abbott ppl 'to lift interest rates'

Abbott PPL 'to lift interest rates'

Home owners and small business operators will suffer interest rate hikes if the banking sector is forced to absorb the cost of the coalition's proposed paid parental leave scheme, the Federal Government says.

The business sector estimates that Opposition Leader Tony Abbott's signature policy - which offers 26 weeks' paid leave for women earning up to $150,000, funded by a five per cent levy on corporations earning more than $5 million - could cost large companies in excess of $100 million a year each.

"Home owners and small businesses will be footing the bill through higher interest rates to pay for Mr Abbott's Rolls Royce paid parental leave scheme," Assistant Treasurer David Bradbury told reporters in Canberra.

"This is a $20 billion tax, and as Mr Abbott has told us, when you whack a big tax on business, business will pass on that tax in the form of higher prices and higher costs for consumers."

The Parliamentary Budget Office has put a price tag of $5.3 billion on the scheme by 2016/17.

"Each of the four major banks will be facing a liability of up to $100 million under this new paid parental leave tax that Mr Abbott intends to levy," Mr Bradbury said.

"That will mean for home owners, increases in their standard variable mortgage rate of 10 basis points."

An unnamed "senior banker" told The Australian that the Commonwealth Bank, Westpac, ANZ, and National Australia Bank will each pass on the cost of the levy.

"The banks will have to treat it as an increase in their cost base, which means passing it on to shareholders or customers," the banker said.
The industry insider said passing on the levy in full would equal a 10 basis point interest rate increase for mortgage holders.

http://au.news.yahoo.com/thewest/business/a/-/national/17341957/abbott-parental-scheme-to-lift-rates/