By political correspondent Emma Griffiths
Video: Lowering PPL threshold 'reasonable' says Abbott (ABC News)
Photo: The PM has been facing pressure from within his own ranks to dump the scheme. (AAP: Alan Porritt)
Related Story: PM facing internal dissent over 'crazy' debt levy proposal
The Prime Minister says he regrets the decision to pare back his signature paid parental leave scheme, blaming it on a "budget emergency" he says was created by the former Labor government.
Tony Abbott has decided to drop the threshold for his wage replacement scheme from $150,000 to $100,000.
The backdown comes as Mr Abbott also considers bringing in a tax hike to help pay off debt, despite promising before the election that there would be no new taxes under a Coalition government.
Opposition Leader Bill Shorten, who has campaigned against the "Rolls-Royce" parental leave payments, says both decisions amount to broken promises.
But Mr Abbott says Labor's legacy of deficits amounting to $123 billion over the next four years has made drafting the Coalition's first budget on May 13 a "particularly difficult business".
"Everyone from the top down is going to be part of fixing Labor's debt and deficit mess, and yes that does include regrettably an adjustment to the paid parental leave scheme," he said.
"Under all the circumstances, I think that's fair. Obviously I regret that we find ourselves in very difficult fiscal circumstances.
"But under the circumstances, where everyone is going to have to share in bearing the burden in fixing this particular problem, I think it's reasonable."
Mr Abbott's "fair dinkum" parental leave scheme has been under fire from the business community and some of his colleagues, who argue it is too generous given the dire budget situation.
Under the scheme, a woman would be entitled to receive her full wage for six months, including superannuation.
Before the revision, women earning $150,000 or more would have been eligible for a maximum of $75,000, but it will now be capped at $50,000 for six months.
Mr Shorten says Mr Abbott has proven he is "not a man of his conviction".
"If Prime Minister Abbott can't even stick by his signature policy for 24 hours, how can Australians trust him on anything?" he said.
"In the last 24 hours, the Prime Minister has 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 hard-working Australians.
Parental leave scheme changes
- The maximum payment for new mothers in the proposed scheme has been dropped from $75,000 to $50,000.
- The scheme will provide mothers with 26 weeks of paid parental leave at their actual wage or the national minimum wage (whichever is greater), plus superannuation.
- The Coalition went to the election saying a woman earning $150,000 or more would receive the maximum cap of $75,000 (Six months of actual wages for a woman on $150,000).
- Labor and some within the Coalition have been rallying against the cost of the scheme, saying it is unaffordable.
- Labor has also suggested that it is unfair that well-off mothers will receive considerably more money from the scheme than someone on the minimum wage.
- The current paid parental leave scheme, set up by Labor, pays all eligible mothers the minimum wage ($622.10) for a maximum of 18 weeks, totalling just over $11,000.
"You can't renovate a bad idea, you should just scrap a bad idea."
The Greens are withholding support for the revised scheme, despite calling on the Government to lower the threshold to $100,000.
"Firstly we need to hear from Tony Abbott: have you actually got a scheme that you're prepared to put to the Parliament?" deputy leader Adam Bandt said.
"At the moment it's been leaks and rumours and we are none the wiser about whether there's a ready-to-go, costed proposal to put to the Parliament."
Mr Abbott said he had been "thinking for some time" about how to adjust the policy, and, after consultation with Treasurer Joe Hockey last week, took the change to Cabinet's powerful Expenditure Review Committee on Sunday.
Sources close to the Prime Minister say the move is partly one of pragmatism - acknowledging that the scheme was unlikely to pass the Senate.
They say it is also a symbolic gesture to show Mr Abbott doing some of the "heavy lifting" in the budget, although the saving will not be "huge" because so few women earn above $100,000.
The scheme was to cost the budget $5.5 billion per year, partly funded by a 1.5 per cent tax increase for big companies.
Mr Abbott announced the policy while in Opposition after attending an International Women's Day lunch, without consulting his shadow cabinet or party room.
He later apologised, telling his colleagues it was sometimes better to seek forgiveness than ask permission.
The ABC understands a handful of Coalition senators had been willing to cross the floor and block the policy.
Nationals MP and Parliamentary Secretary for Defence Darren Chester, who had previously criticised the scheme, has denied this change is a humiliating backdown.
Singles sidelined by budget
Single people and couples without children are usually overlooked in the budget hype, writes Greg Jericho.
"I don't think it's embarrassing when a prime minister or a treasurer or any other minister considers public opinion, looks at the state of the Parliament and decides whether or not they can get a policy through," he told the ABC.
"I think that's pragmatic and it's a way of actually getting things done in our nation."
Nationals senator John Williams, who yesterday said the scheme should be "put on ice", still has reservations.
"We've really got to just get the budget back in order, and my concern is the expense of the program," he told ABC Local radio.
"Even to reduce it from $150,000 to $100,000 is not a big saving in the actual cost of the program, so I do have concerns about that."
He said he had "spoken to colleagues who have concerns about the cost of the program" but did not confirm if several of his colleagues would oppose it in the Parliament.
The Australian Chamber of Commerce and Industry, a pro-business lobby group, says the scheme should be scrapped.
Chief operating officer John Osborn says the changes will not make a significant difference to the cost of the scheme.
"The change announced by the Prime Minister today is not a material change," he said.
"The scheme does need to be much more significantly moderated."
Doubts on Coalition backbench about debt tax
There is also unrest on the Coalition backbench about mooted plans to introduce a debt tax.
The Government had been calling it a levy, but the ABC understands the Government is considering a temporary lift in the top two income tax brackets to help reduce the size of the deficit. It would affect people on incomes above $80,000 a year.
The Prime Minister yesterday denied a levy would be a broken promise because it would only be temporary, but Mr Shorten accused the Government of using "weasel words".
"Mr Abbott, if people are paying more tax, that doesn't feel temporary," he said.
"How on Earth can the Prime Minister justify increasing the income tax levels for all Australians who go to work, and yet have a paid parental leave scheme which will see tens of thousands of dollars for people who don't need paid parental leave?"
Mr Abbott has begun the hard sell of the measure, saying Australians "are all in this together".
"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 that we have inherited," he said.
"But above all else we've got to do it in ways that are fair and that's what the Government will ensure in these final 10 days or so of budget preparation."
Details for the tax rise are yet to be confirmed by the Government.
