Next week’s federal budget appears likely to contain a paid parental leave scheme, despite the Government’s claim that the financial crisis could change its budget priorities.
While the Productivity Commission has recommended providing 18 weeks of paid maternity leave, a report in The Australian has suggested the Government may use the budget to introduce a scheme with a delayed start date or a scheme that could be phased in gradually.
While the Government is likely to argue that such a scheme would boost immediate spending by mothers, businesses are likely to be worried by it. Under the Productivity Commission’s proposed scheme, business will be required to pay superannuation contributions on maternity leave payments.
But Council of Small Businesses of Australia chief executive Jaye Radisich says a universal paid maternity leave scheme would be welcomed by the business community.
“COSBOA’s policy is that we support universal paid maternity leave, even though the economy is in a poor shape at present. Whether this happens now in the downtimes or good times, it won’t make that much difference to the economy overall.
“It’s the kind of the issue that simply needs to be addressed so that we can all move forward,” she says.
While Federal Treasurer Wayne Swan has not commented on the maternity leave provision, he told ABC television yesterday that the Government will deliver election commitments, despite a sharp drop in revenue.
Economists now estimate the budget deficit may be as big as $68 billion.
“Between last year’s budget and February of this year, there has been a revenue shortfall of about $115 billion, Swan said. “I think it (the shortfall) has got substantially worse.”
The Government has delivered $52 billion in stimulus measures since the budget last year (when it announced a $21.7 billion surplus) but other stimulus measures are likely to bring the deficit to around $68 billion.
But despite revenue shortfalls and rumours that the Government may raise taxes for high-income earners, Swan said yesterday that plans for tax cuts will remain unchanged.
“We have already legislated those tax cuts. But I make this point very clearly. There are very hard choices in this budget, particularly for us to make and meet our commitment to reform the base rate of the pension,” Swan said.
“And the consequence of that will be hard choices on budget night. We will have to rearrange our priorities to make sure we can meet our commitments and also at the same time put in place a medium-term strategy to make sure that we’ve got fiscal sustainability.”
Tax cuts worth $30.8 billion over four years were announced in last year’s budget, with the second phase to begin on 1 July that will lower taxes to 38% for those earning between $80,000 and $180,000.
But while tax cuts may remain untouched, the Government could hit high-income earners in other areas. “We will have to rearrange our priorities to make sure we can meet our commitments,” Swan said.
Changes to the private health insurance rebate and taxation laws regarding holiday homes are rumoured to be on the table.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
