Albanese, Chalmers the new bracket creeps

Take a bow PM and Treasurer - ripping the heart out of Stage 3 tax cuts is the most clear-cut and outrageous of your growing list of broken election promises.

Prime Minister Anthony Albanese with Treasurer Jim Chalmers. Picture: NCA NewsWire / Martin Ollman

The changes to – the ripping the heart out of — the Stage 3 tax cuts aren’t just the most clear-cut and outrageous of the growing list of broken election promises from the Albanese-Chalmers Labor Government.

And note, I use that designation – the Albanese-Chalmers government – very deliberately; for both can’t hide from what they are in the process of doing.

Yes, Albanese might have shown himself to have been just another wannabe-PM, prepared to lie his way through an election.

In his case, true, he’s so financially and fiscally inept – what’s the RBA’s official cash rate Prime Minister? – that, beyond a certain basic point, he wouldn’t really have had a clue.

But at the same time, Chalmers has thrown into the trash-can any claim he might have had to be a Keating-style reformist treasurer; neatly revealing at the same time his irrelevance in cabinet decision-making alongside his own cynical populism.

The broken election promise is clear-cut and utterly undeniable.

Very importantly, it can’t even be justified as being “unaffordable”; on the tried and true, and always dubious, claim of getting into government and finding the fiscal cupboard was bare.

When the duo made the promise, and repeated it again and again and yet again, the official budget figures were forecasting a budget deficit of $56bn in this coming 2023-24 financial year in which the Stage 3 cuts were supposed to start.

Now, the latest budget numbers forecast a 2023-24 deficit of just $1bn.

So PM, and Treasurer, you were prepared to give an unqualified and absolute promise to deliver the Stage 3 cuts, when you expected a $56bn deficit.

But “can’t afford it” now when the deficit is only going to be $1bn?

Let it be very clearly understood, the robbing of “higher-income Peter” to pay the “lower-income Paula” is a fiscal mirage and in itself a cynical lie.

It is actually an attack on both, on Peter and Paula, on all Australians, by further cementing the insidious tax grab from bracket creep – higher inflation forcing you into higher tax brackets.

Remember, they are called Stage 3 tax cuts because we’ve already had Stages 1 and 2 – they delivered the cuts, such as they are, in this insidious world of bracket creep, to lower and middle-income earners.

Yes, Stage 3 would have delivered to middle and higher income earners.

But they also, critically, would have reduced – not eliminated, but significantly reduced – the future impact of bracket creep, by having a single 30c tax rate all the way from $45,000 to $200,000.

Instead of, now, facing a 37c-in-the-dollar tax grab from $135k (these days, not exactly a high income) to $190k and then 45c after that.

Yes, the changes will slash the formerly proposed cuts to those over $200k.

But they will also slice into the cut for those earning between $135k and $200k.

And, even worse, hurt them increasingly punishingly every year after 2023-24.

And hurt those from, say, $80-90k who will increasingly move over time into the 37c bracket, as against paying as they should, only 30c.

Take a bow, Treasurer – political impotence merged with policy ineptitude.

Originally published as Albanese, Chalmers the new bracket creeps