Crikey, if Tony’s newly costed Parental Leave Plan is what we have in store in the next government then someone is in for a very big shock. I’m not sure if it’s the polity or the Libs. From the AFR:
The Coalition policy would pay more than 125,000 women each year their full wage, capped at $150,000, for six months, plus superannuation. This means a maximum payout of $75,000 for six months’ leave.
…Bank of America Merrill Lynch Australia chief economist Saul Eslake said it was “a dreadful policy” that would not increase productivity or participation.
He said paid parental leave should be funded by the employer, not the taxpayer. Taxing big business and redistributing the wealth was “not a policy philosophy I would normally associate with the Liberal Party”.
“It reflects a pro-natalist philosophy.” Mr Eslake said the open-ended spending burden would further exacerbate the budget’s worsening structural deficit as detailed last week by Treasury in its pre-election fiscal and economic outlook.
Director of Deloitte Access Economics Chris Richardson said the scheme was the latest example of unsustainable spending by the major parties, joining the national disability insurance scheme and other big spending announcements.
“There’s less money yet we’re promising more of it and today’s yet another example,” he said.
…The Business Council of Australia renewed its criticism upon the scheme’s launch.
“The BCA has consistently raised concerns with the Coalition’s policy of funding paid maternity leave through a levy on some businesses and we remain of that view,” said a spokesman.
“Lowering the tax burden on all of Australia’s businesses is critical to support investment and jobs, particularly at a time when many business are struggling and the economy is undergoing change.”
From BS, the cost to the budget is going to be very high:
Opposition Leader Tony Abbott says his paid parental leave scheme will deliver “workplace justice” for new mums at a cost of $5.5 billion a year, offset by a business levy and budget savings.
…It will be funded in part by a 1.5 per cent levy on about 3000 companies earning more than $5 million in taxable income a year, which will be offset by a 1.5 per cent corporate tax cut from mid-2015.
The coalition estimates the net cost at $6 billion over the forward estimates, after budget savings and the scrapping of Labor’s scheme.
The scheme doesn’t kick off until mid 2015 so it’s the long term budget that’s at issue and probably doesn’t add to my current estimates of the Libs’ $35 billion black hole over the next three years.
However, measured against what the nation needs, the policy fails on every measure. As we enter our post-boom adjustment there are three key measures that government should be benchmarking any policy against:
- boosting competitiveness wherever possible, including an engineered real depreciation of the economy
- productivity boosting policy on every front, including chops to wasted recurrent spending on middle class welfare and redeploying it to productivity boosting infrastructure spend
- preparing the population for burden-sharing so that lower income flows are distributed in a way that best protects the vulnerable
This does the opposite on every front, boosting expectations of easy largesse, favouring rich over poor, wasting money on unproductive policy and inhibiting company competitiveness. A worse policy for the times it would be hard to find.
