A recent Croakey discussion about the health benefits of paid parental leave caught the eye of health policy consultant Jennifer Doggett. She argues that the potential benefits of paid parental leave may outweigh any concerns about it being inequitable.

She writes:

“It is not clear to me why equity should be considered when assessing Tony Abbott’s proposed parental leave scheme. This was suggested by Fran Baum and other commentators in Croakey (9 and 11 March), yet if the evidence to support parental leave comes from the link between maternal employment and health and social outcomes, then surely this should be the only basis for measuring the scheme’s effectiveness?

As Croakey points out, the Marmot Review provides solid evidence for the health and social benefits of parental leave, although it is not clear that these are Abbott’s primary motivations for proposing such a scheme. These benefits include an increase in breastfeeding rates, improved cognitive development and a reduction in childhood obesity.

A proposed parental leave should therefore be assessed in terms of its cost-effectiveness in delivering these outcomes. If it is more cost-effective than alternative strategies, then it should be implemented regardless of whether or not it provides more resources to women on high incomes compared with those on lower incomes. If resources are directed according to any criteria other than health and social benefits – including equity considerations – the scheme will necessarily be less effective in achieving its stated aims.

Clearly the cost-effectiveness of an income-replacement scheme, such as that suggested by Abbott, will vary according to the income of the stay-at-home parent. This may mean that above a certain income level the resulting health and social benefits of parental leave are not cost-effective and that therefore the resources could be used to achieve greater benefits elsewhere. However, this is not due to the equity impact of the scheme.

There may also be good health and social reasons why the benefits of parental leave are greater for families on lower incomes. For example, it may be that families with limited resources cannot afford high quality childcare and so their children experience more negative effects from maternal employment than do families with higher incomes (the Marmot Review found that the quality of child care matters in terms of its impact on children’s health and social development).

Or it may be that breastfeeding for twelve months delivers greater health benefits to children from low income backgrounds because their families have poorer access to high quality food. However, again it should be in respect of these health and social benefits, rather than in order to increase income equity, that resources are targeted at this group.

If equity is relevant to an assessment of the proposed parental leave scheme, it is only to the extent that the scheme’s contribution to income inequality has a negative health and social outcome. There is some evidence that income inequality is correlated with poorer overall population health outcomes, although this research is controversial.

While it does not appear from the comments by Baum and others that this is the basis of their concerns about the equity of the proposed scheme, even if this effect were taken into consideration, its impact is likely to be insignificant in comparison with other causes of income inequality.

If a policy goal of parental leave is to reduce inequities in income between women or between families, then that should be clearly stated and the proposed parental leave strategy should be assessed against other alternative approaches to reducing income inequalities.

However, if this is the case it is unlikely that a parental leave scheme could be justified as there are a number of competing strategies, such as tax credits for low income earners or direct payments to low income families (regardless of whether or not they have children in care), which would be more effective in reducing the income disparity between the rich and poor.

Clearly equity is an important goal of many public policies. However, the problem with assessing Abbott’s, or any other, parental leave scheme in terms of its impact on equity is that this risks compromising its stated health and social aims.

By including equity as an ill-defined and/or secondary goal for a proposed parental leave scheme, we run the risk of ending up with a policy which can neither achieve its potential health and social benefits nor effectively reduce income inequality within our society.”

* Just for the record, it was Jennifer who suggested she was having a rant. Croakey would prefer to describe it as a constructive debate…