The Coalition’s PPL scheme: budget drain or revenue raiser?

Parliament house flag post
Silhouette of mother pushing baby cart with family

The Coalition’s PPL scheme: budget drain or revenue raiser?

Posted 29/04/2014 by Luke Buckmaster

One of the most controversial features of the Coalition Government’s proposed Paid Parental Leave (PPL) scheme is its significantly greater cost compared with the current scheme. The more generous proposed scheme is expected to cost $5.7 billion per year when up and running in 2016-17, while the current scheme will cost $2 billion in that year. Media reports suggest that this has led some Coalition members of parliament to urge the Prime Minister to either abandon or ‘scale down’ his proposed scheme.

However, it is important to note that according to the Coalition’s 2013 election costings the scheme is expected to make money by its second year—that is, it will raise revenue of $1.7 billion in 2016-17. 

As can be seen from the table below (adapted from the costing document), the Coalition indicated that in 2016-17 the cost of its scheme would be more than offset by the following:

  • $2.0 billion from the existing PPL scheme, which would no longer have to be paid
  • $557.0 million from Commonwealth, state and territory government PPL schemes, which would no longer be paid
  • $665.0 million from ‘automatic adjustments to government spending and revenue’ (for example, taxes collected on the new higher PPL scheme payments; reduced cost of Family Tax Benefit with fewer families eligible due to receipt of higher PPL payments) and
  • $3.8 billion from a levy of 1.5% on companies with more than $5 million in taxable income.

Budget impact of the Coalition’s Paid Parental Leave Scheme Package

 

2014-15

$m

2015-16

$m

2016-17

$m

Total

$m

Gross cost of the Coalition PPL

 

-10

-4,108

-5,684

-9,802

Less

Existing government scheme

 

-

1,653

2,012

3,665

Existing Commonwealth and state public sector schemes

 

-

557

672

1,229

Automatic adjustments to government spending and revenue

 

-

665

946

1,611

Remaining Cost

-10

 

-1,233

-2,054

-3,297

Levy of 1.5% on company taxable income above $5 million

300

300

3,800

4,400

Net Budget impact – Coalition’s Paid Parental Leave Scheme Package

290

-933

1,746

1,103

Source: Fiscal budget impact of Federal Coalition policies, September 2013

Thus while it often appears from media reports that abandoning (or substantially reducing the generosity of) the Coalition’s PPL proposal could save billions of dollars, the Coalition’s costings suggest that this is unlikely to be the case.

If the Government were to abandon its proposed PPL scheme, it would continue to bear the $2 billion annual cost for the existing PPL scheme and it would not achieve the $1.5 billion in offsets from existing public sector employer schemes and other adjustments to spending and revenue. The value of these offsets would also be reduced if the Government were to reduce the generosity of its proposed scheme rather than abandon it altogether. If the proposed scheme is not implemented, it is unlikely the Government will implement the 1.5% business levy, given it is specifically intended to help pay for its PPL scheme.

As it stands, it is difficult to see the Government abandoning a policy that will actually produce budget savings.

Comments

  • 15/05/2014 11:35 AM
    Luke Buckmaster said:

    Hi Anonymous, It would seem logical that the value of offsets will now be reduced but we don't have access to the information that would show us by how much.

  • 8/05/2014 11:18 AM
    Anonymous said:

    You say that the value of the offsets would be reduced if the Government were to reduce the generosityy of its proposed scheme. Is that the case now, given that the amount does seem to have been reduced to $100k? Would the Government still make money from the policy in the second year?


Thank you for your comment. If it does not require moderation, it will appear shortly.
Facebook LinkedIn Twitter Add | Email Print

FlagPost

Flagpost is a blog on current issues of interest to members of the Australian Parliament


