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The Opposition Leader’s plan for paid parental leave will help the rich and hurt small business.
At first glance, Tony Abbott’s proposal to fund 26 weeks of paid parental leave through a 1.7 per cent levy on the profits of medium and large businesses is a win for small businesses.
The Council of Small Business Organisations of Australia certainly thinks so.
“Tony Abbott’s proposal is welcome because it supports small businesses that employ women and does not appear to shift any administrative burden to small business,” enthuses chief executive Jaye Radisich.
The federal Opposition Leader himself says: “Such a scheme would provide smaller businesses’ employees with a benefit that is funded by larger businesses.”
On closer inspection, however, Abbott’s plan is a giant handout to mostly rich women which, contrary to his and COSBOA’s assurances, will burden small businesses.
By offering 26 weeks’ leave at full pay, capped at $75,000, the plan will benefit high-income earners much more than low-income earners.
The federal government’s responsibility is to make sure all parents have enough money coming in so that no Australian child is homeless, hungry or cold.
It discharges this responsibility through family tax benefits and other payments for families.
By linking these payments to jobs, as Abbott’s plan and the Rudd government’s more modest paid parental leave scheme propose, they discriminate against jobless parents and, in Abbott’s case, against working parents on low incomes.
So what, you might be thinking. If larger businesses are funding it, small business employees will enjoy paid leave without burdening their employers.
This is wishful thinking. Big businesses will not ultimately pay the levy. Sure, they will physically hand over the money to the Australian Taxation Office. But they will use their market power to recoup the money from small businesses.
The big banks, for instance, will pass the levy on to their small business customers through higher lending rates and fees.
The big supermarket chains will squeeze the levy out of the thousands of small businesses which fill their shelves.
Where big businesses can’t pass the cost on to small businesses, they will lift the prices they charge consumers and, after that, lower the dividends they pay their shareholders. And guess who those shareholders are? Working Australians saving for their retirements through superannuation funds.
In short, Abbott’s plan will keep babies in rich families eating organic food and wearing boutique clothes with a tax that will ultimately fall on small businesses. Any benefit for babies in working families will be chewed up in higher bank fees, more expensive groceries and a poorer retirement.
Abbott is floating a thought bubble that deserves to pop in his face.