The Politics    Tuesday, August 30, 2022

A terrible, horrible, no good, very bad policy

By Rachel Withers

Prime Minister Anthony Albanese, August 29, 2022

Prime Minister Anthony Albanese, August 29, 2022. ©  Lukas Coch / AAP images

The Stage Three tax cuts are indefensible, and there is no reason to keep them

The debate over the unaffordable, irresponsible, regressive, sexist Stage Three tax cuts has escalated, after Anthony Albanese stood by them at the Press Club yesterday. Or did he? There has been some conjecture about what the PM said, leaving what has been perceived as “wiggle room” in his responses (shadow treasurer Angus Taylor certainly thought so, demanding more certainty). Things heated up further overnight, after Coalition backbencher Russell Broadbent called for them to be axed, noting “the world has turned on its head” since their introduction (indeed, the world has turned on its head, if a Liberal MP is denouncing tax cuts for the wealthy while Labor stands by them). But Social Services Minister Amanda Rishworth backed them on RN Breakfast, saying the cuts had been legislated, while confirming that the budget would not include an increase to JobSeeker – a pro-rich, anti-poor contrast that infuriated progressives. The government is no doubt in a bind here, terrified of breaking its election promise and being pounced upon by the Opposition and the media. But that is no justification for keeping tax cuts that even Labor admits are terrible policy.

That’s the thing: even as it stands by them, Labor – and its online supporters – refuses to provide any moral or economic justification for the tax cuts, other than that they are “legislated” and that it “promised” not to scrap them. (As cartoonist Fiona Katauskas points out in today’s Echidna cartoon, the “two good reasons” Albanese can provide for the cuts are “they’re a campaign promise” and “they’re a campaign promise”.) Speaking at the Press Club, Albanese made it clear that he knew the “inherited” cuts were a bad idea, reminding journalists how hard Labor had tried to “amend out” the third stage. (Indeed, the then shadow treasurer Jim Chalmers described it as the “least affordable, least fair and least likely to be effective”, before Labor caved in order to pass the rest of the package, which also benefited lower-income earners.) “I said at the time it wasn’t wise to consider that you knew in 2019 exactly what the economy would look like in 2024–25,” Albanese said yesterday, reminding viewers of his foresight. But he gets no brownie points for his 2019 clarity while refusing to do anything about it now that he can, when we are in exactly the kind of economic circumstances he warned about.

One doesn’t envy the government’s position here. The Coalition has already made clear it intends to be absolute monsters should Labor budge, even though its own members can see that the cuts are unjustifiable in the current circumstances – though who is really listening to the Coalition right now, anyway? There’s no doubt some of the journos currently grilling Labor over the “unaffordable” tax cuts are going to turn around and hypocritically crucify it for “breaking a promise” (although perhaps Labor should stop repeatedly declaring limitations it places on itself “promises”, as it did with its refusal to go further on emissions reduction). Labor is also worried about upsetting some of its wealthier voters, but let’s be real: how many wealthy people who put their hip pocket above the good of the nation are really voting Labor anyway. None of that, however, is a good enough reason to stick with the tax cuts. It is worse, not better, that Labor knows and admits this is atrocious policy and yet stands by it anyway.

There’s growing suspicion that Labor is looking for a way out of its “promise” here, waiting for public opinion to become so overwhelming that the regressive cuts become untenable (as if they aren’t already: today’s damning analysis shows the richest 1 per cent will gain as much as the poorest 65 per cent combined). Some reports suggest the government may “leave the tax cuts in place but slap a deficit levy over the top for high income earners”, although senior sources deny this, while Queensland Labor MP Graham Perrett has now broken ranks, calling on his government to reconsider, in light of a deficit that “a show-jumping horse couldn’t clear”. But while they wait for the political winds to shift firmly enough, Labor remains publicly wedded to an unjustifiable tax plan, betraying its own values for the sake of political expediency. So much for that light on the hill.

Rachel Withers

Rachel Withers is the contributing editor of The Politics.


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