James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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Abbott’s parental leave policy leaves him open to attacks, but SMEs could win big

Published 19 April 2013 10:22, Updated 22 April 2013 06:55

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Abbott’s parental leave policy leaves him open to attacks, but SMEs could win big

The Coalition’s parental leave scheme would see mothers get their full wage paid out for six months, capped at $75,000 for that period. Photo: Penny Bradfield

Make no mistake about it – Tony Abbott is determined to push ahead with his plan to tax Australia’s top 3200 companies an extra 1.5 per cent to help pay for his Rolls Royce parental leave scheme.

While the deteriorating state of the federal budget has arguably given Abbott the excuse to quietly back away from the policy, he made it clear yesterday he’s not budging.

“I want this important reform to be one of the things for which an incoming Coalition government is remembered,’’ he told The Australian Financial Review.

“This isn’t just a women’s issue, it’s not just a families issue, it’s an economic issue and if we can get more women productively into the workforce, that’s good for the economy as well as good for families as well as good for society. I’m deeply committed to it and the policy that we announced stands.’’

The policy stands, but some of the details have changed.

The impost on big companies was supposed to be offset by a 1.5 per cent cut to the company tax rate, meaning the affected companies would see their company tax rate remain at 30 per cent while other businesses paid 28.5 per cent.

However, the state of the books means the Coalition will need to reassess that tax cut – and that’s already got business groups griping.

The Coalition’s parental leave scheme would see mothers get their full wage paid out for six months, capped at $75,000 for that period.

Labor’s existing system pays the parent 18 weeks worth of the minimum wage.

While Labor’s system has been warmly embraced by all, Abbott wants to up the stakes with an extremely generous system.

Parents will love the idea, and that’s what Abbott is counting on, particularly given his apparent problems attracting the female vote.

But the policy leaves Abbott open to attacks from his natural constituency and his natural opponents.

While those on the Labor side will be careful not to argue that parents aren’t deserving of more cash, they will rightly attack Abbott for bitterly opposing the mining tax on one hand and then stinging big companies (including, ironically, the miners) on the other.

And there will be plenty within the Coalition’s ranks who will bristle at the idea of increasing company taxes for a group of businesses that include some of the Coalition’s biggest supporters.

Quite how Abbott will placate his own critics will be interesting. Perhaps he can convince them that this is one bitter pill they’ll just have to swallow.

Besides parents, the big winners out of all this – for a change – are small and medium businesses. Not only will they get access to a rolled-gold parental leave scheme that only their big competitors could previously afford, but those same big competitors will have to pay for the thing.

Not all of them will like the idea of taxes going up for the larger companies, but in an election that will be short on much for the SME community, this is a little nugget to grab on to.

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