‘Recession’ call triggers party clash on economy

Labor’s refusal to back the government’s entire $158bn income tax cuts package has set up a clash over the economy.

Anne Aly has given a car-crash interview on Sky.

Labor’s refusal to back the government’s entire $158 billion personal income tax cuts package has set up a clash over the economy, after ­opposition MP Anne Aly yesterday declared Australia could not afford the high-income tax cuts because it was in a “recession”.

The backbencher’s claim was slammed by Finance Minister ­Mathias Cormann, who described her comments as “recklessly irresponsible and wrong”.

Pressed on why she would not endorse stage three of the government’s plan, which from 2024-25 lowers the tax rate from 32.5 per cent to 30 per cent for those earning $45,000 to $200,000, Dr Aly told Sky News: “What about the fact that our economy is now in a recession, or it looks like it is going into a recession?

Anne Aly: Our economy looks like it's going into a recession, we don't know if the tax package is affordable.@tomwconnell: Don’t you think it’s a bit dangerous to say we are about to go into a recession?

Aly: A recession could be on the cards.

MORE: https://t.co/Zfn4BVKMES pic.twitter.com/PKhxS86r7j

— Sky News Australia (@SkyNewsAust) June 19, 2019

“How do we know what the economy is going to look like in 2024 and whether or not these are affordable? I want a bit more information about exactly how this is going to impact on the people that I represent before I support future tax cuts. Very happy to support tax cuts now.”

Asked why she thought Australia was headed towards a recession, Dr Aly backtracked and pointed to the Reserve Bank’s ­decision to cut interest rates to record lows. “Perhaps a recession is a big thing to say,” she said.

Senator Cormann, who is also the government’s Senate leader and is trying to secure enough upper house votes to pass the tax cuts package, urged Anthony ­Albanese and opposition Treasury spokesman Jim Chalmers to ­clarify if they agreed with Dr Aly.

“Importantly, higher taxes, as Anne Aly appears to be still arguing for, would make our economy weaker. We went to the election with a plan for lower taxes to make the economy stronger,” he said.

“The Australian people voted for our plan to put more money into workers’ pockets and to get more people into jobs by stimulating the economy.”

Dr Chalmers backed Dr Aly, declaring Australia was in a per capita recession and urged Senator Cormann to focus on “fixing” the economy rather than attacking his colleague.

“The economy is floundering under this third term government and they do not know what to do. Wages are stagnant. Productivity has gone backwards four quarters in a row. Australia is in a per capita recession. Public debt has more than doubled. Australia is experiencing the slowest economic growth since the global financial crisis 10 years ago,” Dr Chalmers’ spokesman said.

“They should let the parliament pass the tax cuts they promised by July 1 and bring forward infrastructure investment.”

According to the final set of national accounts for 2018, Australia was in a per capita recession after two consecutive quarters of negative GDP growth when adjusted for population.