Former Liberal treasurer Peter Costello has launched a scathing attack on the Federal Opposition's paid parental leave plan, accusing leader Tony Abbott of engaging in a "race to the bottom" with Labor.

Writing in Fairfax newspapers this morning, Mr Costello says Opposition Leader Tony Abbott's plan is against Liberal party principles and will lead to higher taxes.

The scheme would give parents six months leave paid at full salary and be funded by a new levy on big business.

Mr Costello says Mr Abbott is engaging in a policy race to the bottom.

"[Mr Abbott] keeps being told he needs to appeal more to female voters. So he adopts the Crocodile Dundee approach," he said.

"In the movie a New York mugger pulls a switchblade on Mick Dundee. Our hero laughs at the blade 'That's not a knife, this is a knife'. The terrified mugger disappears into the night.

"The point of Abbott's proposal is to tell the public that Rudd does not have a maternity leave scheme. 'This is a maternity leave scheme', he declares."

"In this kind of politics if your opponent has a bad idea you try to outflank it. Your opponent has a mildly bad idea so you come up with a more extreme one and race him to the bottom."

The former treasurer also criticised Prime Minister Kevin Rudd's health funding plan, saying that taking a third of the states' GST is a bad principle.

Finance Minister Lindsay Tanner has seized on Mr Costello's criticisms.

"Good on him for having the courage to point out how bad Tony Abbott's scheme is," he told AM.

"It's interesting and very significant that somebody from the Liberal Party, and a Liberal icon like Peter Costello, would come out there and criticise Tony Abbott's plan."

But Coalition finance spokesman Barnaby Joyce told ABC2 New Breakfast that just because Mr Costello has spoken out, it does not mean his words are "gospel".

And he denied Mr Costello's comments have damaged the Coalition's strategy.

'I don't think so," he said. "We've said that this is a levy and in the long-term we intend, like all levies, to remove them.

"Peter Costello was very good at bringing in levies and removing them."