The Government's 2009-10 Budget provides for the introduction of a Paid Parental Leave scheme from 1 January 2011.

This government-funded scheme will provide the primary carer (whether the mother or the father) with 18 weeks post-natal leave, paid at the adult federal minimum wage (currently $543.78 per week).

These payments will be treated as taxable income and will affect entitlement to family assistance payments, but will not be counted as income for income support payments.

People who elect not to receive Paid Parental Leave or who do not qualify will continue to receive the Baby Bonus and other family payments, where they meet eligibility requirements.

Primary carers will be eligible for the scheme if they:

• earned less than $150,000 in the full financial year prior to the birth or adoption of a child;

• have worked at least 330 hours over the 10 months preceding the birth or adoption of a child; and

• have also worked continuously with one or more employers for at least 10 of the 13 months before the expected date of birth or adoption.

Employers will not be required to pay superannuation on Paid Parental Leave entitlements.

The Baby Bonus and Family Tax Benefits will continue to be available for mothers who choose to stay at home. However recipients of the Government’s Paid Parental Leave scheme will not be eligible to also receive either the Baby Bonus or Family Tax Benefit Part B.

The government-funded scheme is the government's response to the recommendations of the final report of the Productivity Commission Inquiry into Paid Parental Leave: Support for Parents with Newborn Children, which was released with the 2009-10 Budget.