Abbott's scheme ruffles feathers

Tony Abbott. Photo / Supplied

Opposition Leader Tony Abbott has finally discovered the nation's working mothers as he picks up the pace of his challenge to Prime Minister Kevin Rudd for this year's federal election.

Back when he was a minister in John Howard's former conservative Government, he vowed to fight compulsory paid parental leave to the bitter end.

"Over this Government's dead body, actually," he told a Victorian Liberal Party function.

Times have changed for the father of four daughters.

Abbott has come up with a plan to tax big business - those earning more than A$5 million ($6.25 million) a year - to pay for a surprisingly generous compulsory leave scheme.

Under his proposal primary carers would be paid at their full rate of take-home pay up to a maximum income of A$150,000 a year ($187.5 million) for 26 weeks. Abbott estimates the scheme will cost about A$2.7 billion a year.

"Isn't it a good thing to change your mind as your understanding grows?" he told ABC radio.

"What's brought it about is deeper understanding of the practical difficulties of women who are trying to juggle families and careers."

Rudd's scheme, due to be launched next January, pales by comparison. This scheme will pay the minimum wage of about A$544 a week to the primary carer for a maximum 18 weeks' leave after the birth of a child.

It will cost an estimated A$260 million a year, paid out of consolidated revenue. Abbott has seen his plan as a means of one-upping Rudd, who is battling hard to win support for his proposed overhaul of the public health system.

Helped by this and a series of other problems besetting the Government, Abbott has narrowed the popularity gap separating him from Rudd, moved to a small lead in primary votes, and considerably gained on Labor in the two-party preferred vote that decides Australian elections.

Some kind of compulsory parental leave was essential for the policy package Abbott is pulling together for the election. Australia is one of the few developed countries not to have already implemented a scheme, and the Coalition could not have gone to the polls without one.

But Abbott's announcement has not met the applause he could have expected.

His own party was angered that he publicly released the plan before he had spoken to key shadow ministers, let alone the party room.

Abbott's reply to that on ABC radio yesterday was that he had mentioned his ideas in the book he published last year, which he was certain would have been well read by his colleagues.

Retailers liked his plan, saying that funding the scheme by taxing large companies made sense, and that criticism by big business was "pathetic".

But the plan has predictably infuriated the big end of town, which sees no reason why it should pay for a compulsory universal parental leave scheme, and warns that the upshot would be fewer women in the workforce.

Australian Industry Group chief executive Heather Ridout told the ABC: "On any measure this is bad parental leave policy and it's bad tax policy."

The Australian Council of Trade Unions also blasted the proposal, describing it as a "dishonest smokescreen" for a planned resurrection of Howard's now-defunct WorkChoices industrial legislation.

"His real views are contained in comments he had made recently that housework and ironing are the role of women," ACTU president Sharan Burrow said.

Finance Minister Lindsay Tanner said the scheme would create a major distortion of the business taxation system, and act as a disincentive to grow and add more jobs for companies with turnover just under A$5 million.

Abbott's plan:

* Six-months paid parental leave.

* At full salary, capped at salaries of A$150,000 a year.

* Funded by a 1.7% levy on top 3200 firms on company tax above A$5 million.

Labour's plan:

* $250 million taxpayer-funded policy.

* All primary carers the minimum wage of $544 a week for 18 weeks.