

An astonishing 40 of our top 200 public companies have no female directors whatsoever.

It can hardly be the weather. The United States has greater proportion of women on boards. India outdoes us for executive directors. But it could be something to do with our values, something to do with where many of us have come from.

Economists often don’t talk about culture. They talk even less about how it is formed. Modern Australia was formed in an unusual way. Economists Pauline Grosjean and Rose Khattar of the University of NSW describe it as a “natural historical experiment”.

Their groundbreaking study is entitled It’s Raining Men! Hallelujah?

‘Unusual’ is an understatement. For the best part of a century from 1788 to 1868 a total of 157,000 prisoners were sent from Britain to Australia. Only 25,000 were women. By 1833 male convicts accounted for 80 per cent of the recorded east Australian population. Among convicts the ratio of men to women was 8 to 1. Over time the ratio in the general population settled down to 3 to 1. Just as is happening now in China in response to the one-child policy, a large imbalance of men and women can do strange things.

The father of of research into the economics of marriage is Gary Becker of the University of Chicago. He died last month aged 83. More than 50 years ago he suggested that wherever the number of men massively outnumbered women those women were more likely to marry and were more likely to marry up. It makes sense. With many potential suitors it’s easy to get hitched. With many potential partners to choose from it’s possible to discard those unable to provide well and marry those with real prospects. The alternatives were awful in the early days of Australia’s colonies - barely paid domestic service or prison. And marrying well could mean being well kept. The provider could provide for two.

That’s indeed what the figures show. In the parts of Australia that had the highest male to female ratios, women were the most likely to get married, the least likely to be in paid work and the least likely to work in high paying occupations.

Grosjean and Khattar’s shocking finding is that those differences persist today....

They’ve digitised maps in each of the state libraries to match up the results of Australia’s first censuses with the results of the latest census broken down by postcode.

Women in those postcodes today are less likely to work in high-status high-paid occupations. As they put it: “Historical gender imbalance still explains 5 to 10 per cent of the variation in the glass ceiling effect.”

Translated: Women who live where there was once a high ratio of men to women are even today less likely to break through the glass ceiling and make it to the top, perhaps because they are less likely to want to.

And there’s evidence that they are less likely to want to.

Grosjean and Khattar examined the responses from the modern Household, Income and Labor Dynamics Survey to this statement: “It is better for everyone involved if the man earns the money and the woman takes care of the home and children.”

Their finding: “Where the gender imbalance was most severe in the early days of white settlement in Australia, people are less likely to hold progressive views about gender roles.”

Much less. On average: “One more man historically for a given number of women moves the average Australian today towards conservative attitudes by nearly 6 percentage points.”

Attitudes persist through generations. This shouldn’t be surprising. The convict era wasn’t that long ago. Grosjean and Khattar say some of those answering the survey question would have had great grand-parents who grew up in the 1880s when the male female ratio was much higher than it is today. The use of the plough in agriculture goes back much longer, but another economic study has found that even today in the areas were the plough was first introduced women are less likely to be in the workforce and less likely to be involved in politics.

It seems the attitudes are passed down within families rather than through contact between families. Grosjean and Khattar examine the attitudes of Australians born outside of Australia and find no relationship to the historical gender ratio in the regions where they now live.

And they hasten to add that conservative attitudes aren’t necessarily bad, at least not for the women who hold them. The survey shows that women in locations that have traditionally had a heavy gender imbalance are happier in their relationships than those elsewhere, although “only when their husband works”.

But they are poorer. Women in areas where there was once a heavy gender imbalance earn an average of $1500 per year less than those in other parts of Australia. The shortfall isn’t made up by higher earnings from their men as might be imagined. “On average, every year, every person in these areas loses out on nearly $800 of income,” Grosjean and Khattar conclude.

Our views about what we want from work and what we want from relationships come from somewhere. Grosjean and Khattar believe they come from our pasts, and our parents and grandparents pasts. It isn’t easy to outgrow them.

Grosjean will present her trailblazing findings at a conference in the United States next week. There’s worldwide interest.

As for Abbott, he is attempting to outgrow his past. He is dismembering the stay-at-home reward known as Family Tax Benefit Part B and he is introducing paid six month maternity leave. We can change ourselves, but slowly.

In The Age and Sydney Morning Herald

Australia’s convict past has been evoked as an explanation for why so few Australian women make it to the top in politics or in business.

Pauline Grosjean and Rose Khattar of the University of NSW say it is not Australia’s convict history itself that has made women less likely to rise to the top but the very high ratio of male to female arrivals that accompanied transportation.

In some parts of Australia there was one woman for every eight men among arrivals, they report in their new study, It’s Raining Men! Hallelujah?

The high ratio made women sought after in marriage and able to marry up. The men who won their hands were prepared to work hard enough for two, enabling the women to stay at home.

