The Coalition has decided that they are for lower taxes.
That’s a start. But when it comes to the finer points like how much lower, lower for who, how much will it cost and when can this be achieved – all of that is up in the air.
I can understand why – despite legislating tax cuts for the rich in government – in opposition the Coalition under Peter Dutton is keen to position itself on the side of the working class.
In the short term that means getting out of the way of Labor’s more generous tax cuts for low and middle income earners, an approach ticked off by the joint party room on Tuesday. Dutton said this was done because he could see that families are hurting, but privately Coalition members acknowledged the bill was likely to go through and reasoned it wasn’t worth a fight.
What now? Some, like Liberal senator Andrew Bragg, are arguing that the party should continue to campaign on removing the 37% tax bracket, recommitting to the central plank of the stage-three tax cuts.
The former prime minister, Scott Morrison, spoke up in the party room, explaining the benefits of the original stage three and nudging in that direction.
But when Dutton fronted the media, no such promise was made. He acknowledged that the hefty $9bn-a-year price tag to add stage three back into Labor’s changes had given the Coalition pause.
Promising to remove the 37% bracket would be a bit like watching Labor smash open the stage-three piggy bank, then the Coalition spending its contents twice – all while claiming to be the party of fiscal responsibility. A difficult sell.
The Coalition is instead promising a new policy to combat bracket creep, which the shadow treasurer, Angus Taylor, says will be “in keeping with” and “in line with” the principles of the original stage-three cuts.
But there was no commitment to abolish the 37% bracket or compensate people earning $146,486 who are now worse off.
Dutton argued we couldn’t expect a fully-costed alternative from the opposition just a fortnight after Labor’s plan to gut stage three. One suspects it wasn’t just the time pressure that made this a difficult task – it was also getting the sums to add up.
Labor’s tax plan gives taxpayers back $1.3bn more over four years, but is $28bn less generous over 10 years. So there is some money to play with if the Coalition proposes to give back some of that $28bn. But it’s too far in the future – the cheque is well and truly in the snail mail.
The truth is they would have to find substantial savings from cuts elsewhere, or raise other taxes, to do any more.
The government also still has some room to manoeuvre. Labor doesn’t want to abolish the 37% tax bracket because, as Chalmers has noted, this wrecks the progressivity of the system. But it’s still open to Labor to do more in future to return bracket creep – like lifting the tax brackets or indexing them regularly.
The Coalition will want to focus on trust: can you trust Labor under Anthony Albanese to deliver lower taxes if he shredded stage three?
Albanese was out on Tuesday arguing if the Coalition won’t oppose Labor’s package and won’t promise to repeal it, then this is “all just wind”. Will voters care about a broken promise if 84% of taxpayers get more money, and even those who are worse off relative to stage three see the Coalition wasn’t prepared to die in a ditch over it?
It will be tough for Dutton to maintain the rage.
The Coalition looking for mystery savings to fund lower taxes also opens up lines of Labor attack: can you trust Dutton not to slash services to pay for tax cuts to the rich?
John Howard, Australia’s second-longest serving prime minister, was fond of saying that political parties can’t fatten the pig on market day – meaning they had to establish in voters’ minds that they stood for something substantial, well in advance of an election.
To borrow the metaphor and broaden the outlook beyond income tax, there are now quite a few pigs in the Coalition sty that need fattening.
We are yet to hear what the Coalition’s emissions reduction target is going to be, or how it will foster a domestic nuclear power industry, when it seems the prohibitive cost – and not the legislative ban – is the real impediment.
Albanese announced big policies like cheaper childcare early on in his term as opposition leader. But Dutton’s budget replies have been limited in scope, recommitting to allow access to super to buy a house, proposing to limit gambling ads and letting welfare recipients earn a little more before payments are reduced.
Dutton has been an opposition leader in the style of Tony Abbott: better at articulating what he is against and with very little sense of what he’s for.
On tax, Labor has executed a massive policy change that breaches its election commitment to stage three. But it has crafted an alternative so generous that even the Coalition couldn’t stand in the way.
Labor has wedged the Coalition so successfully that the breach of promise Dutton said would end Albanese’s prime ministership he will himself end up voting for.
The Coalition will now have to do the work on an alternative, because this week it became that much harder to tell what the point of a Dutton government would be.
