Tax cuts: Scott Morrison says economy will stay on track

Scott Morrison says his economic plan will keep the economy on track, dismissing Labor criticism of part of it.

Scott Morrison is confident tax cuts will boost the economy. Picture: AAP

Scott Morrison has declared his economic plan will keep the economy on track and dismissed Labor claims that the contentious stage three relief to higher income earners will force cuts to government services.

Speaking this morning after parliament passed tax cuts, the centrepiece of the government’s re-election platform, the Prime Minister said they would stimulate the economy and some commentators were at risk of “over-interpreting” Reserve Bank Governor Phillip Lowe’s calls for boosting infrastructure spending.

The tax package will hand an immediate $15 billion in cuts to lower and middle income earners.

Dr Lowe, after cutting official interest rates 0.25 points to a record low of 1 per cent, this week warned the country should “not rely on monetary policy alone’’ and urged the government to spend more on infrastructure while increasing fiscal and productivity measures.

But Mr Morrison said the government had taken a “comprehensive plan’’ to the election because it understood the economic circumstances facing the nation.

“And we know the challenge. That’s why we put this plan together with $100bn worth of infrastructure,’’ he said.

Mr Morrison’s comments came as Anthony Albanese indicated he could keep all of the government’s tax cuts package, walking back suggestions Labor would repeal the third stage of the government’s tax cuts for higher income earners if it won office at the next election due in 2022.

Labor has been deeply critical of stage three which takes effect in 2024-25 and hands tax relief to higher income earners by introducing a 30 per cent tax rate for workers earning between $45,000 and $200,000.

Amid calls for the government to fast-track infrastructure spending in the wake of the RBA governor’s speech earlier this week, Mr Morrison said the government was already responding to the RBA concerns by lifting the total package of infrastructure spending to $100b in the May budget from $75bn.

“This year, 2019-20, there’s $13.4bn going into infrastructure. We’ve got another 280 projects currently now under way or in planning,” Mr Morrison told ABC radio this morning.

“What we’ve been doing is building this infrastructure pipeline very much consistent with when Phil Lowe first raised this with me.

“We agree and have agreed for a long time. I think people need to be careful of over-interpreting Mr Lowe’s remarks. What he’s saying is get the infrastructure activity happening and that is exactly what we are doing ... we’ve known about this for a long time.”

In his first question time against Mr Albanese yesterday, Mr Morrison said there would be no cuts to services as a result of tax cuts to higher income earners.

Today, the Prime Minister said that the pre-election fiscal outlook took both the full tax cut package and his record spending on schools and hospitals into consideration.

“That is the report that is provided independently by the secretaries of Finance and Treasury before you go into an election ... that’s why I could assert quite confidently in the House that our spending plans are set out and they are not affected,” he told ABC radio.

“It’s not my word for it, it’s the secretaries of Treasury and Finance.”

Mr Morrison said the tax cuts would stimulate the economy but it was up to Australian workers to decide what to spend their up to $1080 tax rebate on.

“It’s their money, it’s not mine,” he said.

Earlier this morning, the Opposition Leader walked back the possibility of Labor repealing tax cuts for higher income earners if Labor won the 2022 federal election.

After the Opposition voted for Scott Morrison’s full tax package last night and after trying to split out the third tranche of the plan, Mr Albanese and Mr Chalmers said they would review stage three of the bill as they still considered those tax cuts “irresponsible.”

In a statement, Mr Albanese and Dr Chalmers said: “We will review Stage Three closer to the next election and propose our own policies which take into account the economic and budget conditions at the time,” the statement said

However, appearing on the Nine Network this morning, Mr Albanese denied he had any plans to repeal stage three if he were to become prime minister.

“No, I haven’t said that at all,” he said. “The government and Labor will go to the election in three years’ time with policies. Economic policies ... we didn’t say that at all.”