Industry breathes a sigh of relief as paid parental leave scrapped

Posted on 4 Feb 2015 by Tim Brown

The Prime Minister Tony Abbott has scrapped his paid parental leave scheme and replaced it with a proposed increased focus on child care, much to the delight of business groups.

The proposed $5.5bn paid parental leave scheme was to be introduced in July 2015.

The scheme was designed to pay a new parent full annual salary capped at $150,000 (later revised to $100,000) for up to 6 months and was intended to replace Labor’s $1.8bn scheme to provide 18 week’s pay at minimum-wage.

However, following intense pressure from businesses and within his own party, Mr Abbott this week scrapped the plans in preference for more child care support.

In a speech at the National Press Club on Monday Mr Abbott said: “That bigger parental leave scheme is off the table… I accept, though, that what’s desirable is not always doable, especially when times are tough and budgets are tight.”

Business groups reacted positively to the new proposal but requested further clarification particularly on a proposed levy on larger businesses.

“The expected announcement today that the proposed business-levy funded Paid Parental Leave scheme will not proceed [is] a triumph of common sense and a sign the Government has heard and acted on the feedback from the public and the business community,” said Innes Willox, Chief Executive, Australian Industry Group.

“It is critical that the Government also clarifies that the additional levy on larger businesses will also be scrapped. This would allow the much-needed boost to investment, competitiveness and employment creation of the upcoming reduction in the company tax rate to be fully realised. In addition of course, if there is to be an increased focus on child care, this has the potential to better contribute to meeting the same policy objectives than the PPL scheme itself,” Innes Willox said.