February 4, 2024

Albanese now has the upper hand on tax. But Dutton will want to drag it out

By David Crowe
Updated February 4, 2024 — 10.35pmfirst published at 12.33pm
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Anthony Albanese is doing everything he can to pile pressure on Peter Dutton to make a quick decision on the revised stage 3 tax cuts when parliament meets on Tuesday.

The prime minister has made a big declaration – “I’m an honest person” – and wants the new package to be made law by Easter for a compelling reason that works for him rather than his rival.

Anthony Albanese is looking to push changes to taxation through parliament as soon as possible.Credit: Artwork: Marija Ercegovac

Labor’s mission is to compress the timeframe for the argument about Albanese and his broken promise to keep the original stage 3 package because the goal is to finish this dispute in parliament and shift the debate to new ideas in the May budget.

Dutton, however, needs time. The opposition leader has to decide on a broader response to the Labor tax agenda that goes beyond a “yes” or “no” and offers an alternative he can take to the next election.

The numbers are against the Liberals and Nationals on two counts. The first is that there are more winners than losers under the Labor package in its first year because 11.5 million receive a bigger tax cut and about 1.1 million get a smaller one.

The second is that this remains the case over time. The Grattan Institute released an analysis on Sunday night saying 83 per cent of taxpayers would be better off over the decade. Treasurer Jim Chalmers plans to release estimates on Monday that show the same. Chalmers claims a worker on average income would pay $21,635 less tax over a decade under the revised package.


Dutton has relied heavily on the claim that more people will lose over time. “It will be something like 4 million Australians,” he said last week. How can he know? It will be up to the Coalition to explain its calculation, but it is at odds with the Grattan Institute findings.

Why does this matter? Because the Coalition wants to think there is a “black hole” in the Treasury numbers – a killer blow, in other words, to the Labor plan. Treasury estimates the revised stage 3 tax package would cost $359.4 billion over a decade compared with $387.6 billion under the original Coalition policy.


This means the Labor policy costs $28.2 billion less than the Coalition policy. “We think there’s a massive black hole in what the government’s doing,” Dutton said last week. How? It is not a cost blowout. Nobody should be calling it a black hole without evidence of a fatal flaw in the Treasury assumptions.

Albanese made his move to speed things up by releasing the draft legislation for the revised package on Sunday and saying the government would introduce the bill to parliament on Tuesday in the hope it would be decided by Easter so that the tax cuts could begin on July 1.

He is trying to go on the offensive at a time when he is on the defensive regarding his personal standing. Whatever the argument about the tax cuts, Albanese still has to deal with the questions about whether he can be trusted after saying his word was his bond and then breaking his promise.

“Prime Minister, is your word still your bond?” Insiders host David Speers asked on Sunday morning.

“David, I’m an honest person,” Albanese replied. “I am up-front.”

But the questions about the broken promise are sure to continue.

Dutton will convene a shadow cabinet meeting on Monday to discuss the Coalition position before a party room meeting on Tuesday that is likely to debate the issue, while the Nationals will also gather on Monday to discuss their stance.

Dutton was asked on the Nine Network’s Today show on Friday morning about his position when host Sarah Abo made the point that many people in his electorate of Dickson would receive bigger tax cuts from Labor’s plan.

“You don’t want to take money away from them, do you?” Abo asked.

“And we’re not going to,” Dutton replied. That is the clear answer to anyone who claims a Liberal government would attempt to “roll back” the changes after the next election.

“So you’re not going to stand in the way of these changes, as a party?” Abo asked.

“I’ve been very clear that the Liberal Party is the party of lower taxes,” he said.

That suggests his alternative could offer more generous tax cuts than Labor over the decade ahead.

The public message from Dutton is logical: the Coalition will not try to block the revised tax plan in the final vote in parliament. This does not mean Coalition MPs have to be happy with the revised stage 3 package because many dislike the way it restores an entire tax bracket with a 37 per cent rate on earnings over $135,000 before a higher rate kicks in at $190,000.


If some Liberals had their way, Dutton would have a policy to restore some of the structure of the original Coalition plan, which applied a 30 per cent tax rate on earnings from $45,001 to $200,000. The trouble is that it would be very, very expensive for the Coalition to take a highly ambitious plan to the next election.

Labor assumes the Greens will fight over amendments but will not prevent the tax changes going ahead in a vote by Easter, which means the Coalition does not have the numbers to block these tax cuts being applied from July 1.

Dutton, however, does not need to work to Albanese’s deadline. The opposition leader has a severe disadvantage because he does not have the resources of Treasury to help devise and cost his alternative policy.

That means Labor will have the upper hand on the tax details. And Dutton will want to drag out the argument over the prime minister’s integrity.

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David Crowe is chief political correspondent for The Sydney Morning Herald and The Age.Connect via Twitter or email.


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