Their important finding, to be unveiled at a conference in the United States next week, is in regions that had extremely high male to female ratios those attitudes have been passed down.

“Historical gender imbalance still explains 5 to 10 per cent of the variation in the glass ceiling effect,” they conclude.

Women living in those regions are today more likely to agree with the statement: “It is better for everyone involved if the man earns the money and the woman takes care of the home and children.”

They earn less than women in other locations but say they are happier in their relationships.

Pauline Grosjean said while female researchers had been intrigued by her findings some older men had been unsettled.

In The Age and Sydney Morning Herald



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The makeup trap. Why women keep piling it on

And some would like to take it off

Tracey Spicer wears three inches of make up. She doesn’t literally wear that much, but she says that’s the way it feels.

“Let me take you through my schedule,” the television journalist told the Brisbane TEDxWomen conference in December.

“Get up, look in mirror, see old lady looking back, put on running gear designed to suck in wobbly bits, run to maintain professionally acceptable size 10, go to bathroom, scour skin with defoliant to get rid of those dreadful dead cells, hop in shower, lather hair with sodium laurilsulfate, rinse out, dollop on conditioner containing placenta extract, wait until it sinks in, rinse off, soap up, wash off, get out of shower, dry body, lather body in petroleum byproduct, otherwise known as body moisturiser, and wait until that sinks in, cleanse face, add toner containing alcohol, dab on eye cream, cover the rest of the body in bronzing cream, and wait until that soaks in, put straightening jell in hair, section of and apply searing heat until styled into shape, almost do back in lifting up makeup kit, foundation powder, concealer, blusher, eyeshadow, eyeliner, eyelash curler, mascara, eyebrow liner, eyebrow colour, lip liner, lipstick, lipgloss, put on shapewear to suck in mummy gut after two children, pop on dress perfectly pressed by a dry cleaner using known carcinogens, add liquid to nails containing chemicals linked to cancer after yesterday visiting the house of pain, the one with the hot wax which drips above my lip and below my eyebrows before large hairs are torn out of my face.”

"Why, why do we do this to ourselves?” she asked, before adding: “...because its bullshit.”

And then, in the video on the internet, Spicer began to he begins to “deconstruct” the problem, literally.

To whooping and laughter she removes her layers of makeup, sprays her hair to return the frizz, takes off her dress, removes her high heels, and remains on stage wearing nothing much at all.

“Imagine what we could achieve if we weren't beholden to society's unreasonable expectations about how we should look?” she asks.

“Over our lives on average women will take 3276 hours grooming...

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For men it's 1092.”

“Do you know what we could do over those 3276 hours? We could complete a Master of Business Administration, become proficient at a musical instrument, learn another language...”

“I've got a seven year old daughter. Every time I get ready for my TV appearances she stands next to me in the bathroom, and she always asks the same question: Mummy, why do women wear makeup and men don't?”

“I can't say: ‘Because honey it makes me look better’, because that implies that women don't like the way they look naturally. I can't say: ‘It makes me feel better’, because that points to pathologically low self esteem.”

“What I do say to her is: Darling, I don't like it, it's not right, but it is what society expects of women.”

Is it wasted effort as Spicer suggests? If the aim of makeup, grooming, and what would would have once been unthinkable exfoliation is to help women get ahead (and good looks do help, even babies are attracted to beautiful faces) the the effort ultimately will be wasted, even though if though it works to start with.

Four decades ago the British economist Fred Hirsch summed up the folly of what he called positional goods like this: “If everyone stands on tiptoe no one sees better”.

A positional good is something that improves the position of someone who uses it, like buying a $500 suit to attend a job interview. It’ll work, and it’s far from stupid to try it. But as soon as everyone gets a suit, the expense is wasted. The job outcomes will be the same, yet everyone will have spent an extra $500. But by then there will be no way of escaping it. It will have become essential.

Charles Darwin was on to it earlier. He noted that large antlers gave male elk an advantage in fighting for females. But as they mated the entire species developed very large antlers and became vulnerable to attack. In his book The Darwin Economy economist Robert Frank sums up it up this way: What was good for the individual was bad for the species.

Think about dental work, or university degrees. We are drowning in them compared to earlier decades, and they help the people who get them. But does all the extra work advance the species?

Frank says in many areas of life we impose limits. Nations have arms reduction talks, ice hockey players wear helmets. We get together to help individuals in a way they can’t themselves.

No-one should accuse Spicer of hypocrisy for continuing to wear makeup when she presents the news. She is prepared to point to the problem and she is pleading for a way out.

In The Canberra Times, The Sun Herald





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The truth about women. Why Abbott's Cabinet won't last

Sunday column

Never has a prime minister’s first Cabinet been more insulting. Never has it mattered less.

