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You can find the current article at its original source at http://www.theguardian.com/commentisfree/2014/apr/29/the-generosity-of-abbotts-paid-parental-leave-scheme-puts-the-budget-in-jeopardy

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Version 1 Version 2
Generosity of Abbott's paid parental leave scheme puts budget in jeopardy Generosity of Abbott's paid parental leave scheme puts budget in jeopardy
(4 months later)
Some of the proposals leaking out of the Some of the proposals leaking out of the budget process indicate the gap between political rhetoric and policy remains large. For all the talk of a government of "no surprises" and the need to end the age of entitlement, the government appears to be considering a surprise increase in income tax while continuing to fight for its unpopular gold plated paid parental leave scheme while introducing a new income threshold of $100,000 for government payments.
budget process indicate the gap between political rhetoric and policy remains Restricting family benefits to those with a combined income under $100,000 is a good idea. At $20.3bn a year, the family tax benefits program represents the third largest single area of federal government spending. As it currently stands, a couple family with two children aged 14 and 10 with a combined taxable income of $100,000 per year receives $2,377 a year in tax-free family payments. If that income is earned primarily by one person, that amount becomes $3,127 as a result, which is designed to cater to the single-breadwinner family.
large. For all the talk of a government of "no surprises" and the need to end It’s clear that there is room for cuts, but abolishing family tax benefit part B, or rolling part A and part B into one payment with a uniform withdrawal rate, as the Henry Review recommended, would be a better way of targeting assistance. It could also reduce low income traps for secondary earners if done correctly.
the age of entitlement, the government appears to be considering a However, the case for reform in this area is substantially weakened by the prime minister’s steely resolve, in the face of broad-based objections, to offer a massive new paid parental leave entitlement (PPL) to 26 weeks of replacement wages.
surprise increase in income tax while continuing to fight for its unpopular The PPL scheme has a $75,000 cap, but it’s only a cap on the amount someone can receive – people earning above $150,000 are still eligible for the scheme. This is excessively generous, and its generosity is only compounded by the fact that eligibility is assessed on individual income instead of combined income. The proposal to restrict family benefits would see an even starker and more untenable difference emerge between family benefits and the proposed PPL scheme.
gold plated paid parental leave scheme while introducing a It's true that believing in promises made at an election is rather like believing in the tooth fairy. Nevertheless, it’s disappointing that "no changes to pensions" is an election promise worth keeping, but "no new taxes" is not. The proposed deficit levy, temporary or not, would simply be an acknowledgement that the government lacks the will to address the causes of the growing deficit.
new income threshold of $100,000 for government payments. Cutting assistance to comfortably well-off (if not necessarily wealthy) families is justifiable on the grounds of trimming fiscal fat and reducing entitlements – but to impose a new tax on these same families while simultaneously allowing them to access an incredibly generous paid parental leave scheme is contradictory.
Restricting family benefits to those with a Somewhere in this morass of rhetoric and policy proposals is this truth: if people are going to have to make do with receiving less from the government, then governments are also going to have to make do with taking less from the taxpayer.
combined income under $100,000 is a good idea. At $20.3bn a year, the This is especially so when the proposal in question rests on unsteady philosophical foundations. Taking a broader view of the deficit levy suggests the policy is not really about the deficit – it’s about raising extra money so the government can preserve its absurd commitment to the paid parental leave scheme and its ruling out of changes to pensions in their current term.
family tax benefits program represents the third largest single area of federal The May budget will set the tone for this government’s term in office because it will be an example of how they intend to fix the budget crisis they were elected to solve. Bad policy like the PPL scheme and the deficit levy undermines both the efficacy and the public case for good policy such as changes to family benefits. It’s important that the government gets it right the first time.
government spending. As it currently stands, a couple family
with two children aged 14 and 10 with a combined taxable income of $100,000 per year
receives $2,377 a year in tax-free family payments. If that income is earned
primarily by one person, that amount becomes $3,127 as a result, which is designed to cater to the single-breadwinner family.
It’s
clear that there is room for cuts, but abolishing family tax benefit part B, or rolling part A and part B into one payment with a uniform withdrawal rate, as the Henry Review recommended, would be a better way of targeting assistance. It could also reduce low income traps for secondary earners if done correctly.
However, the case for reform in this area
is substantially weakened by the prime minister’s steely resolve, in the face
of broad-based objections, to offer a massive new paid parental leave
entitlement (PPL) to 26 weeks of replacement wages.
The PPL scheme has a $75,000 cap, but it’s
only a cap on the amount someone can receive – people earning above $150,000
are still eligible for the scheme. This is excessively generous, and its
generosity is only compounded by the fact that eligibility is assessed on
individual income instead of combined income. The proposal to restrict family
benefits would see an even starker and more untenable difference emerge between
family benefits and the proposed PPL scheme.
It's true that believing in promises made at an election is
rather like believing in the tooth fairy. Nevertheless, it’s disappointing that "no changes to pensions" is an election promise worth keeping, but "no new
taxes" is not. The proposed deficit levy, temporary or not, would simply be an
acknowledgement that the government lacks the will to address the causes of the
growing deficit.
Cutting assistance to comfortably well-off
(if not necessarily wealthy) families is justifiable on the grounds of trimming
fiscal fat and reducing entitlements – but to impose a new tax on these same
families while simultaneously allowing them to access an incredibly generous
paid parental leave scheme is contradictory.
Somewhere in this morass of rhetoric and
policy proposals is this truth: if people are going to have to make do with
receiving less from the government, then governments are also going to have to
make do with taking less from the taxpayer.
This is especially so when the proposal in
question rests on unsteady philosophical foundations. Taking a broader view of
the deficit levy suggests the policy is not really about the deficit – it’s
about raising extra money so the government can preserve its absurd commitment to
the paid parental leave scheme and its ruling out of changes to pensions in
their current term.
The May budget will set the tone for this
government’s term in office because it will be an example of how they intend to
fix the budget crisis they were elected to solve. Bad policy like the PPL scheme and the deficit levy undermines both the efficacy and the
public case for good policy such as changes to family benefits. It’s important
that the government gets it right the first time.