PPL ball and chain drags on Budget progress

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By Leith van Onselen

With the year winding down, and many of the May Budget measures still stuck in limbo, the Abbott Government is preparing to “clear the barnacles” and water down or junk some unpopular measures in order to start the new year on the front foot.

As reported in The AFR today, the $7 medical co-payment is set to be scrapped by the Government, along with the attached Medical Research Fund, with Abbott’s signature paid parental leave (PPL) policy also likely to be watered down. It is also seeking a compromise with the Senate on university fee deregulation:

Senior government sources said pragmatism was now a key motive and there was no point persisting with measures that were hurting the ­government and which had no hope of passing the Senate.

“We’ve been taking water on this stuff and we’d just continue to do so,” a source said…

“We’ll see what we can and can’t get through and we’ll draw a line under it,” another senior source said.

While the Coalition’s more pragmatic and conciliatory approach to the Budget is sensible, and should ensure that at least some of its contentious measures pass the Senate, Tony Abbott’s PPL tin ear is forming into cast iron, refusing to junk the $5 billion a year policy altogether despite widespread opposition from within the Coalition.

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Why Abbott insists on maintaining PPL at all is beyond me. The scheme has been universally condemned as inequitable, a waste of scarce taxpayer dollars, and inconsistent with the Government’s message of “ending the age of entitlement” , as well as needing to trim expenditure to overcome the so-called “Budget emergency”. It also has little chance of ever gaining enough support to pass the Senate.

While showing some positive signs, the Prime Minister still has much more to learn on the art of compromise and backing winners.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.