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As far as I can make out, the issue of maternity and parental leave is currently high on the agenda in Australia. It seems to be Australia’s turn now to have the kind of debate we in
Sweden had so many decades ago before our internationally lauded scheme was introduced here. Consequently, a description of the Swedish system might be beneficial to the Australian debate.

Maternity leave in Sweden falls under our much-acclaimed law-governed and tax-funded parental leave system. It runs for 16 months (may be stretched out up to the time when the child starts at school at age 7).

A parent who worked for money for at least 8 months before childbirth gets 80 per cent of her/his previous income in benefits for 13 of those months, the equivalent of AU$ 35 a day (= AU$ 1034 a month) thereafter.

The parent who has the child before entering the labour market gets AU$ 35 a day (= AU$ 1034 a month) right through.

All these amounts are subject to approx. 32 % income tax, VAT, and various commodity taxes, leaving the remaining purchasing power, net of taxes, at approx 50 % of the before-tax income.

The father must stay at home with the child for at least two months, otherwise two months’ pay will be lost.

An interesting quirk about the scheme is the so-called “speed bonus” which enables parents to retain those 80 % of their previous income in benefits also for subsequent children, provided they are born within 30 months of the previous sibling.
If the next child is born one day too late, the relay stick is dropped, making our imaginary family an inevitable future loser in the money game our parental leave scheme is.
That puts quite a strain on mothers as you may appreciate and partially explains our marginally higher fertility rate than those of comparable countries. [1]

A number of advantages and disadvantages of the scheme may already be apparent:
Advantages
1. It encourages young people to have children. They tend to perceive the State as being a generous provider of economic support to parents,
2. Even single mothers can afford to stay at home with their babies, provided they have worked for at least eight months before the birth of the child (see above). [2]
Disadvantages
1. To sum up briefly because of space constraints, our parental leave scheme is macro-economically very expensive and has contributed strongly to our fall from 3rd place on the OECD’s affluence list to 14th over the last few decades. A far more econo-efficient solution would be letting people keep the money they need to survive and reproduce without that money making a round trip via the State’s coffers.

2. A collateral conclusion of the aforesaid is that our parental leave scheme restricts personal freedom severely and arbitrarily. You, the parent, will get your money back only if you behave politically correctly and if luck is on your side (in the sense that you and your child is on the right side of whatever age, time or income limits you will be tested against).

Among free-market economists there is strong consensus that minimising the flow of money from income-earners to the State and back is far better macro-economically and personal-freedom-wise than taxing people to the point where even normal income earners become dependent on the State for survival. Unfortunately, due to a lifetime of Social-
Democratic dominance over our political life, Sweden is firmly in the latter category.

Therefore, my humble recommendation for Australia, on the topic of maternity and parental leave is that you make sure that families are allowed to keep the money they need to enable new mothers the recuperation time they and their children need without undue governmental interference.

That kind of approach would create more wealth all around than any seemingly generous parental leave pay from the State ever could and leave your Government with far more resources on hand for helping that smaller number of people who still would need welfare help.

State-provided parental leave pay, to the extent that it also covers the middle and upper classes, is not the generous offer from Government it appears to be but rather an affluence-reducing and freedom-restricting coercion.

Footnotes

[1] By carefully balancing the benefits accruing to stay-at-home mothers on the one hand with those going to working mothers on the other, the Government can pretty much achieve the fertility rate it wants.
[2] Thanks to other welfare benefits kicking in when the basic parental leave pay is insufficient, a lone-mother family in Sweden is always able to get by financially, provided she surrenders her children during daytime to a childcare facility and maintains some semblance of actively
looking for work.

Bo C. Pettersson,
Director, Barnens Ratt Till Foraldrarnas Tid
www.barnensratt.se/index-en.htm.