PRIME Minister Tony Abbott's moves to quell internal Coalition disquiet about his paid parental leave scheme have been dealt a hefty blow by the Commission of Audit.
The audit report, released on Thursday, examined all government finances in a bid to save $70 billion a year in spending and return the budget to surplus by 2023-24.
Among the top 15 "biggest and fastest growing" areas of government spending it examined was childcare and Mr Abbott's own paid parental leave scheme.
After senior Nationals figures and some Liberals this week pushed against Mr Abbott's $5.5 billion PPL scheme, the Prime Minister gave some ground and limited it to those earning $100,000 or less.
Mr Abbott's decision took the scheme away from some of nation's wealthiest parents, but the audit has recommended even further cuts, bolster internal arguments against it.
The audit report instead proposed cutting it back again, so those eligible for the PPL scheme would not be able to earn more than $57,460 a year.
"The commission recognises PPL has the potential to support maternal and child health and increase women's workforce participation," the report reads.
"However, steps need to be taken to better balance the objectives of the scheme with the need to restore government finances and to target expenditure to those most in need."
It also recommended that the 1.5% levy on big business, designed to help pay for the scheme, should be kept, and the extra savings from limiting the eligibility be put towards other child care payments.
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