James O’Doherty: Albo’s credibility takes another hit over Stage 3 tax cuts

As recently as last Friday, Anthony Albanese insisted the Stage 3 tax cuts would go ahead as planned. Less than a week later, that is no longer the case — and the PM’s credibility is shattered, writes James O’Doherty.

“I rarely meet a Labor voter who wants to pay more tax,” a senior minister in the NSW government told me this week, as details began leaking out about Prime Minister Anthony Albanese’s plan to overhaul Stage 3 tax cuts.

The wry observation was issued as a warning about what could go wrong for Albanese if he scrapped the (legislated) tax cuts which were set to deliver a boost to people’s take-home pay from July.

Multiple NSW Labor MPs, unshackled from the caucus solidarity that has bound Albanese’s federal colleagues to a major broken promise, are wary of the Prime Minister’s income redistribution plan.

Ahead of the announcement on Thursday, they argued that there could be a policy merit to the changes. However, they said those merits would be moot if Albanese could not win the political argument of why he had chosen to go back on a proclamation he made some 100 times.

The assurance that the government’s position “hadn’t changed” on delivering Stage 3 tax cuts was one Albanese made as recently as last Friday, in an interview with ABC Radio. He insisted the tax cuts would go ahead, as planned.

Anthony Albanese announces his tax cut changes at the National Press Club of Australia. Picture: NCA NewsWire / Martin Ollman

Albanese was asked: “will you modify (the stage 3 tax cuts) to be less at the top end and more towards the bottom end?”

“We haven’t changed our position on what has been legislated,” he said.

In a lie of omission, Albanese ignored the fact that he was preparing a seismic shift behind the scenes.

He would not even admit the broken promise when he explained the policy on Thursday.

In a slick new advertising campaign, Labor argues that the overhaul was driven by major economic changes since the tax cuts were legislated.

“When economic circumstances have changed, it is the responsible thing to do to change our policy,” Albanese said on Thursday.

None of that explains why the PM was insisting that the tax cuts would go ahead as planned as recently as last week.

MP Sally Sitou expressed concerns about the tax changes Picture: Monique Harmer

Albanese will be banking on voters ignoring the broken promise at the next election because of the extra cash they are getting in their pockets.

But he has suffered a major, perhaps irreparable, blow to his credibility.

Rather than acknowledge the broken promise on Thursday, Albanese doubled down. He refused to concede that he lied on radio last week.

In fact, as Treasurer Jim Chalmers revealed, the government had been considering changing course “over Christmas”.

“It became increasingly clear to us over Christmas, over summer, that we could deliver these tax cuts in a better way,” he told Nine.

The “better way” will involve a significant redistribution of income from the highest income earners to those earning less.

Under the new Albanese-Chalmers plan, those earning less than $150,000 — the vast majority — will get larger tax cuts than planned.

But anyone earning over $150,000 will be worse off than they expected.

State government insiders concede that a yearly salary of $150,000 is not actually that high, especially for someone in Sydney.

Tellingly, Premier Chris Minns declined to answer on Wednesday when asked by Laura Jayes on Sky News if even someone earning $180,000 per year is “rich”.

Federal Treasurer Jim Chalmers said the tax cuts would be delivered in ‘a better way’. Picture: NCA NewsWire / Martin Ollman

Thanks to generous wage deals inked last year, a NSW critical care paramedic can expect to get base pay of as much as $127,000 a year. Top teacher salaries will increase to more than $122,000.

That critical care paramedic and that teacher will now be better off under the Albanese and Chalmers plan than the original stage 3 tax cuts.

Indeed, almost nine in 10 of taxpayers will be better off, while those at top end will be adversely impacted by the income redistribution.

The people negatively impacted by Albanese could include people like tradies, small business-owners, IT workers and some public servants: the very people Minns sought to win over with his message of fiscal responsibility at the state election last year.

Sky News reported that three MPs expressed concerns with Albanese’s tax changes in Wednesday’s caucus meeting, including Sally Sitou from Reid in the inner west and Mike Freelander who represents tradie-heavy Macarthur in the west.

In Albanese’s own seat of Grayndler (in Sydney’s inner west), thousands of people in more well-heeled areas will be negatively impacted. Tanya Plibersek’s Sydney electorate has plenty of high income earners who will get less than they would have.

Albanese described the tax changes on Thursday as “a plan for Middle Australia,” saying he needed to respond to changed conditions.

But Albanese cannot win the policy debate if he has already lost the political argument over a broken promise.

The Prime Minister is not entering 2024 from a position of strength.

He suffered a bruising defeat when voters overwhelmingly rejected an Indigenous Voice to Parliament, and has been caught on the back foot over cost of living concerns after failing to deliver promised savings to energy bills.

If Albanese wanted to have any hope of reclaiming the narrative, he would have owned the fact that he was breaking a promise while arguing why that change was needed.

Former Prime Minister John Howard succeeded in doing that when he took a GST proposal to the election, after earlier ruling out the new tax.

In his Press Club address on Thursday, Albanese refused to concede he broke a promise. Instead, he described his tax overhaul as “a change in our policy”.

That’s a euphemism for the ages.

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