PPL: Abbott’s mother of all fiscal mistakes

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ScreenHunter_03 Jun. 26 21.56

By Leith van Onselen

The Business Spectator echo chamber is spreading the good word again today with Callam Pickering taking up my concerns about Tony Abbott’s paid parental leave (PPL), whose huge cost will do little to boost workforce participation, but will come at the expense of worthwhile welfare programs for the poor and increased taxes:

If the budget crisis is so dire and so urgently in need of repair, how can Abbott justify his paid parental leave scheme?..

The hypocrisy, so obvious to the public, is also patently obvious among members of the Coalition government…

Beyond the cost of the scheme, which is problematic enough, there is the unfortunate reality that the scheme will do little to boost female participation in the labour force.

…if you were a government that believed it faced a budget emergency, wouldn’t you be better off pursuing the cheaper policy [childcare subsidies] that provides budget benefits in both the near and long-term?..

Isn’t that better than providing more middle to upper-class welfare?..

They cannot, in good conscience, cut welfare to poor people and raise taxes while simultaneously supporting their paid parental leave scheme.

With the PPL being attacked from all corners, including from within the Coalition, it is a marker of Abbott’s stubbornness that he has yet to admit his mistake and execute a dignified reversal.

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In any event, with the prospect of Coalition members crossing the floor, along with growing opposition from the Greens and the Palmer United Party, there is every likelihood that PPL won’t pass the Senate, placing it on the scrap heap of dumb political policies, right alongside Mark Latham’s Medicare Gold.

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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.