Independent MPs in the country’s richest seats say many of their constituents feel the Albanese government’s new stage 3 tax cuts are fairer, but warned more substantial reform must be on the agenda to resolve long-standing tax problems such as bracket creep.
Teals Kate Chaney and Monique Ryan said they would support Labor’s changes, which will give tax relief to about 11.5 million people but cut the benefits to those earning above $150,000, while other MPs still considering the changes had heard a degree of positive feedback in their electorates.
Prime Minister Anthony Albanese with independent MPs (from left) Monique Ryan, Allegra Spender, Kate Chaney and Zoe Daniel last year.Credit: Alex Ellinghausen
While Labor will not need the support of independents to pass its tax package in the lower house, the views of teal MPs will shape the debate in parliament and could influence the vote of key crossbenchers in the Senate. Meanwhile, the Coalition hopes the government’s changes will help it win back support of high-income earners in former Liberal held seats.
Kooyong MP Ryan, who wanted changes to stage 3, said she would vote for the new package because it would give more relief to more Australians when they needed it.
“Most of my community believes the government should do much more to help us address the cost-of-living crisis,” she said.
But she said tinkering around the edges was not good for the country in the long term.
“Bracket creep is a real concern, as is Australia’s unsustainable reliance on income tax. Both matters should be addressed, which is why I have called for a whole-of-system tax review ... I urge both major parties to put politics aside and be open to reasonable, expert-led tax reform.”
Chaney, the member for Curtin, will also support the redesigned stage 3 package as an “acceptable compromise” while people struggle under cost-of-living pressures, but said tax brackets should be indexed to solve bracket creep.
“Even more importantly, I would like to see both major parties having a serious conversation about the reform we need in our tax system more broadly. We need to reduce our reliance on income tax and identify alternative sources of revenue,” she said.
In the 2021 census, the median personal weekly income was $1058 in Kooyong and $1115 in Curtin, compared with the national median of $805.
Independent MP for Wentworth Allegra Spender, whose constituents took home a median weekly income of $1517, said she was hearing three views.
“There are a lot of people who will be better off. There are a significant group of people who will be worse off but still think it’s the right thing,” she said.
“Then, there’s another group who were really relying on these [cuts] for significant mortgages and childcare costs, and they’re hurting. They’re the ones I feel the government hasn’t acknowledged.
“What I am also hearing loud and clear is that we should be looking further on tax reform, because frankly, this doesn’t cut it for long-term issues.”
She said both Labor and the Coalition would need to take up the issue to show they were serious about governing.
“This is the moment to get that broader tax reform on the table. This is cost-of-living relief, but it doesn’t mean its tax reform, and it doesn’t mean we’re setting ourselves up well for the future.”
Independent Kylea Tink, the member for North Sydney, where the median income was $1402, said she was yet to decide on a position as she consulted her electorate.
“But, initially, it seems many support the relief these changes will bring to those on lower and middle incomes. Ultimately, many in my community are more concerned about cost-of-living relief and good economic policy than about not budging from election promises,” she said.
“However, the backflip from government will impact those who were relying on the tax cuts to pay for groceries, school fees, mortgages and rent – particularly single-income families.”
Sophie Scamps, whose Mackellar electorate recorded a median weekly income of $1080, had argued the government should honour its election commitment, “not only for integrity reasons but also because so many were depending on these cuts to help them through the current cost-of-living crisis”.
However, she said Labor’s changes responded to the hardship and mortgage stress that many families were facing.
“It is without a doubt a very different environment to when the cuts were first planned five years ago ... In the current context of so many Australians facing financial hardship, the government’s changes to the stage 3 tax cuts, if I’m honest, just feel a lot fairer.”
Zoe Daniel, the member Goldstein, where the median personal weekly income was $1068, said a quick poll of 1600 constituents had revealed up to 77 per cent supported the changes to boost middle-income tax cuts, despite 27 per cent having taxable incomes above $180,000.
“Surveys of this kind are imperfect, but the trend is useful information ... I also note that the proposed changes would favour women taxpayers,” she said.
“The government has broken an election promise and … Labor will have to deal with the political consequences of that ... As always, I will assess what is proposed on its merits.”
The Greens will fight for greater support for low and middle-income earners, including a lift to the tax-free threshold, in negotiations with the government to get its changes through the Senate.
But on Monday Treasurer Jim Chalmers challenged the crossbench to support the package as it stands.
“We want to pass the tax changes that were announced. That’s our intention. There are obviously always a whole range of ideas about what else we might do to help with the cost of living, but what we’ve been able to do here is good for the budget and good for the economy,” he said.
“This tax package that we announced last week is not some sort of compromise position. I say to the parliament, not just the crossbenchers, but the Liberals and Nationals as well, if you accept that middle Australia is under pressure, and it is, then you have to back our tax cuts for middle Australia.
“You can’t be for middle Australia and against the tax proposals that we put forward last week.”
Cut through the noise of federal politics with news, views and expert analysis from Jacqueline Maley. Subscribers can sign up to our weekly Inside Politics newsletter here.