Bill Shorten tax bungle ignites leadership talk

Bill Shorten’s humiliating backdown on corporate tax cuts has left his close Labor allies ­increasingly worried that his leadership is at risk.

Bill Shorten’s humiliating backdown on corporate tax cuts has left his close Labor allies ­increasingly worried that his leadership is at risk.

The Opposition Leader — under fierce criticism for his “captain’s call” to tear up tax ­relief for businesses with a turnover between $10 million and $50 million — was overruled on Friday by an angry Labor shadow cabinet.

It comes amid new fractures within Mr Shorten’s factional support base and growing doubts over his judgment ahead of five crucial federal seat by-elections on July 28.

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An ashen-faced Mr Shorten emerged from a hastily arranged meeting with senior colleagues to announce he was walking away from his week-long pledge to repeal the Turnbull Government’s company tax cuts.

The move comes as his senior supporters in Victoria are concerned that the Right ­faction in New South Wales could drop Mr Shorten in favour of NSW Left-winger Anthony ­Albanese.

Mr Shorten said it had ­become clear the policy was ­“creating great uncertainty”.

“I listened very carefully to other colleagues, and listened very carefully to business,” he said after the meeting in Sydney on Friday.

An ashen-faced Mr Shorten emerged from a hastily arranged meeting with senior colleagues to announce he was walking away from his week-long pledge to repeal the Turnbull Government’s company tax cuts. Picture: AAP

Labor will retain tax cuts to be implemented from July 1, which lower the rate to 27.5 per cent for businesses with turnovers up to $50 million.

But Mr Shorten said a Labor government would not proceed with the legislated but yet-to-be implemented tax cuts, which progressively lower the rate for small and medium-sized businesses to 25 per cent by 2026-27. He is also promising to repeal any tax cuts for businesses with turnovers above $50 million.

The change was greeted with relief rather than happiness by Opposition MPs.

One Victorian MP said the policy announced by Mr Shorten was still disappointing:

“Is it perfect? God no — but it’s better than where we were a few days ago.”

A number of senior Labor Victorian MPs from both Left and Right factions believe the NSW Right is on the verge of deserting him.

“There’s no doubt they’re coming for him,” one said. But another senior MP added: “I think they wanted him to know that if they wanted to come for him, they could.”

Treasurer Scott Morrison said Labor was still going to the election with a higher tax rate for all businesses with a turnover of up to $50 million.

“Bill Shorten’s gone from a captain’s call to a captain’s fall, flat on his face when it comes to the issue of company taxes and particularly taxes for small and medium-sized businesses,” Mr Morrison said.

“It will be a tax increase for everything from the fish and chip shop and the hairdresser to the home-based business — at home baking muffins.”

Opposition Leader Bill Shorten (right) and Shadow Treasurer Chris Bowen. Picture: AAP

Multiple Labor MPs said there was “genuine anger” with how the corporate tax policy was handled but stressed Mr Shorten’s backdown had “taken the heat out” of any move on his leadership.

Queensland MPs — seen as critical to Mr Shorten’s leadership — said they would not be making any decisions on shifting their support until after the Longman by-election.

One senior member of the Right faction said Longman was “the main game in town” when it came to the leadership.

Another MP said Mr Shorten had otherwise done a good job of consulting the party room since taking the leadership in 2013, and he shouldn’t be punished for making one bad “captain’s call”.

“My hunch is that what he (Mr Shorten) did today has taken bit of air out of the sails of people trying to use it an ­opportunity to destabilise.”

Opposition treasury spokesman Chris Bowen — who pledged his full support to Mr Shorten while standing alongside him on Friday — said not proceeding with the tax cuts would save $2 billion over the forward estimates and $62 billion over a decade.

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