A harbinger of conservative battles to come

August 23, 2013

By David Hetherington

In the era of small target campaigning, it’s rare for Opposition Leaders to have a big signature policy.

For one thing, they’re all too conscious of the fate of Fightback and Medicare Gold. For another, it’s just easier to campaign on bad government policy than to risk scrutiny of detailed, positive policies developed without the resources available to incumbents.

Yet in 2013, in an Opposition campaign in which every other imaginable risk has been neutralised, Tony Abbott has insisted on retaining a signature policy which risks more critical scrutiny than all his other positions combined.

That’s why the Opposition’s paid parental leave (PPL) scheme is fascinating to election tragics: not principally for its policy detail, but because it adds to an emerging picture about the contradictions of Tony Abbott’s leadership and in his brand of conservatism.

Much has been made of the fiscal impacts of the scheme, but its policy objectives and philosophical foundations are equally revealing.

Of course, the most debated contradiction sits squarely within the wider narrative of this campaign: the battle over costings. How much will it cost and who pays for it? If, as Abbott claimed last week, we are facing a “budget emergency”, can we afford a new $5.5b scheme, particularly when we have a workable, but less generous, PPL scheme in place already?

The answer leads immediately to the second contradiction – a 1.5 per cent levy on big business to pay for the scheme while concurrently cutting corporate tax rates.

Confused? We’re only just starting. Abbott conceded this week the levy would only pay for half the scheme, with the balance promised to come from the cessation of the PPL schemes run by Labor and the states. The credibility of this can only be tested with the release of the Coalition’s full costings the day before the election.

There has been a brief kerfuffle about the burden of the scheme falling on shareholders in lost franking tax credits but, in Abbott’s defence, a business levy was always going to be paid for by the shareholders of those businesses. There is longstanding precedent for treating a levy in this way.

More interesting paradoxes emerge from the stated objectives of the policy. Mr Abbott has claimed it will boost the fertility rate, workforce participation and productivity. Yet while it is true that financial support makes it easier for working women to have more babies, it is not clear how participation or productivity will be improved by the policy.

The key participation challenge is to get women back in the workforce after child-raising – rather than before children – which the policy does nothing to address. If anything, its generosity might defer women’s return to work by giving them more savings to stay at home with the baby.

And the productivity benefits claimed in the Coalition’s policy document are directly contingent on higher participation. The experts’ consensus is that PPL will not lift productivity without matching improvements in childcare accessibility and affordability.

In effect, the Coalition’s PPL should be seen less as a participation policy than a much-needed social insurance scheme. Social insurance provides financial support for citizens at important life junctures, and there is no doubt the care of young babies falls in this category.

This is the strongest argument for the increased generosity of the Coalition’s scheme – that we should be supporting mothers as best we can during a challenging and financially draining period.

By contrast, there is no strong argument for making PPL highly regressive, so that it pays high-income women far more than low-income ones as Abbott’s scheme does. It is almost unprecedented for a social insurance scheme to distribute public money in a way that increases inequality by benefiting the wealthy at the cost of the poor. Imagine if Medicare or the pension did this.

Finally, the PPL scheme tells us much about Tony Abbott’s personal political philosophy. In his 2009 book Battlelines, as in his campaign stance on marriage equality, Abbott makes clear that he is a social conservative who believes in government’s right to intervene to sustain traditional institutions. The PPL scheme shows he is willing to use the public purse in these efforts, in this case to support motherhood.

In a real sense, that makes him a ‘big government’ interventionist. And it sets him at odds with many in the conservative movement who believe fervently in ‘small government’ – the right-wing think tanks, the fiscal conservatives, the IR hardliners. These groups despair of the fiscal and policy contradictions inherent in Abbott’s PPL scheme.

Should Abbott win on September 7, as seems likely, these frustrations will be harbingers of the battles ahead between Abbott and his conservative base – on industrial relations, on the GST, and on ‘big government’ schemes like Gonski and the NDIS.

The paradoxes of this prime ministerial aspirant could make for a rollercoaster three years ahead.