Business big and small see red over the Greens’ baby pay scheme

Small business groups have criticised the Greens’ proposed paid parental leave policy, saying even though it taxes big business it will increase regulatory burdens and have flow-on effects for SMEs.

The Greens have released a new paid parental leave scheme, which effectively gives support to the Coalition’s controversial policy.

Big business could bear the brunt of the costs after the next election, as under the Greens’ policy, primary carers on salaries of up to $100,000 will receive 26 weeks of pay at their full wage. Under the Coalition’s proposal, people on salaries of up to $150,000 would receive full pay.

Both schemes have been criticised for being costly, with a 1.5 percentage point increase in company tax on businesses with annual taxable revenue of more than $5 million. The Greens 1.5% levy would only apply to revenue over $5 million, but the Coalition’s policy has no revenue cap.

The Greens’ proposal was estimated by the Parliamentary Budget Office to cost taxpayers $1.9 billion on top of the levy.

The Council of Small Businesses of Australia, the Australian Chamber of Commerce and Industry and the Australian Industry Group have called on both parties to re-think their approach to paid parental leave.

COSBOA executive director Peter Strong told SmartCompany he’s concerned business will still be the paymaster.

“On the face of it, it looks like a benefit to small businesses as big business will be paying for the parental leave of our employees, but in our experience is it doesn’t work like that, the costs are still passed on,” he says.

Strong says there’s a chance there will be extra compliance regulations “coming out our ears” and says the Greens should release a regulation impact statement alongside their policy.

ACCI director of employment, education and training Jenny Lambert told SmartCompany the chamber of commerce agreed with the underlying principle of the policy, to encourage greater female participation in the workforce, but said taxing business is not the right solution.

“Any policies which encourage female participation are worth considering – you need to keep highly skilled females in the workforce,” she says.

“But there are limitations to what you can do and we have been concerned about the cost of the scheme and the fact there would be an additional tax on companies, and we don’t believe this is the way to deal with it.”

Lambert says with any tax there are flow-on effects to small business.

“Large businesses have small business suppliers and there are flow-on effects through the entire economy. Just because it taxes some parts, doesn’t mean others won’t be impacted.

“The larger businesses often already have their own generous paid parental leave schemes and with this scheme many would not continue to invest in their own additional schemes because they’ll be paying more tax.”

In ACCI’s submission to the government’s review of the paid parental leave scheme, a survey of 17,000 businesses found 84.3% thought the government “should not require employers to be the paymaster for the PPL”.

The government’s current model sees taxpayers pay the primary carer the minimum wage, now $622 a week for 18 weeks, without superannuation contributions.

Ai Group opposes both the Greens and the Coalition’s proposals and chief executive Innes Willox says in a statement the current system is “working well”.

“The Australian Greens’ paid parental leave policy is unaffordable and would be unfair to the businesses saddled with a hefty levy to fund it.

Willox says the Green’s scheme would cost 10 times more than Labor’s policy and some of the largest employers could end up paying an extra $100 million a year.

“For some companies, this levy could lead to job losses. No doubt in some cases companies required to pay the 1.5% levy would pass on the cost to consumers through higher prices, but others in import-competing industries would not have this option, and jobs would suffer,” he says.

If the Coalition wins the election, Greens leader Senator Christine Milne said she would negotiate with Tony Abbott.

“We will negotiate with either side because we think Tony Abbott’s scheme is too generous and we think the government’s scheme doesn’t go anywhere near far enough,” Milne told The Australian Financial Review.