Lambie’s vote locks in Coalition victory over tax cuts

The government has locked in the crossbench support it needs to pass its $158bn tax package.

Independent senator Jacqui Lambie. Picture: Kym Smith

The Morrison government has locked in the crossbench support it needs to have its $158 billion ­personal income tax package ­legislated today when the Senate votes on the plan to deliver further financial relief for about 10 million workers.

The Australian understands Tasmanian senator Jacqui Lambie late yesterday joined Centre Alliance’s Rex Patrick and Stirling Griff in agreeing to pass the tax cuts in full without amendment, following negotiations led by the government’s ­Senate leader, ­Mathias Cormann.

A senior government source ­revealed last night that Senator Lambie had given the government a commitment she would support the tax cuts in full today.

With the support of independent senator Cory Bernardi already secured, the ­Coalition last night had the four crossbench votes it needed to get to 39 and ensure the bill could pass the Senate today.

Labor’s shadow cabinet will meet again today to make a final decision on whether it will vote against the full package if it fails to secure amendments that would split the bill by bringing forward lower-end tax relief while ­dumping longer-term tax relief for middle- and higher-income earners. The Australian understands a growing number of Labor MPs have told the leadership team they do not want to be put in a position where they are forced to vote against tax cuts.

The passage of the package would bring the total legislated ­income tax relief delivered by the Coalition over the past two years to $302bn.

It would immediately deliver $1080 in tax relief to those earning between $48,000 and $90,000 under stage one of the plan, which has bipartisan support.

Labor wants to bring forward tax cuts scheduled for 2022-23 and carve out stage three, which from 2024-25 lowers the tax rate from 32.5 per cent to 30 per cent for Australians earning between $45,000 and $200,000.

The third phase would cost the budget $95bn to 2029-30.

Senator Lambie had been holding out support for the package, demanding the government waive Tasmania’s $157 million social housing debt in exchange for her deciding vote. Senator Cormann, who is also Finance Minister, has maintained there would be no “special deals” with crossbenchers linked directly to the tax cuts with. He has said that the government would consider any ideas that the crossbench had on their merits.

“We are always happy to engage with senators in relation to issues of concern to them and their constituents,” Senator Cormann said. “We will be putting our plan for lower income taxes to the Senate tomorrow. We call on Labor and all other non-government senators to act in the national interest by supporting our income tax reforms in full. Our income tax plan is economically necessary and fiscally ­responsible and it was endorsed by the Australian people at an ­election.”

Senator Griff said discussions with the government on measures to reduce gas prices, which the minor party had called for in order to support the entire tax cuts ­package, were “progressing very well”. An east coast gas reserve is one policy being considered, as well as a modification to the Australian Domestic Gas Security Mechanism, which can be used to force ­exporters to quarantine gas for Australian consumers.

Senator Griff said Centre Alliance “should be able to confirm our final position early tomorrow”.

Senator Lambie said people in her home state were “doing it tough”.

“For them, $1000 in their back pocket now will give them some immediate relief,” she said.

“But there are thousands of Tasmanians who are on the pension, New­start, and don’t earn enough money to pay tax, and they don’t see any benefit from a tax cut.”

The outspoken senator said the Tasmanian government owed the federal government $157m that was “holding Tasmania back and denying shelter to thousands of Tasmanian families”.

“It’s only by having the balance of power for Tasmania in the Senate that real debt relief is going to happen and that’s what I am here to fight for,” she said.

“There is no way in good conscience I can vote for substantial tax cuts without making sure that the people who so desperately need a roof over their heads aren’t left to go without.

“This isn’t going to fix every problem in Tasmania, but it’s a start. It would free up enough money to find a home for 3000 people on the critical list through accommodation and casework.”

One Nation leader Pauline Hanson wrote to Scott Morrison yesterday, reaffirming her party’s support for stages one and two of the tax cuts but was “steadfast on rejecting the 2024-25 cuts outlined in stage three”.

She will support Labor’s amendments in the Senate to bring forward stage two and carve out stage three from the package.

“At the rate this country is going, the tax cuts offered in stages one and two will be given in one hand but taken with the other with every increasing electricity and water cost,” Senator Hanson said.

“One Nation supports tax cuts as we did in the last parliament, but we have a responsibility not to tick and flick the irresponsible third stage that won’t come into effect for half a decade or two elections and cost the economy $95bn.”

Opposition Treasury spokesman Jim Chalmers said his plan to bring forward stage two of the tax cuts would not affect the surplus.