I can understand the bewilderment many Australians felt hearing we were going to be run by a board of 19 men and 1 woman. Junkee.com reckons there are more women on the board of AFL, the Prostate Cancer Foundation, the executive of Zoo Magazine, in the Iranian Cabinet and in Saudi Arabia’s Olympics team.

It’s not as if women aren’t qualified. An extraordinary 30 per cent of Australian women in their thirties and forties have university degrees. A less-impressive 27 per cent of similarly-aged men are so qualified.

Should we be worried about the Cabinet? Not in the least. It’s the Coalition that should be worried. It has a serious problem using and finding talent. Australian men should be worried as well, because away from the Cabinet things are moving against them at a blistering pace, so quickly most don’t have a clue what’s happening.

Professor Sue Richardson spelled out the changes at this week’s Social Policy Conference at the University of NSW. One of Australia’s leading labour market scholars, she directs research at the National Institute of Labour Studies and sits on Fair Work Australia's minimum wage panel. Delivered just hours after Abbott unveiled his Cabinet, her address was entitled Breadwinner Men and the Gentle Invaders. It showed women grabbing men’s jobs, their incomes and their prospects in marriage.

It starts with education. Back at the start of the 1980s an impressive 11 per cent of men in their thirties and forties had university degrees. Only 5 per cent of women did. Now it’s 27 per cent for men and 30 per cent for women. The job market has been flooded with graduates, especially women graduates.

What has it done for male earnings? In the past three decades the earnings of male graduates have increased not at all when adjusted for inflation. That’s right, not at all. It isn’t that the wages for particular jobs haven’t increased, it’s that male graduates are being elbowed out of the way for the good jobs, forcing them to take jobs that would have once been done by less qualified people.

Richardson was surprised. She and her colleague Josh Healy had thought that low income blokes would be suffering the most. Instead “it’s the high education blokes, they no longer have a monopoly over well-paid jobs”.

Many no longer have jobs. Richardson flashed on the screen a graph the proportion of men in each age group with jobs in 1982. Then she showed the proportion with jobs now. The proportion in work in each age group had fallen, right up to the age of 60...

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It’s unlikely to be voluntary. “In our culture men work,” Richardson said. “Who is supporting them. Is if their parents, their girlfriends, the government? Or are they just poor?”

“The contrast with women is spectacular.”

At each age group a much greater proportion of women are employed now than in 1982 - in some cases 50 per cent more. The traditional dip in employment seen in the ages when women had babies has all but vanished.

Displaying a slide that read “Are men still marriageable” Richardson asked why a rational woman would bother to marry a man who couldn’t earn an income.

“You’d just have another dependent in the house” she said, to nervous laughter all around. For highly educated men marriage rates are little changed, but for low-educated men the marriage and cohabitation rate has plummeted. It’s fallen from 80 per cent three decades ago to less than 70 per cent.

Richardson doesn’t think this is because low income men are choosing not to marry. “They are finding it hard to attract a mate,” she says.

Three decades ago there were three low-educated women for every two low-educated men. Those were very good odds. Now it’s one to one, and many of the women are looking for men with better prospects.

Employment-wise that change ought to be good for low educated men. They are competing with fewer women. But (notwithstanding the mining boom) it’s the traditionally male industries that are shrinking.

“It’s the feminised areas of the economy that are growing; things such as aged care, child care, health care, retail, tourism,” Richardson says. “But men are reluctant to equip themselves to enter these industries, and they can face gender bias when they try.”

Richardson says men are accustomed “to being on top”. When they are not, they often “don’t know what to do”.

Women by contrast have faced centuries of disadvantage. They are used to turmoil and they know how to take advantage of it. Abbott’s Cabinet won’t last long.

In The Canberra Times, The Sun Herald


Sue Richardson, 2SER Thursday September 19 2013 Right click to download




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What's so good about Abbott's paid parental leave scheme?

Anyone would think Tony Abbott's paid parental leave scheme was an economic disaster.

We are told it’s unaffordable, we are told it's unfair because it gives the most to the workers who earn the most, and bizarrely we are told that it’ll make employers discriminate against women of childbearing age and hire men instead.

(On that last point, that’s what we were told at the end of the 1960s when the so-called equal pay decision make it illegal to pay women for less than men doing the same job. Employers complained they would have to sack women and take on men. Yet in the past 35 years they have taken on an extra 3.2 million more women and only 2.4 million more men. And the equal pay decision actually did make it more expensive to hire women than it had been before. The whole point of Abbott's parental leave scheme is that it would not impose an extra penalty on employers who hire women, it would remove the penalty.)

Let’s talk about fairness first.

Louise, a participant in Wednesday's leader’s debate asked Abbott why we needed a scheme that would pay some women $75,000 for six months leave when most women never earned that much in an entire year.

