Labor plans to spend up to $40m selling its stage 3 tax changes

Anthony Albanese will spend up to $40m of taxpayer money selling his stage three tax revamp to voters.

Treasury secretary Steven Kennedy in Senate Estimates on Wednesday. Picture: NCA NewsWire / Martin Ollman

Anthony Albanese will spend up to $40m of taxpayer money selling his stage three tax revamp to voters, as new evidence revealed the government knew early on that Treasury’s advice on further cost-of-living relief would involve breaking a key election promise.

Treasury officials told Senate estimates on Wednesday a new spin unit would be set up and communications experts would be hired to sell the benefits of the updated package.

With Peter Dutton attacking the Prime Minister over breaking an election promise not to touch the tax cuts, Finance Minister Katy Gallagher said “the decision of government is to agree to a campaign of up to $40m over two financial years in relation to the tax campaign”.

“That hasn’t been finalised because we haven’t got a campaign in place and it hasn’t been approved. And so we’ve made a provision,” Senator Gallagher said.

The publicity blitz would not start before the Dunkley by-election on March 2, she said.

The department has released expressions of interest for people with “broad” communications expertise to fill a number of roles to execute the planned public information campaign.

Under questioning by Liberal senator Dean Smith at Senate estimates, a Treasury official agreed that the “predominant work” to be undertaken by the new unit would be to sell the benefits of the revamped stage three legislation, which is yet to pass through the parliament.

Senator Gallagher said the $40m stage three tax roadshow would be of a “similar size and scale” to the public information campaign that followed the announcement of the three-stage income tax reforms in 2019 under the Coalition.

Later in the day, however, the Finance Minister confirmed the former Coalition government spent substantially less – below $24m – on public information campaigns over three years supporting the first two stages of the personal income tax reforms.

Opposition Treasury spokesman Angus Taylor said “the government’s broken promise meant four million people would be worse off in the next 10 years, and it would cost Australians an extra $28bn in taxes”.

“After spending $450m on a failed referendum and adding $209bn of extra spending, this government is spending $40m on an advertising campaign for their lie to the Australian people,” Mr Taylor said.

Speaking in parliament as the tax cut bill was debated, Mr Albanese said the stage three revamp was “aimed squarely at regional Australia and the outer suburbs”.

He said higher income earners in his electorate had told him they agreed with the changed position.

“They are telling me that our tax cuts are fairer,” he said.

“They understand that a good society means not leaving people behind. They understand that people on average wages – Middle Australia – will get double the tax cut that they were going to get under the previous system.”

The debate over stage three came as Treasury secretary Steven Kennedy revealed Jim Chalmers knew that a request on December 11 to develop options to address cost of living pressures on middle-income Australians would likely involve a redesign of the stage three tax cuts.

Under questioning by opposition finance spokeswoman Jane Hume in Senate estimates, Dr Kennedy said the meeting with the Treasurer in December was about “sharpening up” his department’s ongoing considerations on potential cost-of-living measures, “and the framing of it needing to go to millions of people and not affect inflation”.

“And I outlined in broad terms that there were not going to be many opportunities to do that without looking at the tax system,” Dr Kennedy said.

This followed a separate parliamentary committee hearing on Friday when the Treasury boss made it clear the government had been kept in the loop about plans to overhaul the stage three tax cuts over December and January.

Speaking on December 21 – or 10 days after the December 11 meeting – Mr Albanese said the government had “made no decisions along those lines (to change stage three tax cuts) – we’re not reconsidering that position”.

Dr Kennedy on Wednesday again strenuously denied he had been directed to come up with a redesigned stage three.

“Obviously, I serve the government, but I must be in a position to develop that advice independently, and then it’s up to them. It’s what I’ve done repeatedly throughout my career,” he said.

“And my approach in this case did not change from the approach I’ve taken over many years.”

Dr Kennedy also flagged that a second straight budget surplus was increasingly likely, saying higher than assumed commodity prices continued to swell government coffers and there were “further upside risks to tax receipts”.

The mid-year budget update in December showed a vastly ­improved deficit forecast for 2023-24 of $1.1bn