Scott Morrison will move to ensure the Senate sits without a break until the Coalition’s entire $158 billion income tax cut package is passed when parliament resumes next week, after Labor’s frontbench yesterday rejected calls from its own senior MPs to wave through all three stages of the plan.
Setting up a showdown with business and members of his own caucus, Anthony Albanese yesterday demanded the government split the tax legislation, fast-track the delivery of relief for middle-income earners and accelerate infrastructure spending, in a move he conceded would cost the budget an extra $3.7bn.
In his first major policy decision as Opposition Leader, Mr Albanese revealed that his frontbench had agreed to withhold support for the third stage of the tax plan, under which 94 per cent of taxpayers would pay a marginal rate of no more than 30 per cent by July 2024.
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The government immediately rejected Mr Albanese’s ultimatum and accused Labor of not only putting the economy at risk by opposing the entire package but also jeopardising a return to surplus with its counter-offer.
The government’s Senate leader and Finance Minister, Mathias Cormann, will now put a procedural motion to the Senate on its first sitting day next week to ensure the upper house continues to sit until the legislation to implement all three stages has been dealt with.
Any attempt by Labor and the Greens to split or amend the entire income tax plan would be immediately rejected by the government in the House of Representatives, with the Senate then asked again to vote on the bill, unchanged.
Senior Labor sources said last night that the Opposition might still wave through all three stages, with several members of the party’s frontbench believed to have signalled yesterday that they believed the ALP should not become an obstacle to the government’s tax cuts.
The government’s motion puts more pressure on Labor to wave the legislation through, as opposing it would mean Labor would be accused of delaying tax cuts hitting the bank accounts of low-income Australians.
Mr Albanese may still choose to support the government’s tax cuts in full but, if Labor opposes the package in its entirety, the Coalition will need to win the support of four crossbench senators in the upper house to win a majority of 39 votes.
Centre Alliance senator Rex Patrick — whose party holds two Senate seats — yesterday dismissed Mr Albanese’s compromise position, and said the proposition before the parliament was “we either support the tax cuts in full or we don’t”.
“If we were to modify that (package) in the Senate and send it back to the house, it will get vetoed there and we will get back to exactly where we are today,” Senator Patrick told Sky News.
Senator Cormann told The Australian: “The parliament must deal with our income tax plan by the end of that first sitting week back. This will ensure that low- and middle-income families with both mum and dad working can have up to $2160 in tax relief in their pockets by the time their kids go back to school.
“Labor is being economically irresponsible and fiscally reckless.
“They are wanting to run the budget and the government from opposition, holding Australian workers who voted for lower income taxes to ransom,’’ Senator Cormann said.
“The government will not split our income tax plan. We will deliver tax cuts to lower-income earners first before phasing in structural reforms to our income tax system over time in a way that is affordable, responsible and sustainable in our budget.
“Why on earth would Anthony Albanese allow himself to be tied down to Labor’s losing pre-election argument based on higher taxes and the politics of envy?”
After a frontbench meeting yesterday morning, Mr Albanese said Labor would support the first stage of the package — which would deliver immediate relief of up to $1080 for those on incomes up to $90,000 — but would withhold support for stage three.
The Opposition Leader criticised stage three as a “triumph of hope over economic reality” and urged the government to bring forward stage two of the package, so that the 37 per cent threshold would increase from $90,000 to $120,000 in 2019-20 — three years earlier than planned.
“This would provide up to $1350 for all those above $90,000,” he said.
“The costing of that we’ve assessed to be less than $3.7bn. What we know right now is that the economy needs stimulus. And what we’re looking for here is solutions rather than arguments.”
Business and industry groups urged Labor to pass the tax-cut package in full amid slowing economic growth, sluggish wage increases and falling housing prices leading consumers to shut their wallets.
Australian Industry Group chief executive Innes Willox urged Mr Albanese to change his approach, arguing that the government’s decision to project tax cuts beyond the current election cycle would give the economy “something to look forward to”.
“The economy is very clearly slowing and there is evidence for that across the board,” Mr Willox told Sky News. “A tax cut for low- and middle-income earners now would be a significant boost for the economy which is something that we need.”
Australian Chamber of Commerce and Industry chief executive James Pearson said he hoped that “Labor and the other parties and crossbenchers recognise there is another opportunity here to send a very strong positive signal to the community that the parliament understands the need for the community as a whole to get on with business and encourage aspiration”.
Mr Albanese’s decision to withhold support for the full tax cuts came after Labor frontbencher Joel Fitzgibbon warned his frontbench colleagues not to stand in the way of the package if the government refused to split the legislation.
“We can’t afford to give our political opponents the opportunity to blame us for a bad economy,” Mr Fitzgibbon told ABC radio.
Speaking at the National Press Club in Canberra today on the lessons from last month’s election and the next steps for Labor, opposition Treasury spokesman Jim Chalmers will call for the government to take greater action to help revive economic growth.
“We need a government that takes responsibility for the economy, and brings people together in a common cause,” Dr Chalmers will say. “That’s what so many of the people (Queensland Labor senator) Anthony Chisholm and I met on our 2800km drive through central and north Queensland want.”
Dr Chalmers will defend Labor’s economic credentials, saying that the party “understands the need for budget discipline and the job-creating role of businesses”.
“We will take our time and craft our policies ahead of the next election in that vein,” he will say.
“And in the meantime, we’ll do our part as the opposition, to make sure the government does more for the economy than just pretend they’re good at managing it.”
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