Economic modelling shows real financial benefit could be half of what the opposition leader suggests under the $5.5bn scheme
The real financial gain for women under the Coalition's $5.5bn paid parental leave plan could be half that claimed by leader Tony Abbott, new modelling of the controversial scheme shows.
Abbott said his scheme is proof that he "gets" modern women and that it "will result in a woman earning the average full time salary of around $65,000 receiving $32,500 – and they will be around $21,300 better off under the Coalition's scheme relative to Labor's scheme."
But the modelling, by the National Centre for Social and Economic Modelling (NATSEM), shows a woman with one child and a new baby earning $65,000 would in fact be better off compared with Labor's scheme by somewhere between $10,604 and $14,895 (depending on her partner's income) once reduced family tax benefit payments and income tax was taken into account.
Savings to the government from lower family tax benefit payments and income tax paid on the parental leave payments are included in the costings of the paid parental leave scheme that the Coalition has so far refused to release.
Also included is a saving from denying tax credits to shareholders of the 3,200 big businesses hit with a 1.5% levy to help pay for the scheme, which recent calculations by the Parliamentary Budget Office (PBO) suggest could amount to $3.2bn over the first four years and $1.6bn a year when the scheme is fully operational.
Shareholder groups say this is an "unfair hit" on investors in Australian listed companies that feature in most share portfolios. They are calling on the Coalition to reverse the decision.
Labor targeted the impact of the levy on shareholders and self-funded retirees saying "it will hit superannuation bigtime".
Rudd said the paid parental leave scheme and the levy to help pay for it were "unfair, unaffordable and irresponsible."
Treasurer Chris Bowen said the Coalition's decision to deny tax credits meant the company tax levy would actually "be paid by every single shareholder in Australia.
"This is Tony Abbott's grand raid to pay for his signature (paid parental leave) policy...why should a retiree who has been working and saving all their lives pay for Tony Abbott's scheme through a tax on their retirement savings," Bowen said.
Former Liberal prime minister Malcolm Fraser tweeted Wednesday that "Investors take $1.7 billion hit for parental leave. Bad for retired people especially, inconceivably bad policy."
Under Labor's existing scheme, women get 18 weeks leave at the minimum wage of $622 a week. Under the Coalition's proposed scheme they would get 26 weeks at their actual wage, capped at $150,000 annual earnings.
According to the Coalition, a woman on the minimum wage or a part time worker earning less than that, would be at least $5,000 better off under its scheme.
But the NATSEM modelling, conducted by principal research fellow Ben Phillips, says a woman on the minimum wage with a child and a new baby, whose partner also earned the minimum wage, would in fact be $3,682 ahead under the Coalition scheme compared with Labor's because of lower family tax benefit payments.
High income women would also lose a chunk of their generous gains under the Coalition scheme in tax - a woman earning more than $100,000 whose partner earned more than $150,000 would be $52,000 better off before tax under the Coalition plan, but $26,791 after tax.
The real gains for lower income women would be close to the Coalition's claimed gains if the leave was for their first child and they did not have existing family tax benefit payments to lose under the income test rules for the benefits.
"The Coalition's scheme is definitely more generous but there are strong interactions for low income women with the tax and transfer systems, which means the gains are not as big as some people might think," Phillips said.
The Coalition has said its policy will be "fully paid for" by the levy by rolling government parental leave plans, including for state and local government workers, by scrapping the existing Labor scheme, and by these "consequential" reductions in government payments of family tax benefits and increases in personal tax paid.
But it has so far refused to release the figures. It says they will be released before the end of the campaign.
"All of our policies will be subjected to scrutiny in the course of this campaign. All of them will be subjected to post-election scrutiny by the Parliamentary Budget Office ... it is fully funded and it has been absolutely fully costed by the Parliamentary Budget Office," Abbott said on the campaign trail on Tuesday.
But Labor has seized on the absence of costings and internal Coalition divisions about the scheme.
"Mr Abbott has been on about this policy for years. His party is divided on it. The Coalition is divided on it. The National Party folks are saying they'll cross the floor on it. Business hate it. State government conservative premiers hate it and ordinary Australians think it's wrong because it's so unfair – $75,000 on one hand to this person and taking back Schoolkids Bonus and other basic supports for working families on the other. It is unfunded. It is unfair. And frankly, it is a policy falling apart as we watch," prime minister Kevin Rudd said on Tuesday.
An updated PBO costing of the Greens' scheme, released on Tuesday, shows that their plan would cost the budget $2.1bn over its first four years.
Many of the features of the Greens' scheme are exactly the same as the Coalition's.
Problematically for the Coalition, the PBO says the levy would raise very little over the first two years because companies would "take steps to change the timing of their income in the year prior to the start date in order to benefit from the introduction of the levy".
The Greens would cap the wage replacement at $100,000 annual earnings, compared with the Coalition's cap of $150,000 - a difference that would make it cheaper. But it would also offer fathers an additional two weeks' paid leave, which would be somewhat more expensive.
Couple with two children, husband on minimum wage
Couple with two children, husband on $72,500 average wage
Couple with two children, husband on $156,000 wage
Couple with one child, husband on $72,000 average wage
