The media clamour for the axing of the third stage of the tax cuts indicates a weird dance between honesty and cynicism.
Five months ago, we were voting (in part) on political integrity; the notion that our pollies will be honest; that they wouldn’t say something just to get elected, then renege. Now we are being softened up for a broken promise: the shredding of an explicit election commitment by the Albanese government.
Stage three of the tax cuts introduces a flat rate of 30c for people earning $45,000 to $200,000. There will be no more 37c rate. The cuts are scheduled for July 2024, about 10 months from the expected timing of the 2025 election. The Parliamentary Budget Office estimates a saving to the budget of $243 billion over 10 years if the tax cuts are cancelled.
On the ABC’s Radio National on Wednesday we were again reminded of that juicy windfall if the tax cuts, which were legislated by the Morrison government with the support of the Labor opposition, are abolished.
It seems clear that journalists of a more, say, progressive bent will badger the Albanese government until it dumps on the tax cuts, even if a few of them might benefit from the largesse. How public-spirited! It does sound funny hearing some commentators pivot from calling for dramatic rises in spending on everything – mental health, social housing, childhood educators, foreign aid and beyond – to worrying about this charge on the federal treasury.
As Labor MPs from Jim Chalmers and Katy Gallagher on down stonewall their way through ABC interrogations, we are witnessing a variation of the old Kremlinology. Their responses are being sliced and diced by earnest pundits for a clue to the government’s real intentions. Those pundits are quick with their own solution. The economy is tanking, so just dump the cuts, the MPs are told. How easy can it be?
But it’s not just Labor’s problem as a government or the Coalition’s problem as an ex-government. Of Australia’s 10 wealthiest suburbs, nine are now in electorates held by Teal independents. For those MPs, shouting from the rooftops for the cancellation of a tax cut that would benefit plenty of their constituents would be an odd look.
Nobody should be surprised if the tax cuts are retained, but with a lot of sideways moves. No matter what happens, Chris Richardson of Access Economics estimates 20% of taxpayers will continue to pay 60% of income tax.
Mark Sawyer is a journalist with extensive experience in print and digital media in Sydney, Melbourne and rural Australia.