Taxing times for big business as Abbott strives to be lesser of two evils

HIS paid parental leave scheme slugs big business, but that doesn't mean it isn't good policy.

BIG business faces a rather unenviable choice at this year's federal election. It can throw its support behind a government that has introduced the Fair Work Act, stifling flexibility in the workplace, with long-term consequences for business profits.

Or it can support an opposition that wants to bring back Australian workplace agreements and change unfair dismissal laws, both of which the business community favours, but also intends to introduce a $2.7bn, great big new tax (familiar words) on big business by way of a 1.7 per cent levy on company income above $5m for the nation's 3200 largest companies to implement paid parental leave.

While yesterday the complaints from the business community about Tony Abbott's new scheme couldn't have been louder, with every business association raising concerns, in practical terms the next election is a choice between two offerings.

Like it or not, business will have to decide which party is the lesser evil when it comes to the impost  on business.

So how did Abbott get converted to paid maternity leave, and what are the merits and demerits of his scheme?

John Maynard Keynes once said: "When the facts change, I change my mind, what do you do?"

Abbott paraphrased those words on the ABC's Lateline on Monday night, when he was trying to explain why he had changed his mind on the need to support a generous, universal, paid parental leave scheme.

Don't forget that in 2002 Abbott said paid maternity leave would be introduced over the Howard government's "dead body", but when he released his policy ideas book Battlelines last year, he had shifted ground to broadly favour a paid parental leave scheme.

Yesterday's announcement put some flesh on the bones of what it might look like.

The scheme would apply to all working men and women, giving them six months full-salary payment (capped at $150,00 a year, meaning a maximum six-month payment of $75,000).

It is hard to escape the conclusion that Abbott might have gone for such a generous paid parental-leave scheme because he has one eye to internal polling, showing he has a problem with women voters, but that might be too cynical.

Big-picture change needs politicians prepared to legislate for it and do so without fear or favour.

This scheme would be one of the biggest advances in women's rights in this country's history (even though the scheme applies equally between the sexes, no doubt women would take it up far more frequently).

But it does deliberately pick favourites: the Liberals Party's traditional small-business constituency will benefit from the scheme without having to pay for it.

The losers are the country's 3200 biggest businesses, but I doubt too many tears will be shed for them having to pay an additional 1.7 per cent in taxes.

The most comparable big-picture change affecting business, albeit on a much grander scale, was Paul Keating legislating for compulsory superannuation.

At the time, the business community complained loudly (sound familiar) that it would destroy Australia's competitiveness, yet almost two decades later, after the longest economic boom in the nation's history, and because of compulsory super, Australia is better placed than most advanced economies to deal with the challenges of an ageing population.

The take-out is that doom-and-gloom predictions by vested interests that will pay for Abbott's scheme don't necessarily mean their concerns are fair, accurate or will be proven to be correct.

Few people will worry, for example, that BHP's 2009 financial year net profit of $7.14 billion will be reduced to just $7.02bn (assuming it didn't make savings by abolishing its existing generous voluntary super schemes).

And I doubt it will lead the mining giant to pack up and take its business elsewhere.

But some of the not-so-big Australians might, and that is the unknown in Abbott's proposed scheme.

The other unknown is the extent to which the levy will be sufficient to cover the costs of the scheme.

Company profits fluctuate with business conditions and, therefore, in tough times it is possible the taxpayer would need to top up the levy.

The Liberal Party is the party of business and Abbott is a social conservative leader.

Funnily enough, his paid parental leave scheme goes against both these facts: it slugs big business and encourages women to stay in the workforce, which means they are less likely to be engaged in traditional, stay-at-home activities.

But that doesn't mean it isn't good policy.

The man who said there should be fewer abortions, railed against the introduction of abortion pill RU486, implied that women should be doing the family ironing and suggested women should not give up their virginity lightly, is now proposing to do more for working women than any other modern politician has done in a generation.

Who said politics would be predictable with Abbott as Liberal leader?