HESTA advocates for addressing ‘motherhood penalty’ in pre-Budget submission

In its 2023-24 pre-Budget submission, superannuation fund HESTA has raised the call for paying super on the Commonwealth Parental Leave Pay scheme to address the “motherhood penalty”.

If these equity measures were introduced, it could lead to a super balance boost between 3.7% to more than 11% for mothers, the fund stated.

In its October Budget announcement, Treasurer Jim Chalmers confirmed paid parental leave would be extended to 26 weeks, though he stopped short of announcing that super would be paid on it. 

However, minister for financial services, Stephen Jones, later said it was an area where people could “watch this space” as Prime Minister Anthony Albanese was committed to the measure.

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It was a measure that had been backed by several super organisations, considering the average women retired with about a third less super than men. Research also indicated a 19-year time frame to gender equality in super. 

Per recent HESTA data, the median super balance for a female HESTA member accumulating their super was $29,377,3. For every $1 that women received in super tax concessions, men received $2.52, modelling showed. 

“We want to see the May Federal Budget prioritise paying super on the Parental Leave Pay scheme, as this is a key outstanding equity measure for our retirement system,” HESTA CEO Debby Blakey said.

“It’s not just about the dollars; failing to pay super on Parental Leave Pay sends a clear message to women that unpaid caring work continues to be undervalued in our society.”

HESTA was the largest super fund dedicated to Australia’s health and community services sector and close to 80% of the fund’s 970,000 members were women. 

Blakey added: “This is a critical year for super to address long standing inequities that overwhelmingly impact women, as they shouldn’t be financially penalised after spending their lives caring for others”.

HESTA also highlighted extending eligibility for the Low Income Super Tax Offset (LISTO) to those earning up to $45,000 and bringing the offset in line with the current Superannuation Guarantee (10.5%), which would benefit some 250,000 HESTA members.

Other recommendations in HESTA’s pre-Budget submission included introducing a carer’s credit to assist those taking unpaid parental leave and scrapping super tax concessions flowing to accounts with balances of more than $5 million. 

“Our super system is one of the world’s best, but gaps remain that overwhelmingly disadvantage women and those earning lower wages.

“Now’s the time to address super’s persisting gender blind spot. Not only are these reforms the right thing to do, but our modelling also shows they could be life changing for members on low and middle incomes and would start us on the path to closing the gender super gap once and for all,” Blakey affirmed.