Paid Parental Leave (PPL)

[drsmith]

The Coalition has finally released the detail of its generous PPL scheme including the start up date of July 1 2015.

http://lpaweb-static.s3.amazonaws.com/The Coalition’s Policy for Paid Parental Leave.pdf

The costing detail (or more accurately, lack of it) is on page 9. As expected it will be funded by a 1.5% levy on corporate profits for businesses earning over $5m. This levy also coincides with a 1.5% cut to the corporate tax rate to 28.5%. The baby bonus will be axed (ABC radio) and double dipping with existing employer and Labor's scheme will also be removed.

The Coalition has confirmed that commonwealth employees' existing provisions would be abolished, potentially saving millions by stopping federal and state public servants from "double dipping" on maternity leave, to offset the cost of its scheme.

At the moment, public servants can access an average of 14 weeks, and in some cases up to 18 weeks, of paid maternity leave.

They can also receive payments under the Labor government's existing maternity leave scheme which entitles them to another 18 weeks' pay at the minimum wage, providing an extra $11,200.

http://www.theaustralian.com.au/nat...r-coalition-plan/story-fn9qr68y-1226699538231

One obvious group of losers initially at least will be shareholders that receive franked dividends. The franking rate will obviously reduce with the corporate rate, but corporate profit growth with the associated company tax cut will be largely offset by the new levy.

 

[craft]

Re: Paid parental leave

The Coalition has finally released the detail of its generous PPL scheme including the start up date of July 1 2015.

http://lpaweb-static.s3.amazonaws.com/The Coalition’s Policy for Paid Parental Leave.pdf

The costing detail (or more accurately, lack of it) is on page 9. As expected it will be funded by a 1.5% levy on corporate profits for businesses earning over $5m. This levy also coincides with a 1.5% cut to the corporate tax rate to 28.5%. The baby bonus will be axed (ABC radio) and double dipping with existing employer and Labor's scheme will also be removed.



http://www.theaustralian.com.au/nat...r-coalition-plan/story-fn9qr68y-1226699538231

One obvious group of losers initially at least will be shareholders that receive franked dividends. The franking rate will obviously reduce with the corporate rate, but corporate profit growth with the associated company tax cut will be largely offset by the new levy.

A lot of the companies that will pay the levy will already have had substantial maternity schemes in place to retain their good staff. So to some extent the levy will be offset by lower employment costs as the private maternity schemes are axed.

Its seems really odd LNP policy for them to get involved with gov’t delivery of what used to be delivered privately at the top end. What happened to smaller government? Seems a weird way to different yourself on the more logical government agenda of minimum maternity leave safety net.

Confused – but then again I don’t understand politician logic – ANY OF THEM.

 

[sydboy007]

Re: Paid parental leave

I look forward to seeing how they plan to afford the costs of this policy, along with the corporate tax cuts.

Lot so tax cuts, lots of new spending, so far not much to make me feel they can take on the rentier classes to cut back on spending that does little to help the economy.

 

[ROE]

Re: Paid parental leave

I look forward to seeing how they plan to afford the costs of this policy, along with the corporate tax cuts.

Lot so tax cuts, lots of new spending, so far not much to make me feel they can take on the rentier classes to cut back on spending that does little to help the economy.

Get rid of negative gearing, that 20bn ...that can fund a lot of stuff
Why we give tax offset to people whose sole business is losing money

 

[tech/a]

Re: Paid parental leave

Get rid of negative gearing, that 20bn ...that can fund a lot of stuff
Why we give tax offset to people whose sole business is losing money

Well that's all well and good.
But you wont be able to find a rental property for love nor money.
You won't see an investor for miles.
Those that can afford to positively gear will be in the position
Of naming their price due to shortage of stock.

 

[banco]

Re: Paid parental leave

If Rudd had rolled out a scheme as expensive as this I can imagine the howls of outrage on ASF.

 

[FxTrader]

Re: Paid parental leave

Get rid of negative gearing, that 20bn ...that can fund a lot of stuff
Why we give tax offset to people whose sole business is losing money

Totally abolishing tax offsets for negative gearing will just not happen and the cost last year was 13bn. It should be limited but it's to hard politically now. BTW, assets purchased to generate income (rental income or otherwise) are entitled to a tax deduction for interest expense including shares purchased using a margin loan facility. If the intent of any investment scheme is to lose money to generate tax offsets it's illegal.

As for the paid parental leave scheme, it's simply ridiculous largess and creates a massive new entitlement at a time when such a scheme is least affordable. Given Liberal rhetoric on wasteful spending this move can only be seen as just another indefensible vote buying policy.

