No plan to tinker with stage 3 tax cuts: Jones

Assistant Treasurer Stephen Jones says the government is not looking at altering stage three tax cuts, despite Labor backbenchers getting jittery over the cost-of-living crisis.

Labor MPs are pushing for expanded targeted relief for millions more Australians and an overhaul of stage three tax cuts due to commence from July 1 next year.

Labor MPs are pushing for expanded targeted relief for millions more Australians and an overhaul of stage 3 tax cuts due to commence from July 1 next year, amid concerns the government is struggling to sell its $23bn cost-of-living package.

Jim Chalmers and Katy Gallagher will this week hold talks with jittery Labor backbenchers about the government’s approach to the cost-of-living crisis ahead of the mid-year budget update, due to be released within weeks.

After The Australian revealed Labor MPs would urge senior government figures to consider new cost-of-living measures before Christmas, Dr Chalmers was pressed by backbenchers in Tuesday’s caucus meeting about his approach to the Mid-Year Economic and Fiscal Outlook (MYEFO).

Labor backbenchers, who will meet with Dr Chalmers and Senator Gallagher this week, have expressed concerns the government’s 10-point cost-of-living plan has been too targeted and should be expanded to capture more households.

Some government MPs are also re-prosecuting the case to trim Coalition-era stage 3 tax cuts, which the Prime Minister has committed to several times since the election.

National cabinet will also meet next Wednesday with Mr Albanese likely to urge state and territory leaders to step up responsibility for disability expenditure and housing.

Labor MPs are urging the Prime Minister to tackle cost of living to help struggling families.

Assistant Treasurer Stephen Jones said on Wednesday morning that the government is not looking at trimming stage three tax cuts, re-iterating Labor had not changed its position.

“There’s been no consideration of the stage three tax cuts, no discussion of that,” Mr Jones told Sky News. “We are always looking at ways to find savings in the budget but we’re not looking at, there’s been no consideration of the stage three tax cuts.”

Labor MPs Jerome Laxale and Brian Mitchell broke ranks to urge Mr Albanese to implement tougher policies directly supporting families struggling under soaring cost of living pressures.

Mr Laxale, a first-term MP who won the marginal Sydney seat of Bennelong from the Liberals, said Labor must expand cost of living policies including cheaper medicines, fee-free TAFE and electricity rebates to a larger cohort of people.

“It’s clear that our first round of cost-of-living has been very targeted and supported by many people but I now think we are now at a point where we need to start looking at expanding eligibility of those programs at MYEFO or the budget next year,” Mr Laxale told The Australian.

“We have to have cost of living at the front of mind and it needs to be responsive to the needs of the time.”

On stage 3 tax cuts, Mr Laxale said “we will have to look at the needs of the electorate next year and see where the economy is at by then and see where we land”.

“Cost of living is biting in middle income areas and I would encourage the government to look at that leading into the next budget,” he said.

Mr Mitchell, who narrowly held his central Tasmanian seat of Lyons by 1344 votes at the 2022 election, wants new policies focused on people struggling with rising mortgage repayments following the Reserve Bank’s 13 rate hikes.

“The key issue is making sure that all segments of the economy are pulling in the same direction in the fight against inflation,” Mr Mitchell, who warned mortgage holders were “bearing the brunt” of soaring inflation, said.

“The RBA rate hikes is a blunt instrument and I’d like to see what else can we brought to the table in terms of other sections of the community so that all sections of the community are pulling in the same direction … perhaps we need some sharper, more agile tools at our disposal.”

Another Labor MP said cost-of-living issues were biting heading into the Christmas period and rate hikes “weren’t helping”.

The MP, who panned Catherine King’s cuts to infrastructure projects as “diabolical”, said there are “clearly a lot of huge costs that are really impacting people, like transport and tolls”.

The Australian understands Mr Albanese, Dr Chalmers and Senator Gallagher will maintain discipline and avoid kneejerk spending or a rush of policies in response to a midterm plunge in voter support.

The Prime Minister and Treasurer aren’t expected to respond to a midterm polling slump with excessive spending.

Newspoll this week revealed Labor’s primary vote had fallen to 31 per cent – below its 2022 election result – and the ALP was now deadlocked 50-50 per cent with the Coalition on two-party preferred vote. A special Newspoll question showed 50 per cent of Australians felt they were worse off than two years ago.

Senior Labor sources said Australians were looking to the government to do more, but they intended to “hold the line” and back existing policies that avoid stoking inflation while keeping costs down.

“The economic challenge revolves around inflation and come election time, we will be in a different phase to where we are now. The dynamics at midterm is that we are comfortable with the story that we’ve got to tell about the interventions that we’ve made and the fact they’re not inflationary,” a Labor source said.

“Around the world, the inflation challenge has lasted longer than experts and commentators forecast in early 2022.

“By the time that we get to the election, the debate will be about who has got the better plan and we will point to what we have done.”

Mr Albanese and Dr Chalmers will get through the summer break before hitting the ground running on domestic policies heading towards the May budget.

In Question Time on Tuesday, Mr Albanese rejected Coalition accusations that his government had made “Australians worse off”.

With unemployment at historic lows and more than 620,000 jobs created since May last year, Mr Albanese spruiked Labor’s cost-of-living measures including cheaper medicine, childcare support and increases to Commonwealth Rent Assistance which he said had “been achieved without any support” from the opposition.

“The gender pay gap … is at a record low. The number of women employed full time is at a record high. Business investment is up,” Mr Albanese said.

“The number of days lost to industrial disputes are down. The number of single mums getting support is up”.