Shorten’s magic pudding on tax and surplus

Labor will promise tax cuts to three million more low-­income workers and bigger surpluses.

Labor leader Bill Shorten during question time yesterday. Picture: Kym Smith

Bill Shorten will promise to extend personal tax cuts to three million more low-­income workers, pledge bigger budget surpluses and chart a course to end government debt, in a bid to neutralise Scott Morrison’s key election strategy painting Labor as an economic wrecking ball.

The leaders faced off yesterday in an aggressive precursor to a pitched electoral battle to win the hearts and minds of middle Australia. With an election expected to be called within days, the Opposition Leader faces a Coalition ­attack depicting Labor’s election platform as a socialist redistribution of wealth that would burden the economy with $200 billion in new taxes.

In a pre-emptive strike ahead of Mr Shorten’s budget reply speech tonight, Josh Frydenberg will today unveil a 16-page brochure ­titled Labor’s Tax Bill. It targets the so-called “retiree tax”, crackdowns on negative gearing, capital gains tax and discretionary trusts, Labor’s “electricity tax” and higher income taxes. “Bill Shorten poses the greatest risk to Australia’s economy in a generation. Labor would put at risk Australia’s 27 years of consec­utive economic growth,” the Treasurer said.

The heightening of the political contest comes as Labor staffers make plans to move to the party’s campaign headquarters in Sydney’s Parramatta this weekend. The Coalition is also setting up its federal campaign headquarters, with 130 staff at a base in Brisbane.

Putting essential services at the centre of his budget-in-reply speech tonight, Mr Shorten will launch a campaign to shift the battle­lines to a fight over universal healthcare.

Labor is also poised to revive the Medicare scare campaign that almost won it the 2016 election on the back of false claims that the Liberal Party planned to privatise the ­national health scheme.

He will also seek to up the ante in the contest over competing ­income tax plans following Mr Frydenberg’s unveiling of a $302bn tax cut agenda in Tuesday’s budget.

With both major parties poised to move swiftly to a campaign footing over the weekend — with the expectation that a May 11 or May 18 poll will be called as early as Sunday — the Labor leader will offer to match the government’s income tax plans for about 10 million people.

But he will also go further and announce deeper cuts for workers on less than $40,000. Labor says there are about 2.9 million taxpayers earning less than $40,000 and 57 per cent of them are women, including part-time working mums.

Mr Shorten argues that a retail worker on $35,000 a year would get a tax cut of $255 a year under the Liberal plan, but $350 under Labor’s original plan. “Make no mistake, this is a Liberal Party tax on working mums,” he said.

“Families are already dealing with cuts to childcare and no funding certainty for kindergarten under the Liberals, the last thing they need is higher taxes under the Liberals. Whether it’s lower taxes, better super or universal preschool, Labor is the party for working mums and working families.”

Mr Frydenberg rejected the claim that the government had left behind low-income earners. He also moved to counter a Labor scare campaign on health, pledging­ that a re-elected Morrison government would “continue to guarantee Medicare”.

Ahead of Mr Shorten’s speech today, Mr Frydenberg said Australians faced a “very clear choice at this election, a choice between Bill Shorten and his $200bn of higher taxes or the Morrison government and our lower taxes”.

“Bill Shorten will talk a big game, but he can’t deliver it. He will give with one hand, and take with the other,” he said.

Speaking to the National Press Club in Canberra yesterday, Mr Frydenberg pointed to the second element of the government’s plan to introduce a flatter tax rate of 30 per cent for those earning ­between $45,000 and $200,000 from July 1, 2024.

“That’s going to create a fairer, simpler tax system,” he said. “And the people at the lower end of the income scale will actually get a higher proportion of their tax bill reduced as a result of the policies that we have put in place.”

He also said that Labor had not supported the government’s legislation — which passed last year — abolishing the 37 per cent tax rate and implementing a flat rate of 32.5 per cent for those earning between­ $41,000 and $200,000 from July 2024.

This week’s budget has further reduced that 32.5 per cent rate to a 30 per cent rate, with Mr Frydenberg saying the system would remain highly progressive, with the top 5 per cent of taxpayers paying a third of all income tax collected.

“Labor talks the big game when it comes to taxes but they deliver very little because, in fact, they are … giving with one hand and taking with the other,” he said.

He also set up the election as a contest over trust on economic management, with the government yesterday framing its budget pitch around the key themes of tax cuts, service delivery and surpluses. Mr Frydenberg used his address­ to home in on essential services in a bid to challenge Labor in its traditional areas of strength, including on health and education, and pitch the Coalition’s policy agenda in a more compassionate light.

Mr Frydenberg said the listing of more than 2000 new drugs on the Pharmaceutical Benefits Scheme, at a cost of more than $10bn, was one of the government’s “proudest achievements”, and talked up $730m flowing through to mental health to address­ suicide rates.

Labor also sought to make mileage out of a post-budget decis­ion made by Mr Frydenberg, Mr Morrison and Finance Minister Mathias Cormann to extend a one-off energy payment to people on the dole, adding one million people and $80m to the measure.

Initially only applying to people­ on the age pension, disability support pension, carer payment, single-parent payment and a range of veterans’ allowances, the legislation now includes an additional 11 payment categories.

More than 720,000 people on the Newstart Allowance and almos­t 300,000 on other payments will receive the one-off $75 payment for singles and $125 for couples, with Labor Treasury spokesman Chris Bowen saying the last-minute change was “just chaotic”. “It just shows that this government doesn’t get it and that vulnerable Australians are an afterthoug­ht,” he said.