Anthony Albanese tax cut uncertainty hurting four of NSW lowest taxable income electorates

Labor is standing in the way of thousands of dollars worth of tax cuts for its own voters in NSW’s poorest electorates including parts of Western Sydney. It comes as leader Anthony Albanese yesterday suggested the government did not have a mandate for its full tax cut agenda. FEDERAL POLITICS WRAP

• Tax cut delays hit women and business hardest
• Labor divided and conquered by voters on tax cuts

Labor is standing in the way of thousands of dollars worth of tax cuts for its own voters in NSW’s poorest electorates including parts of Western Sydney.

It comes as leader Anthony Albanese yesterday suggested the government did not have a mandate for its full tax cut agenda.

The full package passed the lower house last tonight after a three-hour debate, during which Labor even tried to change the name of the bill to Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money But Not For a Really Long Time).

The debate on the package will be thrashed out in the senate tomorrow.

Scott Morrison and Anthony Albanese walking into the Senate for the official opening of the 46th government. Picture: Gary Ramage

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Earlier, Treasurer Josh Frydenberg seized on the Reserve Bank statement on cutting interest rates to urge the parliament to pass his full package of tax cuts, while Mr Albanese hit back claiming weakness in the economy meant his plan to bring forward stage two but hold stage three was crucial.

The government is increasingly confident it can secure the support of crossbench Senator Jacqui Lambie, who when combined with Cory Bernardi and the Centre Alliance would be sufficient.

Even if the bill can pass without their backing, Labor MPs are deeply concerned about how voting against any tax cut will look to their electorates.

The government is confident it can secure Jacqui Lambie’s support on the tax cuts. Picture: Kym Smith

Combined with Senator Cory Bernardi. Picture: AAP Image/Sam Mooy

Mr Albanese doubled down on his call for stage three to be put on hold and stage two brought forward, saying: “Guess what. 100 per cent of people didn’t vote for the Coalition.

He said only his tax plan offered a tax cut for all Australians this year.

But blocking stage three risks thousands of extra dollars in savings for middle income earners from 2024-25.

The Daily Telegraph can reveal an analysis of the five NSW electorates with the state’s lowest ­average taxable income shows their regular worker will miss out on up to $16,000 in tax savings over the course of a decade.

Of these electorates, four are held by Labor, meaning the party is ­willing to stand between its own voters in need and thousands of dollars in ­savings. For example, Paul Keating’s old electorate of Blaxland — now held by Jason Clare — has the lowest average taxable income in the state.

Labor’s reticence would stand between those hard working voters and a $15,516 tax cut over the next 10 years. Voters in Chifley, Fow­ler and Werriwa as well as Page which is held by the Nationals all have similar average earnings and so would reap between $15,000 and $16,000 in savings under the government’s plan.

A significant portion of the tax breaks come from stage three of the plan, which Labor opposes.

Mr Albanese confirmed shadow cabinet would decide on its position if its bid to amend the bill fails in the Senate.

RATE CUT A HIT TO RETIREE BATTLERS

Retirees with a small nest egg are the biggest losers from the Reserve Bank’s second straight interest rate cut, to a historic low of 1 per cent.

Saving deposit interest rates are set to follow the ­official cut and fall 0.25 per cent, leaving pensioners suffering with the lowest savings rates in a lifetime.

“Assuming banks cut their rates by 0.25 per cent it will take deposit rates to their lowest since the mid-1950s and headline (standard variable) mortgage rates to their lowest since the early 1950s, ­although many mortgage rates are already at record lows,” AMP Capital chief economist Shane Oliver said.

The elderly will be hit hardest following RBA’s second rate cut.

People who have saved for retirement and have $100,000 in the bank would get $256 a year less — according to analysis from finder.com — based on the average interest rate on 15 top savings accounts falling from 2.69 per cent to 2.44 per cent.

Across the board the ­nat­ion’s savers would take a $2.8 billion hit to interest earned on the total $1.123 trillion in deposits, Mr Oliver said.

HOW THE RATE CUT WILL AFFECT YOU

Less wealthy retirees are the most likely to have all their savings in low-risk ­investments like interest-earning bank accounts, making them the most exposed to losses when banks pass on the cash rate and cut their savings account rates.

“If you are an older person who doesn’t have a lot of super and a lot of savings, the bulk of that will be in deposits. Someone who has $100,000, they are going to have most of that in bank deposits because they can’t afford to lose any of it,” Mr Oliver said.

He said wealthier retirees were more likely to have ­investments in other assets, such as shares. The RBA’s rate cut last month and the May election have also provided a boost to shares, with the Australian market up 4 per cent since the election.

Finder.com analyst Graham Cooke said the banks had been squeezing savers on interest rates despite the official cash rate remaining unchanged until last month at 1.5 per cent. The basic savings rate had halved to 0.8 per cent since August 2016, he said.

“You can see regular savings products becoming pretty useless,” Mr Cooke said.

The big four banks last night had not announced any changes to their standard savings account interest rates.

ANZ passed on the full rate cut to home borrowers after being admonished by Treasurer Josh Frydenberg for failing to do so after the June RBA rate cut.

The other big banks did not follow suit, all lowering rates by less than 0.25 per cent — Commonwealth Bank and NAB both by 0.19 per cent and Westpac by 0.2 per cent.

— Jennifer Sexton

DUO FIRST AMONG UNEQUALS

While the interest rate cuts will be good news for many, first homebuyers Sinead Casey and her fiance Rhys James won’t be reaping any benefits.

The young couple, who bought their new home in Sydney’s Box Hill last year but only moved in April, signed a contract for the next three years with a fixed interest rate.

Sinead Casey and her partner Rhys James won’t benefit from the interest rate cuts. Picture: Adam Yip

“We put our deposit down on the block and went through all the different processes and payments, and within that time interest rates were fluctuating,” Ms Casey said.

— Adella Beaini

Originally published as Anthony Albanese tax cut uncertainty hurting four of NSW lowest taxable income electorates