Colin Barnett has blown a $50 million-plus hole in Tony Abbott's "signature" paid parental leave policy amid warnings the coalition's hugely expensive scheme would unintentionally leave retirees worse off.

The Opposition Leader's leave scheme will be 70 per cent funded through a 1.5 per cent "levy" on Australia's 3200 biggest businesses and give a mother six months full wage, with a maximum benefit of $75,000.

The Premier yesterday openly questioned the generosity of the scheme and ruled out WA helping to fund it.

"I think in many respects it probably is too generous," Mr Barnett said.

"If Tony Abbott becomes prime minister and that scheme is introduced, we will co-operate in terms of the administration but we will not be contributing money to the scheme."

The coalition plans to offset some of the $5.5 billion annual cost of the scheme by asking States and Territories to contribute towards their public servants who opt for the Federal scheme.

The West Australian understands that in 2015-16, the first year of the Abbott scheme, this assumed "saving" is believed to be $560 million, with another $107 million from rolling in the existing scheme for Commonwealth public servants.

The coalition was banking on about one-tenth of the $560 million coming from WA coffers.

Institute of Chartered Accountants executive Yasser El-Ansary said though a paid parental leave scheme was needed, Mr Abbott's "gold-plated" proposal was unaffordable.

"The proposed scheme could mean bad news for retirees who rely on access to franking credits as a key part of their superannuation pension income," he said.

"When companies pay less tax, it reduces the amount of imputation credits that they can attach to dividends, and that means that retirees might end up shouldering some of the cost of putting this gold-plated paid parental leave scheme in place."

The WA Chamber of Commerce and Industry urged the Opposition to back the Government's existing scheme.

Chief economist John Nicolaou said though the concept was admirable, it was too expensive, hurt the competitiveness of big internationally exposed firms with no proof that it would boost female workforce participation or overall productivity.

Nationals MPs remain furious about Mr Abbott's PPL scheme, with one predicting "hand grenades" would be thrown in the first joint party room after the Federal election because of stay-at-home mums missing out while "metropolitan mums" would get $75,000.

The West Australian

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