The Fast Lane: Beware of sneaky moves to pass on parental leave costs to small business

Tony Abbott has come up with a laudable parental leave policy if the coalition government is elected.

But the problem is how his six-month paid parental scheme will be paid for.

Abbott’s plan is for the scheme to be funded by big business through a 1.5% levy on companies with taxable incomes above $5 million.

Effectively big businesses will be cross-subsidising SMEs, which will get all the benefit of the $4.3 billion paid parental leave scheme without having to pay for it.

This makes sense because as much as small businesses want to put in place a useful parental leave scheme for their staff, a 1.5% levy would be a final nail in the coffin for many small businesses.

The problem is big businesses are already threatening to pass on the costs of the scheme directly to small business.

The Australian reports today four of the biggest businesses of all, the nation’s four major banks, are each expecting the scheme will cost them $80 million to $115 million. A cost they intend to pass on to shareholders and customers.

Not just any customers though, small business customers.

An anonymous banker told the newspaper business rates would most likely bear the brunt as the levy involved a direct transfer from big business to small business.

Business rates, he said, could rise as much as 25 basis points in the case of a full pass-on.

Small business has already expressed its concern at the impact of the scheme with Peter Strong, executive director of the Council of Small Business of Australia, warning Abbott’s paid parental leave scheme would increase red tape for business.

One of the guiding principles behind the scheme is to provide leave for small businesses as Abbott knows most SMEs would not be able to afford their own paid parental leave.

He needs to ensure the goals behind his parental leave scheme are not thwarted in the implementation by some fancy footwork on behalf of the banks and big business.