No Joe, paid parental leave isn’t a “no brainer”

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ScreenHunter_16 May. 13 15.31

By Leith van Onselen

Federal Treasurer, Joe Hockey, has pulled rank today, leaping to the defence of his leader, Tony Abbott’s, flawed paid parental leave (PPL) scheme. From The Australian:

…the Treasurer said the government’s $5.5 billion scheme was a “no-brainer” for regional Australia, and that mums on low and middle incomes would be the biggest winners…

“It is a no-brainer for regional Australia and it’s a no-brainer for middle and lower income Australians to have full replacement wages, particularly when the bills keep coming in”…

“I just say to the critics, you want us to keep our election promises, now you’re doing everything you can to stop us keeping our election promises. So make up your mind,” Mr Hockey said.

It’s interesting that Hockey has chosen to defend the PPL on the basis that it is an election commitment, but has conveniently failed to mention the Coalition’s pledge about not introducing any new taxes, or making cuts to education, which were also election promises. Why is the PPL sacrosanct, yet those other commitments are not?

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Moreover, Hockey’s claim that PPL would overwhelmingly benefit middle-to-lower income earners is spurious, given that benefits increase the further one moves up the income scale (up until $100,000), so overwhelmingly benefits higher income earners.

Surely, a more equitable solution would be to follow the Palmer United Party’s alternative proposal to reduce PPL to 26 weeks at the minimum wage and extend it equally to all new mothers, not just those whom are working?

As I said this morning, the Coalition would be wise to accept PUP’s compromise, since as long as PPL remains in play, it will continue to undermine the Government’s pontifications about the need for “shared sacrifice’ to bring the Budget back to surplus, heighten opposition to reform, and continue damaging the Coalition’s standing in the polls.

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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.