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Pauline Hanson says small businesses will “fold” under the cost of providing paid parental leave, as Labor suggested the One Nation leader didn’t understand how the policy worked.

It is not compulsory for employers to pay parental leave entitlements in Australia, though most businesses do provide it and employees are entitled to 12 months of unpaid leave.

Hanson was criticised last week for suggesting parents taking time off work to care for newborn babies should not have their wages paid by employers, telling the National Press Club parental leave was the reason for the gender pay gap.

“If women take time off and they are not paid their wages because they’re not working, fair enough,” Hanson said last week. “Why should business pay? But they’re not at work. That’s the difference. That’s why the pay gap is there.”

She attempted to clarify the comments on Tuesday, telling the Seven Network that it was “OK” for the government to pay parental leave but the cost was too much for small business operators.

“It’s up to companies if they want to have it in their policy to give it to their workers,” she said.

“So there’s no way, shape, or form that I am actually saying to get rid of it. I think it’s been very beneficial to women to get back into the workforce. So that was totally taken completely out of context.”

“There are businesses that cannot afford it. It’s OK for government, taxpayers pay for it. You put another pressure on the small businesses, pay for maternity leave, they’ll actually fold.”

But under the National Employment Standards, it is not compulsory for employers to pay staff parental leave, but employees are entitled to 12 months of unpaid leave from their job.

Federal government data shows nearly 70% of businesses pay additional parental leave entitlements to their workers.

The taxpayer-funded paid parental leave scheme coming into effect from 1 July will offer parents 26 weeks at the national minimum wage, up from 24 weeks under the current rules.

The leader of the Nationals, Matt Canavan, called on Hanson to explain the apparent change in her party’s position since last week’s speech.

“The Press Club speech was considered a detailed view from One Nation, it would be a surprise if they’ve had to revise that within days,” he said.

Tanya Plibersek, a Labor frontbencher said Hanson’s latest statement was disingenuous.

“One Nation doesn’t even understand how the policy works,” she said.

“Senator Hanson has said multiple times over almost a decade she doesn’t support paid parental leave,” she said.

“Obviously, Australian families have told her they want it and now she’s claiming she was taken out of context.

“But Senator Hanson is wrong – small businesses don’t need to force their workers to choose between career and family.”

Plibersek said families would receive almost $30,000 across their paid parental leave entitlement.

“Senator Hanson’s only solution is to pit people against each other, instead of delivering policies that can actually help them.”

Shadow minister for childcare, Matt O’Sullivan, said families, and not politicians, understand the paid parental leave system they need.

“We have no plans to wind back access to paid parental leave schemes. Paid parental leave is about giving families the choice and support they need.”