Reform is kid's play with right process

IT is a belated victory for reformist policy and a model of how to generate consensus for change with the Senate now about to legislate Australia's first national paid parental leave scheme at a modest cost of $250 million a year.

This is a genuine achievement of Kevin Rudd's first term, a much needed success and therapy.

It ends Australia's status as one of only two first-world nations without such a scheme. At a media event in the Senate courtyard yesterday surrounded by women and babies, Rudd declared the reform was "making it easier for working families to chart their future".

Yes, this is Labor's election message, though totally lost over the past five weeks because of the resources tax row.

The paid parental leave scheme starting from January 1 will be available for an estimated 148,000 people on an annual basis and provides 18 weeks' parental leave at the national minimum wage.

Though a modest scheme, it constitutes a social and economic landmark in Australian history. Its passage will represent a rare event these days: an authentic change of sentiment since the Howard government, a new broad-based Labor-Liberal consensus, an independent Productivity Commission review that established the policy path, thorough consultation with stakeholders, careful costing of the scheme and acceptance of its underlying principles.

This is a check list for successful reform. It deserves attention when the public and "true believers" may have forgotten that Rudd Labor actually accomplished this.

Remember, at the 2007 election neither party espoused this policy. Labor was highly cautious, refusing to commit to any scheme while the Coalition was locked into John Howard's rejection of paid parental leave in favour of the baby bonus for both working and stay-at-home mothers.

While paid parental leave has been a long-run industrial objective of the trade union movement, women's groups and many Labor MPs, this cause confronted a series of obstacles: the cost, whether employers or government paid, the need for fairness between working and non-working mothers and recognition that many women prefer part-time work.

In the end Rudd and Liberal leader Tony Abbott acted on political and economic imperatives. Minister for Families Jenny Macklin, with carriage of this issue, said yesterday it was Rudd who made the difference.

As a modernist with a working wife, Rudd's commitment to paid parental leave is a natural step. "It's time to bite the bullet," he famously said after the draft Productivity Commission report.

Nobody sees Rudd's scheme as perfect. As Macklin said: "We knew it was affordable and that it balanced the interests of business and families."

But it is crossing the policy threshold that matters, not impersonating Leonardo da Vinci and seeking perfection. That's what Labor has done.

More spectacular but dangerous is Abbott's road to Damascus. Former sex discrimination commissioner Pru Goward had attacked Abbott for rejecting her report to the Howard government advocating paid maternity leave.

"When the report was released I was heartbroken," Goward said. "There was a campaign run against me. Abbott said, 'Not over my dead body.' I did not have a supporter within the cabinet."

In my book, The March of Patriots, Howard said: "I accept total responsibility for this decision. And Peter Costello had the same view. We weren't going to discriminate between women."

This view of social conservatism was the real reason the Howard government failed to embrace the policy.

Yet Abbott ditched Howard's mantra last March in a policy reversal destined to create serious problems for him.

On reflection after the 2007 defeat and alert to his own challenge with female voters, Abbott embraced a scheme far more generous than Labor's and financed by a tax levy on the top 3200 companies.

In economic terms, Abbott is positioned to Rudd's left, offering to tax more and to spend more. With his levy, Abbott's corporate tax rate is 31.7 per cent compared with Rudd's 28 per cent.

But Abbott, critically, is also to Rudd's left in the social dimension because his policy favours women at work compared with women at home.

The overkill is huge; Abbott's scheme runs for 26 weeks and is at the annual income up to $150,000 for every woman in the workforce before having a baby. His levy raises an estimated $2.7 billion, more than 10 times the cost of Labor's scheme.

Both the higher tax and social inequality embedded in Abbott's scheme will become political issues. Neither Rudd nor Macklin will let him off the hook.

"I am a big supporter of making our scheme fair," Macklin told The Australian yesterday. She says Labor's scheme means non-working mothers will tend to obtain more assistance than working mothers because they are entitled to the baby bonus and family tax benefit.

When he unveiled his scheme Abbott said it needed another leg: to assist stay-at-home mothers. He was right. Yet he was over-ruled on this by his senior colleagues and is now left with an unbalanced arrangement, a problem that must be addressed somehow.

Labor's scheme constitutes a hard-won consensus involving business, unions, women's groups and economic necessity.

It would have been absolute folly for Abbott to oppose Rudd's scheme in the Senate by arguing that his own proposal was more generous.

In her second reading speech Macklin paid tribute to many women including ACTU president Sharan Burrow, Marie Coleman from the National Foundation for Australian Women, sex discrimination commissioners Goward and Elizabeth Broderick, and business lobby leaders Heather Ridout and Katie Lahey.

The final breakthrough was Rudd's agreement before the 2007 election to send a reference to the Productivity Commission. This followed representations from a number of interest groups.

The commission recommended a government-funded statutory scheme of leave up to 18 weeks paid at the minimum wage, the model Labor endorsed.

Eligibility extends to women in seasonal, casual, part time and contract work. They will be the main winners from Labor's scheme. There is a generous income test at an individual income level below $150,000 yearly.

The bigger story is that this is reform achieved by consensus. The foundations were laid when employers and business negotiated parental leave with individual employees and unions, thereby sending the vital signal: parental leave was good for business. This generated the right conditions for Rudd and Macklin to act.

The moral is that Labor needs to return to consensus as its political method. Fast.