Election 2025: Peter Dutton vows to end bracket creep when budget is in shape

Peter Dutton has moved to recharge his election campaign with an aspirational pledge for the indexation of the personal income tax scales to signal his credentials as an economic reformer.

Peter Dutton during an interview with The Australian in Sydney on Wednesday before the second leaders debate. Picture: Ryan Osland

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Peter Dutton has moved to recharge his election campaign with an aspirational pledge for the ­indexation of the personal income tax scales to signal his credentials as an economic reformer.

The Opposition Leader also said in an exclusive interview with The Australian at the midpoint of the campaign: “I want to see us move as quickly as we can as a country to changes around personal income tax, including indexation, because bracket creep, as we know, is a killer in the economy.

“It stifles productivity and ­entrepreneurialism and hard work, but we need to do it at a time where the budget can afford to do so. It would be an aspiration of our government to achieve that ­because it provides equity in the tax system and it is costly to do so.”

Mr Dutton invoked the ­Howard-Costello economic management model from 1996 to 2007 for longer-term tax reform as the precedent he wanted to follow as prime minister.

The Opposition Leader made clear that tax indexation could not be a promise now at the May 3 election because of Labor’s long run of budget deficits, extending for 10 years.

But Mr Dutton stressed that tax indexation, not just temporary cost-of-living relief through petrol excise cuts and tax rebates, was an aspirational aim he intended to implement as prime minister.

Mr Dutton said that, in following the Howard-Costello model, the budget would have to be brought under control as a prelude to income tax reform.

“The Howard government never promised taxation reform going into the 1996 election,” he said. “They never promised a ­revolution around rewriting of the way in which the economy works.”

But, Mr Dutton said, John Howard and Peter Costello ­tackled budget deficits and debt in their first term and then unveiled their major tax reform package, which they took to the winning 1998 election.

“When John Howard was ­elected in 1996 he wasn’t able to predict that the $96bn would be paid off and that you’d be back into surplus,” he said.

“You can’t honestly answer that question … without the ­finance advice and without the Treasury.”

Mr Dutton’s commitment to substantial tax reform follows pressure from a range of economic experts who urged him to embrace personal income tax indexation as one of the key methods to enhance the tax system.

When asked if he could say when a Coalition government would change the decade of ­deficits currently facing Australia and return a surplus, he would not nominate a year.

“I think we will always do better than the Labor government when it comes to economic management,” Mr Dutton said.

Peter Dutton on Wednesday. Picture: Ryan Osland

“We demonstrated that we could do better than 10 years when we came to government after the Rudd-Gillard wrecking ball.

“We also did well in getting the budget back to balance, and we did well going into Covid.

“We saved the economy through JobKeeper and JobSeeker, and we didn’t lock in that recurrent spend.

“It wasn’t legislated, or we’d still be making those payments today, which is the same principle that we’ve taken in relation to our $1200 tax rebate, giving people back $1200 of their own money, and the 25c-a-litre fuel excise cut, which provides immediate assistance economy wide now.

“So lower, simpler, fairer taxes are instinctive for me, and so is providing reward for effort and ­allowing people to keep more of their money.

“The Labor government, over the last three years, people have gone backwards. We’ve had seven consecutive quarters of negative economic growth in households here, which has put people back years and years.”

Mr Dutton said his experience of leaving school in 1987 and finding it hard to get a job had stayed with him.

“I remember very, very intently that the discussions around our kitchen table in the 80s and 90s, when businesses were going broke, when there were for-sale signs on homes, when there were for-lease signs on businesses … and that was the Labor impact.

“For those of us who came from small-business families, we’ve never forgotten that, and I fear that we’re on the cusp of going into that period now – if there is a re-elected Albanese government – and for 30,000 businesses (that have collapsed since Labor came to power), those kids have sat around their kitchen tables watching their mum and dad, who have worked their guts out and have lost everything because of the Albanese government’s economic failure.

“Now if we win the election on the 3rd of May, which I believe we can, we will have to clean up a very significant mess.”

Mr Dutton defended the ­Coalition’s decision to match tax cuts and rebates with the Labor government.

“People are in a very ­significantly difficult spot,” he said. “There are families who are pulling kids out of low-fee-paying schools, people who aren’t insuring their homes, or decide to run the risk of not insuring their car because they just haven’t got the money in their budget.

“So there is a need to provide support to people now to help them through this cost-of-living crisis that the government’s created. But importantly, what we’ve done in relation to particularly, two of the major policies that we’ve announced, they’re not a recurrent structural spend in the budget.”