Politics Analysis

Backtracking forwards: Hypocrisy over Labor's altered Stage 3 tax cuts

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(Cartoon by Mark David | @MDavidCartoons)

Perspective is needed on the substantial reforms of the income tax schedules Prime Minister Albanese announced last Thursday, Alan Austin reports.

LAST WEEK SAW the most nauseating display of faux-outrage and high dudgeon from the craven clowns in the Canberra Press Gallery since they falsely accused Julia Gillard of lying when voters stymied her carbon trading scheme in 2010.

At last Thursday’s Press Club lunch in Canberra, hacks from The Australian, the Herald Sun, the Daily Telegraph, other Murdoch tabloids, Sky News, The Age, ABC TV, Network 10 and Channel Seven all lined up to impugn the PM’s integrity and call him a liar to his face.

A snarky report on Sky News highlighted a Herald Sun headline: 'Albanese, Chalmers the new bracket creeps'.

Another mendacious Murdoch minion at Sky News claimed:

“Albanese didn’t just lie. He knowingly lied to Australians and to every journalist who asked a question ... It was calculated, it was deceitful and it was contemptuous.”

Those are pretty hilarious coming from employees of Rupert Murdoch, who has just forked out more than a billion Aussie dollars in defamation after lies concocted by Fox News resulted in an insurrection and more than 490 duped Americans gaoled.

Murdoch’s Terry McCrann asserted:

“This Government, all governments, are not about cutting the taxes on ordinary Australians. They are about increasing them.”

That is another blatant falsehood. All analysis of Labor’s reforms show taxes will be cut for all Australian taxpayers and increased for none.

Foiled again! Cunning Coalition plan collapses

The Stage 3 tax cuts were conceived by the goblins and orcs in Coalition party rooms in 2018. Their sneaky ruse was to offer ridiculously generous tax cuts to the very rich, small tax cuts to the majority in the middle and nothing whatsoever to Australia’s poorest; then take the legislation to Parliament where Labor would vote against it, because it was so manifestly unjust.

Then, at the next election, the Coalition can show Labor voted against their tax cuts and is therefore the party of high taxation. Given Australian voters are greedy and stupid, the Coalition will win.

Labor sidestepped the trap. They went to the election with no plans to change anything related to taxation. Thus there were no anti-Labor headlines on economic policy — for the first time in countless elections. Labor won handily.

What actually happened

Yes, the Albanese Government has now backed away from its 2019 undertaking to introduce the Stage 3 tax cuts without change. But they were not abandoned, just redesigned for fairer distribution.

High-income earners, on $100,000 to $149,000, will now get more than under the Morrison Government’s formula. Those earning between $150,000 and $180,000 will all save $3,700. That’s less than Morrison was offering, but still a big win. Those above $180,000 will save more than $4,000, the higher the income the greater the gain. That’s also less than Morrison offered, but a fair slice of the limited pie.

All those earning less than $100,000 will now gain far more than Morrison was offering. Workers getting $70,000 now save $1,400 instead of $625. Those on $50,000 collect $929 instead of $125. All taxpayers below $50,000 will gain significant savings, whereas Morrison’s plan offered them nothing at all. Zero. Zip. Zilch.

Alternatively, as shown in this neat graph published by Treasury, we could look at quintiles:

(Graph by Treasury | treasury.gov.au)
(Graph by Treasury | treasury.gov.au)

Clearly, the distribution is much fairer under Albanese’s redesign.

So where’s the problem? Are economists all against this? No, many economists have urged the Government to change the formula.

The Government’s defence

Albanese has deflected all attacks in his unflappable "chairman of the board" manner.

Key talking points were:

  • I’m clear about the fact that we have shifted our position;
  • When circumstances change, policies must change;
  • This was not an easy decision, but it’s the right one, for the right reasons;
  • The changes were adopted unanimously by the ERC, by cabinet, by the ministry and by caucus;
  • 84 per cent of Australians will get more than under Morrison’s plan, and;
  • We have put people before politics.

Treasurer Jim Chalmers, in contrast, ripped into the Opposition:

“It beggars belief that the Liberals and Nationals don't want middle Australia to get more help with the cost of living. It shows how diabolically out of touch Peter Dutton and the Liberals and Nationals are.”

Changed circumstances

Albanese pointed to several developments since the 2022 election. These include unforeseen pandemic aftershocks, persistent global inflation, the Ukraine conflict continuing longer than expected, the Middle East conflict, the 12 interest rate increases and labour shortages resulting from nine years of Coalition failure.

One unacknowledged factor is also in play. Opinion polling shows only 17 per cent of Australians support the Stage 3 tax cuts unchanged.

Has the Government broken a promise? Yes. Were direct lies told? Possibly. That depends on definitions, which vary widely across the political battlefield. Was a redesign inevitable? Yes. Would the Coalition have amended Stage 3, had it won in May 2022? Almost certainly, although their changes would not have been as progressive.

Will the Government take a hit? That depends on how voters weigh broken promises versus social justice.

We shall see if there is any aberrant outcome in the forthcoming by-elections, in Dunkley on 2nd March and in Cook at a later date. The next federal election is not due until mid-2025, by which time last week’s events will likely be long forgotten.

While broken promises are never desirable, sometimes they are justifiable.

Alan Austin is an Independent Australia columnist and freelance journalist. You can follow him on Twitter @alanaustin001.

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