Labor MPs splinter over personal income tax cuts

Anthony Albanese is under increasing pressure from his frontbench to wave through the entire $158bn personal income tax package.

Opposition Leader Anthony Albanese. Picture: Colin Murty

Anthony Albanese is under increasing pressure from his frontbench to wave through the government’s entire $158 billion personal income tax package, as a post-­election internal war looms over Labor’s econo­mic policy agenda.

Labor frontbenchers told The Australian that a “critical mass” was emerging within the caucus and senior ranks that believed the government should be afforded a mandate on the tax cuts to avoid being labelled wreckers for the next three years.

Senior Labor MPs say they will raise the issue with the Opposition Leader before the next frontbench meeting to head off a looming split within caucus.

Last night Mr Albanese called a frontbench meeting for Monday after Labor MP Peter Khalil urged him to support the government’s package if Scott Morrison refused to split it.

“We shouldn’t be blocking tax cuts for working and middle-class Australians,” said Mr Khalil, from the Victorian Right faction.

A Labor MP said the meeting had been called at short notice ahead of a caucus meeting in Canberra the following Monday ­before parliament resumed.

Labor Left MP Graham Perrett, the opposition’s assistant spokesman for education, said Labor should consider whether the Prime Minister had a mandate on his tax plans, given it was the centrepiece of the Coalition’s ­campaign.

“The only thing that came out of the Liberal Party’s voices during the election nationally was their comments about tax cuts. Apart from pointing the finger at Labor, that was the only thing I heard them talk about,” Mr Perrett said.

“It wasn’t like Work Choices in 2004, when we didn’t hear a single thing about industrial relations­ ­reform before the election and then they sprung a massive sleight of hand on the Australian people.

“I will give Mr Morrison and Mr ­(Josh) Frydenberg credit and say they did talk about their plans for tax before.”

Mr Perrett, who holds the ­Brisbane seat of Moreton, said the starting point of Labor’s negotiations with the government should be its pre-election position to support­ stage one of the package.

“(A mandate) is one of the things to consider but we still need to be true to our Labor values,” he said.

Labor Left MPs, including West Australian Patrick Gorman, are strongly opposed to supporting the entire package, while frontbencher Kristina Keneally said yesterday she had reservations.

Finance Minister Mathias Cormann leapt on Mr Khalil’s call for Labor to support the government’s package, urging the rest of Mr ­Albanese’s team to follow suite.

“Our plan for income tax cuts for all working Australians is in our national interest. We won’t split it and we urge all Labor MPs to follow (Mr Khalil’s) strong lead,” Senator Cormann said.

The Morrison government needs four out of six crossbench senators to support its tax package if Labor and the Greens oppose it.

Re-elected Tasmanian senator Jacqui Lambie said yesterday she was “very open” to backing the ­Coalition’s full suite of tax cuts and changes to asylum medivac legislation, in return for more funding for Tasmania.

“I’m very open on all that,” she said. “Obviously, I still need to get into those department heads and speak to them. I also need to speak to the ministers.

“But everything is open. Nothing has been shut off. It’s like: ‘Well, what have you got? This is the deal I’m looking for, what can we do here?’ ”

The two Centre Alliance crossbenchers are holding out on backing the tax cut plan in its entirety while One Nation leader Pauline Hanson says her support is contingent on a new, government-backed, coal-fired power station.

Stage one of the new tax plan is an increase in the low- and middle-income tax offset measures announced last year, and will range from $255-$1080 for workers on up to $90,000 a year. Stages two and three would lift the top income threshold for the 19 per cent tax bracket to $45,000 and reduce the tax rate for incomes between $45,000 and $200,000 from 32.5 per cent to 30 per cent.

Senator Keneally, Labor’s deputy Senate leader, said she was not convinced the opposition should wave through the plan.

“I have serious questions that haven’t been answered by the government in terms of what stage three costs and how stage three would actually help an economy that is flagging right now,” she told the ABC.

“The government’s solution to this is to not provide direct stimulus now but instead to flag in five years’ time, two elections’ time, tax cuts that will benefit high-income earners.”

Mr Gorman said: “Labor has a responsibility to take the time to ensure we get this right for all Australians and the future of our economy.”