The biggest benefits go to those who earn the most and pay the most tax. Of the $20.4 billion benefit in the first year,$9.1 billion goes to those earning more than $180,000 a year. Another $8.8 billion goes to those earning between $90,000 and $180,000,according toParliamentary Budget Office analysis for the Greens.
All sides view the stage 3 tax cuts from a different angle,like explorers staring at the same mountain range – vast and threatening for some,a thrilling climb for others. Progressive critics see the cuts through the prism of fairness,economists worry about inflation and conservative advocates see a righteous way to let taxpayers keep more of what is theirs. Dutton no doubt sees a series of ravines where he might,with luck,shove Albanese down a long drop to a muddy creek.
MPs are not panicking,but they all know the government is going through a rough patch.
The government,however,has to view stage 3 from all these angles at once. And only the government has to consider the tax cuts from an even higher vantage point:that of its own stability and survival on a longer journey. That is because the question on stage 3 is fundamentally about honouring an election pledge and keeping faith with voters.
What does Albanese say? In his Whitlam Oration in Canberra on Wednesday night,the prime minister reminded listeners of a line from Gough Whitlam about “promises fulfilled and reforms begun” and then applied that line to this government.
“Promises fulfilled,reforms begun,” Albanese said. “With more to do and ready to do more.” In taking pride in acting on election promises,Albanese reinforces the argument for keeping stage 3 in full.
Loading
This is where the economic case falters. The Labor decision on stage 3 has to be about an agenda that builds trust with the electorate and puts the government in the strongest position to win the next election. Everything is at stake because Labor needs to hold majority government for more than one term to be confident of embedding reforms on climate,health,the environment,income support,the National Disability Insurance Scheme and more.
The question for progressive critics of stage 3 is whether they believe scrapping or cutting the tax package is so essential for the country – so vital for fairness – that it is worth handing the Coalition a broken Labor election promise;in other words,a deadly political weapon. Dutton would treat any change to stage 3 – not just scrapping the cuts – as a personal breach of faith by Albanese.
The political danger is real because Labor seems lost at the halfway point in this term of parliament. It has delivered on many election promises but is agonising over what to do next. The defeat of the Indigenous Voice referendum marked a key moment when the voting public dismissed what Labor was selling. Labor has looked bruised ever since,slow to act on challenges such as the High Court ruling on detainees.
One caucus member puts things this way:with every sudden problem,the political failure is not the event itself but the lack of preparation for it and the inadequate response to it.
Loading
The caucus is not fracturing and MPs are not panicking,but they all know the government is going through a rough patch,and this raises a huge doubt about the politics of tax:is the government match-fit to gamble its future on a change to stage 3?
Does Labor have a reservoir of political capital to absorb the cost of breaking an election promise? No. Does it demonstrate the political skill required to change a totemic policy of this scale while keeping voters on side? No. Does it have Dutton on the ropes on any other issue so it could throw him on the defensive while it makes a move on tax? No.
Albanese and Chalmers face urgent questions about the cost of living and there are no easy answers,but changing stage 3 is the most dangerous option of all.
The Morning Edition newsletter is our guide to the day’s most important and interesting stories,analysis and insights.Sign up here.