Given 2010 is a federal election year, it should come as no surprise that the leaders of both major political parties are anxious to woo votes from potentially disaffected portions of the electorate. As a result, we now have two very different maternity leave proposals on offer:

Labor’s idea – a taxpayer funded, means tested scheme that pays new mothers the minimum wage for six months; or Tony Abbott’s alternative (as it’s unclear whether the Liberal Party supports it!) – levy ‘big businesses’ approximately $2.7bn per annum and pay formerly employed mothers their full wage for six months. Of these two policies, Tony Abbott’s
is clearly inferior for a number of important reasons.

First, only weeks ago the new Liberal leader promised that if elected he would introduce no new taxes to fund any spending promises. Unfortunately, for not the first time an Australian politician is now trying to argue that a ‘levy’ is not a tax. This piece of sophistry is a blatant lie that most people would see through immediately.

Second, hypothecated taxes (or levies) are rarely a good idea. Such a tax occurs where money is raised from a specific activity or group, and then used to fund a sometimes related programe. Examples include the Medicare Levy (which doesn’t actually come near actual expenditure on healthcare) or the use of state gaming revenue to fund anti-gambling education programes (when most of the cash simply disappears into general revenue). In Mr Abbott’s paid maternity leave proposal, big businesses alone are to be held responsible for funding, an idea from which all society is supposed to benefit. What he isn’t saying, of course, is that these same companies will seek to pass on the annual $2.7bn cost to consumers in the form of higher prices for goods and services.

Third, just about every other benefit we pay to families is quite rightly means tested. Whether one looks at the baby bonus, the dole, rental assistance, or whatever, such payments are rarely made to people earning above $150,000 per annum. In contrast, the Abbott maternity leave system would pay more money to high income earners, and less to those lower down the scale – hardly saleable to an electorate often focused on social justice issues.

Finally, many larger companies already provide benefits to working mums in the form of corporate childcare, extended maternity leave and in some cases paternity leave. Such firms do this because they want to retain employees they deem valuable for the future. It seems counter-intuitive, therefore, to force such enlightened employers to double up on maternity leave support.

Tony Abbott knows that he is unlikely to become Prime Minister as a result of the 2010 federal election. Given this, his policies have to be taken with a grain of salt due to the low likelihood they’ll ever be implemented. For a politician who’s been roundly criticising the Government for its unrestrained spending, however, $2.7bn annually impost on big business seems rather hypocritical.

Tom Elliott
MME Capital: 03 96014515
www.mmecapital.com.au