Parliamentary Library Logo showing Information Analysis & Advice

Archive

Syndication

Tagcloud

refugees asylum immigration Parliament elections Australian foreign policy climate change social security women welfare reform Indigenous Australians Australian Defence Force welfare policy school education higher education private health insurance Taxation health financing emissions trading Senate Australian Bureau of Statistics employment people trafficking statistics Middle East illicit drugs gambling health reform federal election 2010 income management Medicare disability Sport United Nations Asia constitution transport Australian Public Service politics criminal law Afghanistan health forced labour aid Australian Sports Anti-Doping Agency World Anti-Doping Agency United States federal budget Industrial Relations Carbon Pricing Mechanism dental health voting law enforcement electoral reform public service reform OECD Australian Electoral Commission WADA child protection environment poker machines Australia in the Asian Century steroids National Disability Insurance Scheme detention aged care 43rd Parliament slavery health system domestic violence parliamentary procedure International Women's Day accountability defence capability multiculturalism ASADA Australian Federal Police Fair Work Act governance labour force people smuggling debt international relations New Zealand food Australian Crime Commission pharmaceutical benefits scheme crime China regulation leadership Census election results UK Parliament Papua New Guinea banking corruption pensions children's health Aviation federal election 2013 foreign debt gross debt net debt Senators and Members ALP Newstart Parenting Payment Youth Allowance sea farers human rights violence against women vocational education and training military history by-election political parties High Court skilled migration mental health Federal Court terrorist groups science social media Higher Education Loan Program HECS federal state relations youth paid parental leave same sex relationships coal seam gas customs planning doping health risks Gonski Review of Funding for Schooling sex slavery Special Rapporteur Northern Territory Emergency Response social policy election timetable Indigenous royal commission Productivity United Kingdom firearms public policy Population ADRV terrorism transparency research and development welfare ASIO intelligence community Australian Security Intelligence Organisation carbon tax mining employer employee renewable energy regional unemployment fishing European Union family assistance United Nations Security Council Australian economy forestry food labelling Drugs welfare systems Indonesia children Constitutional reform local government codes of conduct terrorist financing homelessness Parliamentary remuneration money laundering Trafficking in Persons Report energy social inclusion paternalism sitting days electoral divisions Foreign affairs Southeast Asia administrative law universities TAFE Ireland citizenship asylum seekers early childhood education Canada Financial sector national security fuel disability employment Tasmania integrity standards NATO Australian Secret Intelligence Service sexual abuse World Trade Organization Australia public health housing affordability bulk billing water health policy Governor-General US economy trade unions export liquefied natural gas foreign bribery question time speaker superannuation public housing expertise climate Intergovernmental Panel on Climate Change Department of Agriculture Fisheries and Forestry Pacific Islands reserved seats new psychoactive substances synthetic drugs UNODC carbon markets animal health middle class welfare constitutional recognition of local government referendum consumer laws PISA competition policy US politics language education baby bonus Leaders of the Opposition citizen engagement policymaking Australia Greens servitude Trafficking Protocol forced marriage rural and regional alcohol entitlements ministries Hung Parliament social citizenship maritime Iran ANZUS regional students school chaplains federal budget 2011-12 salary Medicare Locals primary care Building the Education Revolution prisons police deaths in custody electoral margins electoral pendulum electoral redistribution redistribution NSW redistribution WA redistribution ACT electoral boundaries ASEAN Sustainable Development Goals Double dissolution Senators safety vehicles ODA MYEFO Pathology tertiary education Taiwan Xi Ma meeting family violence government financial advisers financial planners Financial System Inquiry Murray Inquiry China; Economic policy; Southeast Asia; Africa housing Speaker; House of Representatives; Parliament Defence High Court; Indigenous; Indigenous Australians; Native Title ACT Indigenous education Norfolk Island External Territories emissions reduction fund; climate change child care funding refugees immigration asylum procurement Indigenous health e-voting internet voting nsw state elections 44th Parliament 2015 ABS Age Pension Death penalty capital punishment execution Bali nine Bali bombings Trade EU China soft power education Fiji India Disability Support Pension Antarctica Diplomacy by-elections state and territories Bills anti-corruption fraud bribery corporate ownership whistleblower G20 economic reform innovation Members of Parliament Scottish referendum Middle East; national security; terrorism social services Criminal Code Amendment (Misrepresentation of Age to a Minor) Bill 2013 online grooming sexual assault of minors ACT Assembly smoking plain packaging tobacco cigarettes Asia; Japan; international relations Work Health and Safety Migration; asylum seekers; regional processing China; United States; international relations fiscal policy Racial Discrimination Act; social policy; human rights; indigenous Australians Foreign policy Israel Palestine asylum refugees immigration political finance donations foreign aid Economics efficiency human rights; Racial Discrimination Act employment law bullying Animal law; food copyright Australian Law Reform Commission industry peace keeping contracts workplace policies same-sex marriage disorderly conduct retirement Parliament House standing orders prime ministers First speech defence budget submarines workers Somalia GDP world heritage political engagement leave loading Trade; tariffs; safeguards; Anti-dumping public interest disclosure whistleblowing Productivity Commission limitation period cancer gene patents genetic testing suspension of standing and sessional orders live exports infant mortality honorary citizen railways disciplinary tribunals standard of proof World Health Organisation arts international students skilled graduate visas temporary employment visas apologies roads Italy national heritage NHMRC nutrition anti-dumping Rent Assistance obesity evidence law sacrament of confession US presidential election international days DFAT UN General Assembly deregulation Regulation Impact Statements small business Breaker Morant regional engagement social determinants of health abortion Members suspension workplace health and safety marine reserves hearing Victoria astronomy resources sector YMCA youth parliament Korea rebate Australian Greens presidential nomination Racial Discrimination Act political parties preselection solar hot water Financial Action Taskforce Horn of Africa peacekeeping piracy Great Barrier Reef Stronger futures political financing political education Social Inclusion Board early childhood National Quality Framework for Early Childhood Education and Care Murray-Darling Basin sanctions Norway hospitals republic President Barack Obama Presidential visits qantas counselling Korean peninsula Work Choices biosecurity hendra environmental law federalism federation preselection therapeutic goods Therapeutic Goods Administration plebiscites computer games pests suicide nuclear COAG Ministerial Councils floods ADHD stimulant medication advertising electricity extradition conscience votes poverty preventative health rural health coastal erosion Parliamentary Budget Office work-life balance

Show all
Show less
Back to top