The Politics    Thursday, May 13, 2021

Back to the future

By Rachel Withers

Image of Opposition Leader Anthony Albanese in Question Time today. Image via ABC News

Opposition Leader Anthony Albanese in Question Time today. Image via ABC News

Will Labor find its spine on the stage-three tax cuts?

It appears we’re back in 2019, with the government demanding the Opposition support its far-away stage-three tax cuts, as the Opposition dances around the issue. The Coalition – with a little help from its friends at The Australian and the AFR – is keen to wedge Labor on its $130 billion high-income tax cuts, challenging the indecisive party to recommit to the cuts, which it only reluctantly supported in 2019 to get the take-it-or-leave-it tax package passed for lower-income earners. The Australian quotes Treasurer Josh Frydenberg at length, warning that repealing the cuts – which are not scheduled until mid 2024 – “would leave middle-­income earners hundreds of dollars a year worse off”. (Strangely, it doesn’t mention how much worse off high-income earners would be, with modelling from the Australia Institute finding that the top 10 per cent of taxpayers will get almost a third of the benefit, and the top 20 per cent more than half.) Finance Minister Simon Birmingham also pushed Labor on the issue ahead of tonight’s budget reply, demanding that the Opposition leader make up his mind: “Anthony Albanese should come clean, whether he has a high-taxes agenda, or give confidence to the Australian economy and back lower taxes for the future.” The AFR, meanwhile, suggests that Labor is “hardening its position against” the tax cuts. But is it?

Labor, as an impatient Birmingham pointed out, did promise to confirm its position on the stage-three cuts – which will reduce the rate of the 32.5 per cent rate to 30 cents, increase its threshold from $45,000 to $200,000, and increase the 45 per cent threshold from $180,000 to $200,000 – after the budget was handed down (though it has only been two days). But Labor now looks increasingly uncomfortable about making the call. In an interview today, shadow treasurer Jim Chalmers said Labor was yet to make up its mind, adding that it was in no rush to do so given that the cuts are still three years away, and repeated his calls for the low- and middle-income tax offset (LMITO) to be extended further. “These additional tax cuts for lower-middle-income earners are temporary, but the big tax cuts for the highest income earners are permanent and forever,” he said. The Australian reports that the party is split on the issue, with a number of unnamed Labor MPs agitating for its repeal, noting that repairing the trillion-dollar debt had to come before tax cuts for the wealthy – especially with revenue-saving measures such as negative gearing now off the table. But Chalmers and Albanese are determined not to be drawn on the issue.

Labor attempted to keep Question Time focused firmly on other aspects of the budget, sluggish wages specifically, with two questions on wages from Albanese, one from Chalmers and one from Tony Burke. (I wonder what the theme of tonight’s budget reply will be?) Speaker Tony Smith appeared to have pre-emptively taken on some of the recommendations in the “death to dixer” committee report on how to improve Question Time, which has been tabled but not yet adopted. Smith refused to allow the government any “alternative approaches” to mention taxes, though Frydenberg did his best. “I know what will hit the wages of the Australian people is the higher taxes from the Labor Party,” he said, when asked about the cut in real wages contained in the budget. 

Labor is keen not to get drawn into another class war, but it ought to be a little braver here. With a $1 trillion debt looming, economists say the affordability of the tax cuts is “very doubtful”, with either tax rises, big spending cuts or cancelled tax cuts required in the next few years, the AFR reports. It’s not clear how great the appetite will be for saving billions of dollars for the wealthy each year, when the eventual spending cuts start pouring in. Even AFR contributor Chris Richardson, a partner at Deloitte Access Economics, thinks the high-income tax cut is “toast”, politically speaking. “You can see the attack ads now”, he writes, noting that taxes going up for low-income earners (when the LMITO expires) at the same time as going down for higher-income earners “will be seen as little shy of satanic”. Perhaps, in this new political climate, Labor might like to point out – as the Centre for Future Work’s Alison Pennington does – that the stage-three cuts will “overwhelmingly benefit high-income households and men”, with men to benefit more than twice as much as women.

The government, meanwhile, might want to consider showing a little less bravado, now that even the AFR is questioning the viability of the cuts. The finance minister, as Sky News political reporter Trudy McIntosh tweets, has left himself “no wiggle room” to pare back the cuts, confidently declaring that the government delivering on its promised tax cuts is “110 per cent guaranteed”. So was that “Back in Black” surplus, once upon a time.

“Somehow we stick to this mindset that children as young as 10, a child in grade four, can be mature enough to make a well-thought-out, premeditated decision to do something unlawful.”

Mick Gooda, a co-commissioner of the youth detention royal commission, calls for an increase to the age of criminal culpability, as recommended in the commission’s report.


Prime Minister Scott Morrison denies he made a mistake last week when referring to Australia’s policy on Taiwan as “One country, two systems”. A government spokesman has since confirmed he spoke in error.

The website the government doesn’t want you to see
Leaked documents show the Morrison government is actively undermining respectful relationships education and preventing expert materials from being taught. Today, Kristine Ziwica on the question of whether the government’s social conservatism is influencing sex education for young people.

The amount Telstra has been fined over the “unconscionable” conduct of selling phone plans to Indigenous customers who could not afford them – the second-largest fine ever imposed for breaching Australian consumer law.

“The government has scrapped a ‘demeaning’ crackdown that forced thousands of welfare recipients – the majority of whom were single mothers – to get a witness to verify their relationship status, after few people were found flouting the rules.”

Budget papers reveal the government will abandon “third-party verification of parents claiming parenting payment and JobSeeker”, with a recent review finding only 1.3 per cent of welfare recipients breaking the rules.

The list

“The Chilean port city Valparaíso provides an apt stage for all these heightened tensions: its streets were built on almost unconquerable inclines, and patchworks of candy-coloured terraces rise like crayons above abandoned carparks. Valparaíso – conjuring up salt and sweat in every heady shot – becomes both runway and nightclub for the titular dancer, Ema (newcomer Mariana Di Girolamo), who slinks, skulks and struts her way across its urban maze, wreaking havoc in leopard print and Adidas tracksuits.”

“I am sitting on a park bench, reading, when a closed umbrella thwacks onto the path next to me, seemingly falling from the sky. It is one of those flimsy, collapsible black numbers that you dash into the chemist to buy when it’s pouring, inevitably to leave forgotten under a table or in a taxi because you’re not used to carrying one. A middle-aged man retrieves the umbrella, and I resume my reading. Twenty or so seconds later, thwack again, this time on the grass about a metre away. What is this crackpot doing? I wonder, irritated at the interruption. It is a bright autumn day, certainly not the type requiring an umbrella.”

“This is a story about how a company whose own associates call it ‘the Firm’ is slowly reshaping Australia’s welfare agencies. There are others like it – Boston Consulting Group, Bain & Company and so on – but none that match McKinsey for elite status or self-confidence. Those familiar with the Firm say its strategy of ‘corporate imperialism’ is deliberately subtle. Its reach is wide, powerful and, in Australia at least, gaining influence in the public service.”

Rachel Withers

Rachel Withers is the contributing editor of The Politics.


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