Superannuation added to Paid Parental Leave from July 2025

Mothers and fathers will get superannuation on top of government-funded Paid Parental Leave under a milestone Labor announcement.

Finance Minister Katy Gallagher. Picture: NCA NewsWire / Martin Ollman

Mums and dads will receive superannuation on top of government-funded paid parental leave payments, in a major spending commitment ahead of the May budget aimed at bolstering Labor’s gender equity credentials.

But the policy – likely to cost about $200m a year – will undermine Anthony Albanese’s aim to put the budget on a more sustainable pathway, including through increasing taxes on the superannuation balances of the wealthy.

Women’s Minister Katy Gallagher will on Thursday unveil a plan to increase the nearly $900 a week payment by 12 per cent, which will go into superannuation accounts for the 180,000 parents who access the scheme every year.

Senator Gallagher said the measure would “close the super gap”, with men generally retiring with about 25 per cent more superannuation than women.

“The data is clear – when women take time out of the workforce to raise children, it impacts their retirement incomes,” Senator Gallagher said ahead of a speech to be delivered on Thursday at the National Press Club in Canberra. “Paying super on government parental leave is an important investment to help close the super gap and to make decisions about balancing care and work easier for women.”

The government was under pressure from the Greens and women’s groups to pay superannuation on PPL, but had previously resisted because of budgetary constraints.

The Greens were threatening to use their numbers in the Senate to block Labor’s bill to raise taxes on superannuation balances worth over $3m unless it was accompanied by the 12 per cent top-up of PPL payments.

Labor backing superannuation payments on PPL is likely to ensure its proposal to raise taxes on large retirement balances passes parliament but it will undercut the improvement in the budget bottom line.

The tax hike on $3m-plus super funds was likely to generate up to $900m in its first four years, while the superannuation industry predicts the payment on paid parental leave would cost about $200m a year.

The government said it would not release costings on its new PPL measure until the budget.

Anthony Albanese and Jim Chalmers have flagged cost-of-living will be the focus of the May budget, but the PPL initiative will not provide immediate relief to families.

However, it will give the government a big-ticket item to sell to female voters without adding to inflation pressures.

On Wednesday, the Treasurer said the revamp of the stage three tax cuts would be the centrepiece of cost-of-living measures this year.

“If we can do a little bit more in another area or two, then obviously we’ll see if we can afford to do that,” Dr Chalmers told Sky News.

The PPL measure will be announced on Thursday as part of the government’s national strategy to achieve gender equality, which comes after the release of gender pay gap data from 5000 Australian companies revealed some employers with gaps above 30 cent in favour of men.

Dr Chalmers said greater economic inclusion for women was “at the centre” of the government’s agenda and adding super to PPL would lead to secure retirement for more women.

“Paying super on paid parental leave is part of our efforts to ensure women earn more, keep more of what they earn, and retire with more as well,” the Treasurer said.

The announcement comes almost a year after the government’s Women’s Economic Equality Taskforce recommended it take “urgent” action to add super to PPL, which Senator Gallagher said she was actively considering ahead of the May 2023 budget.

The policy was not included in the budget papers last year, prompting backlash from women’s advocates who said it was a missed opportunity.

The Greens blasted Labor for being able to spend billions of dollars on submarines but citing budget constraints when it came to adding super to PPL.

Industry super fund HESTA also urged for Labor to use the tax savings that would be gained from removing concessions on the biggest super balances to add super on to PPL.