Small business advocates are calling for the Coalition to abandon its Paid Parental Leave scheme, saying the measure isn’t affordable and will require too much work on behalf of small business.
This warning comes just days after industry leaders warned the Coalition plan to tax the largest 3,200 companies could affect small businesses as well.
Council of Small Businesses of Australia executive director Peter Strong told SmartCompany while the scheme would be paid for by big business and would benefit small businesses, he questions its necessity and urges reform in other areas such as child care.
“In the current proposed system, big business pays for the maternity leave of small business, which is great. But, from a fiscal approach, given the budget deficits it comes at a high cost,” he says.
Strong says there is likely to be a lot of red tape around the scheme which would increase business burdens.
“The red tape around it would be extraordinary to ensure there was no fraud. Some businesses would consider increasing wages just to take advantage of the system,” he says.
Rather than focusing on maternity leave, Strong says the Coalition and the government should consider more funding for child care.
“For small businesses, we just want to talk about child care, as distinct from maternity. For a small business, if you give child care to one of your workers you need to pay fringe benefits tax.”
“There needs to be a lot more support from the government for child care so women can return to work. By returning to work, many women basically end up just doing work experience because of the high costs,” he says.
Increasing government funding for childcare, Strong says, would help parents and small businesses.
“In a big business, you can stick a crèche in and you don’t have to pay fringe benefit tax, there’s quite a bit of discrimination there since small businesses can’t afford their own crèches.”
“You don’t pay fringe benefits tax for supplying childcare at work and this should extend to small business, even if the childcare is offsite,” he says.
The Australian Financial Review revealed this morning Parliamentary Budget Office costing show the policy would cost $14 billion across three years if it began on July 1, 2014.
The PBO estimates it would cost $3.6 billion in 2014-2015, but this would rise to $5.06 billion to 2015-2016 and $5.3 billion in 2016-2017.
Analysis conducted by research firm the Australian Institute and seen by SmartCompany found based on Abbott’s original policy costing of $3.4 billion a year, the increase in the company tax rate would need to be doubled to 3%, just to meet the original cost.
However, shadow assistant treasurer Mathias Cormann told ABC Radio this morning he rejected the PBO costings.
“Of course, we will be releasing all of our costings in relation to all of our policies close to the next election once we’ve been able to finalise those costings in relation to the Pre-Election Fiscal Outlook,” he said.
Abbott has not yet said when the scheme would come into effect, only that it would be in his first term of office.
Yesterday, Abbott was the target of a social media onslaught with Twitter users creating the hashtag #womenofcalibre to criticise the Coalition leader over comments he made about the scheme allowing women “of calibre” to have families.
“When a woman takes leave because she is having a baby she should be paid at her wage just as if a bloke takes leave to go on holidays, he should be paid at his wage,” he said.
“We do not want educated women, at the higher degree level, to deny them a career. If we want women of that calibre to have families – and we should – we’ve got to give them a fair dinkum chance to do so and that’s what this scheme of paid parental leave is all about.”
Protestors objected to the way Abbott used the term “women of that calibre” to describe working mothers.
This story first appeared on SmartCompany.