Mathias Cormann rejects Labor demand, no chance the government will split tax cuts plan

Mathias Cormann accuses Anthony Albanese of being fiscally reckless, jeopardising budget surplus.

Labor leader Anthony Albanese. Picture: AAP.

Mathias Cormann has accused Labor leader Anthony Albanese of being fiscally reckless and putting the budget surplus in jeopardy after his shadow cabinet’s refusal to back the Government’s three-stage $158 billion tax plan.

“Labor is being economically irresponsible and fiscally reckless,” Mr Cormann told The Australian from Germany.

“They are wanting to run the Budget and the Government from Opposition, holding Australian workers who voted for lower income taxes to ransom.

“It looks like the people who imposed the politics of envy on Bill Shorten continue to call the shots inside the Labor Shadow Cabinet. Why on earth would Anthony Albanese allow himself to be tied down to Labor’s losing pre-election argument based on higher taxes and the politics of envy.

“The Government will not split our income tax plan. We will deliver tax cuts to lower income earners first before phasing in structural reforms to our income tax system over time in a way that is affordable, responsible and sustainable in our Budget.”

Anthony Albanese this morning called on Scott Morrison to bring forward stage two of its tax package and speed up infrastructure projects, but will still not back the bill’s third stage which would give tax relief to higher income earners.

The Opposition Leader met with his divided shadow cabinet today, hours after Labor frontbencher Joel Fitzgibbon said the choice would be to back the full tax package or pass no relief at all, since the government refuses to back the bill.

“What we have determined this morning to do is to propose a negotiating position to the Government which would bring forward tax cuts faster for those who need it and importantly those who will spend it to stimulate demand in the economy,” Mr Albanese said in Melbourne.

Our plan prioritises low & middle income earners, takes the bracket creep monkey off people’s back, is economically necessary & fiscally responsible and, importantly, it is what Australians voted for.

— Mathias Cormann (@MathiasCormann) June 24, 2019

“We have determined the following position: Stage one — of course, we will continue

to support that stage and express disappointment that the Government has breached its clear commitment to bring in stage one by July 1. That was one of the very clear statements that they made during the federal election campaign.

“For stage 2, we’re calling for the Government to increase the 37% threshold from $90,000 to $120,000 that is already legislated but is down the track, to bring that forward to 2019-2020. This would provide up to $1,350 for all those above $90,000.

“The costing of that is less than $3.7 billion. That’s based upon the Government’s own indications of what that would cost come 2022 when that change is due to come in under the already-legislated tax cuts.

“We think that stage 3 at a cost of some $95 billion down the track for an economy which is very soft at the moment, which no-one can say what the economy looks like in 2024-25, is really a triumph of hope over economic reality.”

The Prime Minister today called on Mr Albanese to support his tax plan and to learn the lessons of the federal election.

“Labor have suffered the worst primary vote in an election in 100 years. It’s a one-in-100-year message from the Australian people that they should be backed aspiration,” Mr Morrison said.

“The Liberal and National Parties have always backed aspiration. That’s where we’re leading when it comes to delivering tax relief to Australians.

“And Labor has been dragged kicking and screaming to the table on this issue and so the test is there for them today.”

Business reaction

AI Group chief executive Innes Willox today urged Labor to pass the full tax cut package and said the government’s decision to project tax cuts beyond its current election cycle “gives the economy something to look forward to.”

“The economy is very clearly slowing and there is evidence for that across the board. A tax cut for low and middle income earners now would be a significant boost for the economy which is something that we need,” he told Sky News.

“Then we have some certainty around the tax scales going forward. We’ve always argued for tax simplicity ... it gives the economy something to look forward to into the future.

“It’s just an element of giving business more certainty ... to have a tax cut projected into the future, when the government also have revenue projections into the future, it makes sense.”

Fitzgibbon: pass tax cuts

Earlier, Labor frontbencher Joel Fitzgibbon warned his shadow cabinet colleagues not to stand in the way of Scott Morrison’s full tax cuts agenda if the government refuses to split the $158bn package.

As Anthony Albanese’s divided frontbench prepares to meet today to thrash out its position on the personal income tax package before parliament returns next week, Mr Fitzgibbon said Labor should not ultimately stand in the way of a tax cut for low and middle income earners.

Mr Fitzgibbon today said he thought the third stage of the tax package - giving tax cuts to higher income earners - was unfair and should be split from the whole bill.

But considering the government had refused to split the bill, Mr Fitzgibbon warned his colleagues could “not deny the punters a tax cut from Opposition.”

“We can’t afford to give our political opponents the opportunity to blame us for a bad economy,” Mr Fitzgibbon told ABC radio.

“The only option then - if we are unable to force a decoupling (of the tax package’s third stage from parts one and two) which should be our first objective - are to support the whole package or support none of it.

“The latter option would deny low and middle income earners much needed tax relief.”

Labor Treasury spokesman Jim Chalmers yesterday softened his language ahead of today’s shadow cabinet meeting, claiming there would be more “internal consultation” before a decision was made. But he said with parliament not due to return until next week, there was “no rush”.

The Australian, however, has been told by several senior Labor MPs that they were expecting a position would be set today following intensifying pressure from backbench MPs who claim they were being left with the task of ­explaining to constituents why Labor was rejecting tax cuts.

It comes as former union boss and co-architect of the modern economy Bill Kelty rejected Labor’s tax agenda and backed the Coalition’s move to lower the top rates of personal income tax while calling on both sides to tackle further reform, including broadening the tax base.