She could have asked the same question about sick leave. Highly-paid men and women get sick leave at their standard rate of pay. It’s a workplace entitlement. So too is annual leave and bereavement leave.

“Ah, but this is different,” Louise might have responded. “Parental leave is welfare paid by the government, the other types of leave are in employment contracts.”

The other types of leave are only in most employment contracts because government puts them there. Yes, they are paid by the employer. But so too would parental leave be under Abbott’s plan.

The extra cost of Abbott’s scheme is 100 per cent funded by the employers if we are to believe the Coalition’s numbers. A fact check published Wednesday goes through the maths. But instead of being paid by the individual employer who happens to find him or herself with a pregnant worker (which might discourage employers from hiring women) it is paid by the lot of them - well, the biggest ones anyway.

Employers would be made to pay the workplace entitlement just as they are other entitlements, except that for this one the burden would be shared among all (big) employers rather than paid by only the ones with pregnant workers.

The scheme has been designed that way because for small employers pregnancy is “lumpy”. Some get it, some don’t and it affects their costs big-time. Spreading the lumps among the biggest employers would mean no employer would need fear taking on someone likely to get pregnant.

Abbott’s proposed maternity leave system is no less fair than is the superannuation system of which Labor is proud. Both are paid by employers, and the rate of payment is determined by the wage. It’s the special tax treatment in the super system that makes super really unfair. It massively advantages high earners compared to low earners. Abbott’s proposed maternity system has no such flaw.

If $5.5 billion per year sounds like a big bill, that’s because Australia’s annual total wage bill is enormous. The levy on big companies would cover the extra cost. Labor and the Shareholders Association have expressed outrage that shareholders will end up paying the bill. Of course they will - they own the shares. On the bright side those companies will no longer need to fund their own parental leave schemes, so its not all bad for them.

And their shareholders’ children and grandchildren are more likely to be breastfed for the recommended six months rather than the presently funded three at the minimum wage. They will typically develop higher intelligence, greater emotional resilience, better teeth, resistance to colds and flu and protection against diabetes and obesity.

Would these sorts of shareholders and companies have complained about having to pay a proper wage to women back in the 1960s? Yes they did. They got over it and now regard giving their female employees as much respect as their male ones as a normal cost of doing business.

Yes, they could escape the cost by going overseas. That’s true of any improvement in working conditions, although in this case less than most. The cost is offset by the benefits of having all employable women available to work for all employers.

Six months at full pay would make Australia’s scheme one of the world’s most generous. Medicare is also generous. It has helped rather than hurt Australia.

In The Canberra Times and Sun Herald 

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Half true. Paid Parental leave "fully funded"

The Coalition’s parental leave scheme is “fully funded - by abolishing the existing scheme, and importantly by imposing the 1.5 per cent levy on the largest businesses"

Joe Hockey, Q&A ABC television, Monday August 19 2013

There’s little debate about how much the Coalition's paid parental leave scheme would cost. The Parliamentary Budget Office says $5.5 billion per year.

What is in dispute is how it would be paid for. Joe Hockey told Q&A on Monday the scheme would be “fully funded by abolishing the existing scheme, and importantly by imposing the 1.5 per cent levy on the largest businesses.”

Would just those two measures do the trick?

Finance minister Penny Wong says they wouldn’t. The Coalition would need “deeper cuts to families, education, health and jobs”.

Supporting evidence

The Coalition says it has supporting evidence, but it’s keeping it to itself.

It says Parliamentary Budget Office agrees with it, and (on the record) leaves it at that.

On so-called “background” it spells out what it says the PBO has told it, but it won’t release the actual PBO costing as the Greens have done for their maternity policy.

The Coalition finds $2 billion per year by abolishing Labor’s scheme. It finds another $2 billion to $2.5 billion by its tax levy on big firms. That leaves $1.25 billion to $1.5 billion to be found.

And here’s where it gets complicated.

An extra $1 billion or more would come from higher tax collections. Some would come from the mothers getting the payments, the rest would come from investors.

Right now shareholders can claim their share of whatever tax their company pays as a so-called franking credit which they can use to cut their own tax.

They would be unable to do that with the Coalition’s 1.5 per cent levy. Abbott said Wednesday: “Levies just don’t attract franking credits, that’s just a standard rule”. Because the Coalition both plans to cut the company tax rate (in a separate policy) and lift it for big firms, the firms themselves would notice little difference but their shareholders would be worse off.

The Coalition would also save $100 million on Family Tax Benefits as some parents were pushed into higher brackets, another $100 million from no longer separately paying public service maternity benefits, and $200 to $300 million from the states.

It adds up to the required $5.5 billion if the PBO costing says what the Hockey says it does.

Finding

Without seeing the costing Politifact can only rate Hockey’s claim “half true”.

It will review the finding when it sees the costing.

In Politifact and The Sydney Morning Herald

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