The Stage 3 tax cuts will be the ultimate test of the Albanese Government's desire for consensus
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Anthony Albanese marked 100 days in office this week by championing his consensus-driven approach to reform. If there's broad agreement around an idea, bring it forward.
The Prime Minister wants shared ownership of change — particularly when that change goes beyond what Labor took to the election, or indeed goes against it altogether.
In the lead-up to the Jobs and Skills Summit, which began on Thursday, the government has shifted its pre-election position on multiple fronts. Motivated, it says, by consensus.
On industrial relations, Labor said nothing before the election about multi-employer bargaining. It's now open to the idea, after some consensus between the Australian Council of Trade Unions (ACTU) and the Council of Small Business Organisations.
It was more direct about any change to the Better Off Overall Test (BOOT) that currently applies to enterprise agreements.
Before the election, Tony Burke warned waiving the BOOT could mean "every loading, every shift penalty, every overtime rate can be cut". He suggested retail managers could lose $10,000 a year, butchers $7,000 a year and so on.
Now, with the prospect of some consensus between the ACTU and Business Council for "simplifying" the BOOT, the Workplace Relations Minister has dropped his hardline, pre-election stance. He's now open to the idea.
"I took the view that if I was expecting everybody else to come forward with compromises and to try to find a way together at the summit, that I should be willing to do the same,'' Burke told Radio National.
Treasurer Jim Chalmers yesterday confirmed Labor's post-election position on the BOOT "has evolved over time" due to the emerging consensus on the issue.
One outcome of next month's Jobs Summit seems all but locked in.
On migration, Labor gave no inkling before the election about any significant increase in Australia's intake. Nor did the Coalition, despite business groups warning of crippling skills shortages.
A consensus at this week's summit to lift the permanent migration cap above 160,000 now looks certain. The government will use this to justify the likely change to an electorate often reluctant to embrace higher migration.
Governments should of course respond to community consensus. If common ground can be found on measures that are going to improve standards of living, necessary change should be embraced and delivered.
But how far is the Albanese Government prepared to go in abandoning its pre-election caution on the grounds it's now responding to community consensus?
The ultimate test will be the Stage 3 tax cuts. Consensus may not be there yet, but pressure is building to amend or ditch the lot.
The Greens, key crossbenchers, the ACTU, the welfare lobby and, as of this week, even Liberal MP Russel Broadbent have argued the tax cuts — worth a whopping $243 billion over the decade — should be scrapped before they are due to come into effect in mid-2024.
Opposition Leader Peter Dutton, and most business groups, insist the tax cuts must go ahead.
The Parliamentary Budget Office, in new analysis commissioned by the Greens, finds two thirds of the benefit will go to men due to their higher incomes. Those earning more than $200,000 a year will be $9,000 a year better off.
There's no shortage of ideas as to how the money could be better spent. Every week the list grows longer.
Interest rates are rising to take money out of our hands. So why are stage 3 tax cuts still on the table? asks Peter Martin.
Right now, it includes bringing forward increased childcare support, allowing older Australians to work more while still receiving a pension, extending pandemic leave payments, boosting apprenticeship subsidies and lifting inadequate unemployment benefits.
Consensus exists, to varying degrees, around most of these things. The problem is finding the money. The Treasurer's standard response is to point out "there are a heap of good ideas out there and some of them are expensive and we can't fund all of them".
He certainly can't while the government remains committed to the Stage 3 tax cuts.
Nor, it must be said, is it clear how money will be found for nuclear submarines, a substantial pay rise for aged care workers and a mounting interest bill on government debt.
When Labor voted in favour of the Morrison Government's multi-stage tax package in mid-2019, it did so to ensure immediate tax relief wasn't held up for low-and-middle-income earners.
Labor left the door open to ditching the top-end tax breaks down the track. As Chalmers said at the time: "We'll take into account all of the fiscal conditions, all of the economic conditions … and we'll come up with the right and responsible policy for the future."
It was a prescient position, given the pandemic that would soon wreak havoc. Yet two years later, in mid-2021 — after those fiscal and economic conditions had indeed deteriorated sharply thanks to COVID — Labor locked in its promise to keep the Stage 3 tax cuts.
Debt was spiralling, but Labor argued the top-end tax breaks must proceed to provide "certainty and clarity to Australian working families".
Labor's decision was, of course, driven by politics and not fiscal or economic conditions. It wanted an election focused on Scott Morrison, integrity, and pandemic mismanagement — not tax cuts and aspiration. Politically, this may well have been the right call at the time and may have helped Labor secure a majority government.
Now, Labor must weigh whether to stick with Stage 3 or break a big promise.
Right now, the official, nothing-to-see-here line from the Prime Minister and Treasurer is that "our position that we took to the election hasn't changed".
The policy is defended with as little enthusiasm as possible. Despite their enormous cost, Labor's heart is quite obviously not in the Stage 3 tax cuts in the same way it is for policies on climate change, an Anti-Corruption Commission or an Indigenous Voice to Parliament.
With nearly two years to go before the tax cuts are due to kick in, there's a long way to go in this debate.
If the Albanese Government is genuinely willing to shift previous positions in response to genuine community consensus, the fate of this tax is still in play.
David Speers is the host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.
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