The Federal Government says Western Australian Premier Colin Barnett's declaration that he will not support the Coalition's paid parental leave scheme signals the policy has already fallen apart.

The Coalition's plan delivers working mothers with an annual salary of up to $150,000 their full pay for 26 weeks.

Part of the scheme will be funded by a 1.5 per cent tax on big business, but the Coalition also expects state governments to contribute the money they already spend on parental leave.

However, Mr Barnett said yesterday that the scheme was too generous and his Government would not be contributing to it.

"If Tony Abbott becomes prime minister and that scheme is introduced we will cooperate in terms of the administration, but we will not be contributing money to the scheme," Mr Barnett said.

Federal Treasurer Chris Bowen seized on the comments, saying the policy is poorly designed and unaffordable.

"You've got the Premier of Western Australia saying it's far too much and 'we're not making a contribution', and you've built in a contribution from the states to your costings," he said.

"So your policy's fallen apart in 24 hours.

"Why? Because it's far too big, it is not fair [and] it is unaffordable."

Shadow Treasurer Joe Hockey hit back, saying the Coalition's scheme is fair.

"People should not be financially penalised for raising a family," he told Q&A last night.

"It is so important for our country.

"Our policy ensures small business for the first time is on a level playing field with big business. Small business does not have to pay it.

"The lowest income women do not get financially penalised for going out and having a child."

Coalition campaign spokesman Mathias Cormann says it is only fair that state governments contribute to the cost, because they will no longer require their own schemes.

"Given that those payments will not be required in the future, it is only fair and reasonable that there is an arrangement to work through the transition between those two schemes," he said.

At $5.5 billion a year from mid-2015, the Coalition's policy costs three times the current scheme and has perplexed most economists.

"It's an expensive new entitlements program that in my view may do something to boost population over the longer term, but will do very little to increase participation in the workforce and in my view will do very little to increase productivity either," Bank of America Merrill Lynch economist Saul Eslake told 7.30 last night.

"On the other hand, it does amount to a redistribution of income from big businesses who will have to pay an extra 1.5 per cent on their company tax, missing out on the general company tax cut which the Coalition proposes, a redistribution from big business to small business, which I would've thought was inconsistent with traditional Liberal Party philosophy."

Victorian Treasurer Michael O'Brien said his state will support the scheme of whichever party is in power.

"The Victorian Government has a strong record of supporting parental leave through maternity leave arrangements and will work with the government of the day on the implementation of paid parental leave policy," he said.

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