Abbott on the defensive after retreat on paid parental leave

Prime Minister Tony Abbott has reframed his election commitments on tax. AAP/Julian Smith

Tony Abbott has reluctantly lowered the cap on his signature paid parental leave scheme from $150,000 income level to $100,000 - declaring he would have preferred to stick with the original policy.

The backdown improves the chances for the scheme to get through the Senate, because it brings it into line with the Greens’ policy.

But Greens deputy leader Adam Bandt said the party was not in a position to say whether it would support the proposal.

The Greens want the scheme to be fully funded by big business and were worried there could be a shortfall, Bandt said.

He said that there might be a need to lower the threshold below $100,000 or raise the levy. The Greens would not have a scheme that was funded “by touching other areas of the budget”.

After strong Coalition backbench agitation against the controversial scheme, Abbott told a news conference that some days ago the expenditure review committee had decided to reduce the cap. This means that a woman would only be able to get up to $50,000 for six months’ leave, rather than $75,000 under the promised scheme.

But the change will save little because few eligible women will be in the $100,000-plus annual earning bracket.

Abbott said: “I would have preferred to stick absolutely with the original policy - the policy that we took to not one but two elections.

"But given the circumstances that we are in - given the budget emergency - a lot of things have to be adjusted and everyone is going to have to do his or her bit to deal with the problem we inherited.”

Abbott, who has also been on the defensive over the government’s consideration of a tax impost in the budget, dodged being drawn on the detail but continued to reframe his commitment on tax.

Before the election he promised no tax rise. Yesterday he distinguished between a permanent tax increase and a temporary one, suggesting a temporary rise would not be a broken promise. Today he said: “Over time, yes of course we want lower, simpler, fairer taxes. Over time we want better services. That’s exactly what you will get. But there do have to be difficult decisions in the short term.”

Deputy Prime Minister and Nationals leader Warren Truss told the National Press Club that the paid parental leave scheme was “very near and dear” to Abbott’s heart and the change demonstrated how far the government was going to deliver the best budget result.

Truss said most of the public comment had been on the less than 1.7% of people who earned more than $150,000. Not many, if any, of these were in his electorate.

He said there should be more attention on the benefits the scheme would bring to lower-income earners, including small business people and farmers for whom it would provide the financial opportunity to have families.

Opposition Leader Bill Shorten said that Abbott had been defending his scheme a day ago but had walked away from it in the last 24 hours.

“If Prime Minister Abbott can’t even stick by his signature policy for 24 hours, how can Australians trust him?” he said.

Shorten said the PPL scheme was an unfair one.

“Australians know that giving tens of thousands of dollars to people who don’t need tens of thousands of dollars of taxpayers’ money and at the same time proposing a new tax for the hardworking middle class of Australia … is a terrible idea,” Shorten said.

“In the last 24 hours the Prime Minister’s broken his promises, he has proven he is not a man of his conviction and he certainly hasn’t walked away from his dumb, crazy idea to tax millions of hardworking Australians.”