 

[drsmith]

Re: Paid parental leave

Totally abolishing tax offsets for negative gearing will just not happen and the cost last year was 13bn. It should be limited but it's to hard politically now. BTW, assets purchased to generate income (rental income or otherwise) are entitled to a tax deduction for interest expense including shares purchased using a margin loan facility. If the intent of any investment scheme is to lose money to generate tax offsets it's illegal.

Another topic I know but to me it's the negative element from unrelated income (wages) that should be abolished. It will always be politically difficult but the greatest practical difficulty is how to phase it in to avoid the problems Paul Keating had in removing it in the 80's. The current low interest rates help in that regard and its removal should be accompanied by broader reforms to other property taxes such as state based land taxes and property transaction stamp duties.

I've heard very little positive commentary about TA's PPL scheme and the lack of costing detail in the Libs policy statement is not encouraging. It's just more middle class welfare in my view but in an economic context, I would like to see more detail.

 

[Julia]

Re: Paid parental leave

If Rudd had rolled out a scheme as expensive as this I can imagine the howls of outrage on ASF.

If you'd been reading past comments on Mr Abbott's PPL, you would be aware that it has received complete condemnation across ASF members who have been motivated to discuss it.
I've not heard a single positive comment about it, either here or in the broader community.

To add to the scheme's unacceptability, there is this comment from "Business Spectator" today:

Let me explain how the funding plan works. First there are a series of offsets where the new plan replaces the old schemes and cuts out double dipping. These are genuine savings.

Then Abbott and Hockey impose a 1.5 per cent levy on taxable company incomes of $5 million or more, which will affect about 3200 companies who represent the bulk of company tax raised.

But the levy will be offset by a 1.5 per cent fall in company tax so profit-wise there is no effect on large corporations (and small companies win because they do not pay the levy).

But then comes Tony and Joe’s sleight of hand attack on retirees. Many big corporate taxpayers, like banks, pay around three quarters of their profits out in dividends and there is constant pressure from retirees for companies to payout more, especially now interest rates on bank deposits have been reduced. Most dividends (but not all) are fully franked because they come out of tax paid profits.

So a superannuation fund obtains a franking credit equal to the tax paid by the company. Those franking credits are currently calculated at a tax rate of 30 cents in the dollar. When the Abbott-Hockey plan is introduced the franking credits will be calculated on the basis of 28.5 cent in the dollar. They are worth less and so the retirees and those saving to pay for retirement cop the bill because Abbott and Hockey have simply swapped a tax for a levy aiming to lower the franking credit.

It is a clear attack on the older generation to benefit the up and coming generation.

Now most of you know my approximate age so you will realise that I am biased because I am one of those that the Coalition are attacking. And you can also argue that I should be happy to fund the next generation and to improve the overall productivity of the nation’s work force.

But those struggling retirees and those saving to retire will be horrified that not only are the older generation helping those with mortgages via lower interest rates but they are now seeing their franking credits reduced to help the younger generation.

Read more: http://www.businessspectator.com.au...-pay-paid-parental-leave-scheme#ixzz2cPdQqwWi

It was also not a good look that Joe Hockey, when asked for some detail today, was clearly unable to provide this.
Not being across your own policy at this stage is pretty bad.

 

[banco]

Re: Paid parental leave

Baby boomers well past child rearing age aren't big fans? I'm shocked.

 

[Julia]

Re: Paid parental leave

Baby boomers well past child rearing age aren't big fans? I'm shocked.

What a silly comment. Are you going to remark similarly about all the economists who have condemned the policy? Of course not. Objective assessment of a policy doesn't have to have anything to do with any personal effect or otherwise.

An aspect I've not heard raised is the women who are already stay at home mothers. With the abolition of the baby bonus, even if these women have several children, it doesn't look as if they receive anything.

 

[sptrawler]

Re: Paid parental leave

Baby boomers well past child rearing age aren't big fans? I'm shocked.

So if Rudd rolled it out there would be outrage by ASF members.

However because ASF members are baby boomers, they don't care about it.

Yep pretty well sums up your take on the issue, thanks for the contribution.
Maybe you should put yourself up for pre selection, plenty of space for intellectuals like yourself, in Labor.

 

[banco]

Re: Paid parental leave

So if Rudd rolled it out there would be outrage by ASF members.

However because ASF members are baby boomers, they don't care about it.

Yep pretty well sums up your take on the issue, thanks for the contribution.
Maybe you should put yourself up for pre selection, plenty of space for intellectuals like yourself, in Labor.

I don't think it's that complicated. If Rudd rolled it out the opposition would be a lot stronger on here and baby boomers are more likely to dislike the policy than the younger generations because they don't stand to personally benefit.

