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Aim: Parents of preterm or sick infants are at increased risk of mental health problems. The financial stress associated with an infant's prolonged hospital stay can have an additional negative effect on families' wellbeing and child development. This study explores parent use of Australian paid parental leave (PPL) and the financial impact of having an infant requiring neonatal care. Methods: Retrospective, cross‐sectional, online survey study conducted from November 2020 to February 2021. Participants were parents of babies born from 1 January 2013, admitted to a neonatal intensive care unit or special care nursery in Australia. The survey explored use of Australian Government and private sector PPL, and financial stress. Parent‐reported anxiety and depression were measured using the EuroQol Group 5D‐5L Anxiety and Stress Subscale. Results: Two hundred and thirty‐one parents responded of which 93% had a preterm infant. Seventy‐three percent of infants were hospitalised for more than 1 month, and 34% were readmitted to hospital within the first year following discharge home. Eighty‐three percent of parents reported moderate, severe or extreme levels of anxiety or depression. Seventy‐six percent reported that having a child in hospital had a moderate‐very large financial impact on their family. Parents identified main costs to be travel, food, inability to work and direct medical costs. Conclusions: Having an infant born preterm or sick has significant emotional and financial implications for families. The current Australian Government PPL scheme does not adequately support parents of preterm or sick infants, and a change is urgently needed to improve outcomes for this vulnerable population. [ABSTRACT FROM AUTHOR]