Coalition catches a bout of fiscal madness

I've been out of touch with the news this week so yesterday I took the opportunity to catch up. And boy had I missed out on some excitement.

Firstly, the big news in Sydney is the very public stoush between the Waterhouse family and Singo. I admit I found myself in hysterics at reports of the verbal slanging match that occurred at the NSW Racing inquiry. So much so that I was struggling to follow the facts of the case, other than it seemed to involve a lot of beer drinking and a few poorly timed phone calls. Singo also seemed to have saved himself $100,000 avoiding backing a loser (no wonder he's been so upset).

Questionable (but not surprising) that it should have been the Tele's major news story but entertaining nonetheless. And that's where it should have ended.

But then we get reports that the NSW Government is prepared to consider legislation to compel witnesses to attend NSW racing inquiries. Things must be very slow for the NSW Government if they need to be worrying about legislation to compel ex-footballers to attend inquiries to confirm for the record that they can't quite recall what they said when they were on the booze.

Things then got even weirder as I went on to read that there had been a public stoush between our Federal politicians (who definitely have better things to do) over the use of the word 'calibre'. I don't have much time for parliamentary debate over word definitions but it did focus my attention on Tony Abbott's parental leave scheme.

Now at this point I have to admit I'd only ever been vaguely aware of this policy previously. Mainly because I figured it was one of those 'non-core promises' that would be quietly ditched once Tony had proved to the nation that he 'gets it'. But, as Government spending is very dear to the heart of superannuation investors around the country, I thought I should take a look.

And imagine my surprise when I realised that the Coalition appears to have gone stark raving, fiscally, mad.

This isn't about the merits or otherwise of parental leave. Let's stick to the financials and run the numbers.

As I understand it, someone earning $150,000 who takes six months off after a baby, gets $75,000. If they take three months off they get $37,500. But someone earning $50,000 gets $12,500 or $25,000, depending on how much time they take off work.

Basically, the more you earn and the longer you take off work, the more cash you get.

In an era where it feels the superannuation system is being wound back monthly, this seems an astonishing way to spend the money saved by slashing contributions caps. Usually the $150,000 crowd get means tested out of benefits, not means tested into more and more of them. I found myself agreeing with Julia Gillard who said it's 'not how we provide assistance in Australia'.

Now I understand the bit about it being good for small business. Anytime you put a levy on big business to pay for something that benefits small business it's good for small business. But I can only guess that the reason Liberal politicians are starting to make noise is that its dawned on them that the maths of the policy are a gigantic 'oops'.

Not only have they gotten the maths backwards but the details of the policy will open up a Pandora's box. How are they going to prevent family businesses giving family members massive pay rises prior to going on maternity leave? What about someone who starts a job on $150,000pa, goes on maternity leave the following month, and then goes back and quits after six months is up? They'd have received $12,500 salary and $75,000 parental leave.

$75,000 also seems like an astonishing amount for a one-off Government hand out. A couple on the pension get about $30,000 in a year and those on unemployment benefits get even less. Perhaps Tony's next move will be to cut pensions and make payments of $500,000 available to those earning a million dollars annually?

This parental leave policy could become Tony Abbott's mining tax. Let's hope someone in the Coalition comes to their senses before he has to scrap the superannuation system completely to afford it.

 

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