 

[sptrawler]

Re: Paid parental leave

I don't think it's that complicated. If Rudd rolled it out the opposition would be a lot stronger on here and baby boomers are more likely to dislike the policy than the younger generations because they don't stand to personally benefit.

Are you commenting on your parents? or baby boomers generaly?

 

[sydboy007]

Re: Paid parental leave

Well that's all well and good.
But you wont be able to find a rental property for love nor money.
You won't see an investor for miles.
Those that can afford to positively gear will be in the position
Of naming their price due to shortage of stock.

This chart shows that the property investors add little to nothing in terms of housing. If the landords sell either they sell to another landord or they sell to a renter. How will making changes to NG affect the level of rental accomodation?

I have no issue with NG on the formation of new assets, so long as it's quarantined against the income of that asset.

Since the halving of CGT IPs have had NG totalling around $65B in inflation adjusted terms.

I doubt any changes to NG will occur until we're well on our way to being as stuffed as the Greeks. Every rentier out there has seen how effective media campaigns are in forcing the Government to back down on any changes.

Whn you're talking hundreds of millions, or billions, a $20 million ad campaign can have a great ROI.

This is a signature policy from Tony. I hate to think what other grand ideas he will want to implement if he wins the election.

 

[drsmith]

Re: Paid parental leave

In the absence of sufficient costing detail from the Coalition, the media is left to try and work out the numbers themselves.

The Australian understands the $5.5bn cost of the scheme will be covered by less than $2.5bn a year from the levy, roughly $2bn in savings from replacing Labor's current parental leave scheme and about $1bn in further savings.

The $1bn includes contributions from state governments as well as savings on family tax benefits and income tax revenue on the parental leave payments.

I suspect the state government contribution will revolve around the federal government recovering the cost of their present state public service schemes that the federal scheme is replacing. If that's the case, there would no net cost to state governments, but the negotiations could still be testy.

The problem with the above numbers is that there's still a $600m shortfall between the $5.5bn cost noted above and the Coalition's latest costing of $6.1bn in their formal announcement.

http://www.theaustralian.com.au/nat...t-libs-baby-bill/story-fn9qr68y-1226700207353

 

[sptrawler]

Re: Paid parental leave

In the absence of sufficient costing detail from the Coalition, the media is left to try and work out the numbers themselves.



I suspect the state government contribution will revolve around the federal government recovering the cost of their present state public service schemes that the federal scheme is replacing. If that's the case, there would no net cost to state governments, but the negotiations could still be testy.

The problem with the above numbers is that there's still a $600m shortfall between the $5.5bn cost noted above and the Coalition's latest costing of $6.1bn in their formal announcement.

http://www.theaustralian.com.au/nat...t-libs-baby-bill/story-fn9qr68y-1226700207353

I can't help but wonder if Abbott will dump it, saying that he is bowing to public pressure. This would then blow a hole in Labors argument and help Abbotts economic image.

 

[drsmith]

Re: Paid parental leave

I can't help but wonder if Abbott will dump it, saying that he is bowing to public pressure. This would then blow a hole in Labors argument and help Abbotts economic image.

He won't dump it, at least not this side of the election.

When in office and there's the usual discovery that the budget is in in a worse position than previously advised, that will be another matter. His direct action climate policies will hopefully also be dispensable in the same sense. It wouldn't surprise me if they keep the mining tax too.

 

[MrBurns]

Re: Paid parental leave

He won't dump it, at least not this side of the election.

When in office and there's the usual discovery that the budget is in in a worse position than previously advised, that will be another matter. His direct action climate policies will hopefully also be dispensable in the same sense. It wouldn't surprise me if they keep the mining tax too.

After the election the gloves are off but right now the Libs have to play the game, it seems being truly honest isn't an option any more. The ends, however, justify the means,

 

[McLovin]

Re: Paid parental leave

What a disgraceful bit of policy. I'm not sure how the Liberals can keep a straight face while they talk about being the party of business. All the key elements of policy formation are there; a thought bubble when Tony was in the bath, followed by a bit of Excel spreadsheet work to find out how it will be "funded", along with the usual compensation so no one is actually out of pocket. In this case it's a round robin tax hike with an equal tax cut. And all this in a supposed "budget emergency".

Bah, I've been cycling through Spain and France for the last month, clearly I came back to soon. To quote Greenday, wake me up when September ends.

Oh and I agree on scrapping NG too. Anyone who makes an investment based on a tax writeoff isn't an "investor" (although I did pretty well with my little bet on MMS a few weeks ago). There's three countries in the world with NG, all three also have some of the most unaffordable housing in the world.