‘Differences of opinion’ within Labor over stage-three tax cuts amid worsening economic outlook

by Sarah Martin
Assistant treasurer Stephen Jones says government ‘not walking away’ from previous policy but framing budget in ‘difficult’ circumstances

There are “differences of opinion” within the government about what to do over the stage-three tax cuts, and the focus of the budget will be to “not make a bad situation worse”, the assistant treasurer, Stephen Jones, has said.

The government’s expenditure review committee is meeting this week to work out whether to amend its position on the third stage of the tax cuts ahead of the 25 October budget. The treasurer, Jim Chalmers, has made clear the tax cuts are under review amid a worsening economic outlook.

Backbench MPs have expressed mixed views on the fate of the tax policy, with several publicly calling on Wednesday for the government not to break a perceived election pledge.

The MP for the Sydney seat of Macarthur, Mike Freelander, said the government had “made promises, and we need to stick to them”, and said those earning $200,000 a year were “well off, but not rich”.

“We’ve made promises and people have planned on the promises we made, and I think we should stick with them,” he told Sky News.

But Labor MP for the seat of Fremantle, Josh Wilson, said he had received feedback from his constituents that the spending on stage 3 tax cuts could be better directed elsewhere.

“The treasurer is right to say the Stage 3 tax cuts don’t bear directly on our present challenges, but it’s heartening to hear from people in my community who know the Coalition left the budget in awful shape and would rather see resources go into shared benefits like health, aged care, NDIS, or even defence than into their own pockets,” Wilson told Guardian Australia.

Dan Repacholi, the MP for the seat of Hunter, said he did not believe the government should change its position in this year’s budget, saying it should focus on other priorities.

“I think it should be assessed closer to the time, who knows where we are going to be in two years’ time,” Repacholi told Guardian Australia.

“I’m of the opinion that there are a heap of other things that are on people’s minds right now.”

Josh Burns, Labor MP for Macnamara, said he was listening to the views of his electorate.

“I’m having conversations inside the government on the economic impacts of the current economic headwinds, cost of living pressures, and the views of people in Macnamara on the stage 3 tax cuts,” he told Guardian Australia.

Numerous Labor MPs declined to speak on the record about the tax cuts, citing ongoing internal debate within the party and an evolving economic situation. Several MPs said they wanted to see changes to the tax cuts as legislated, but did not want to speak on the record.

Daniel Mulino, chair of the parliament’s economics committee, rubbished comparisons between Australia’s stage 3 tax cuts and the shelving of tax cuts in Britain. The Member for Fraser noted Australia’s tax changes would not come into effect until 2024, unlike the United Kingdom’s more immediate changes.

“Most people expect that the economic conditions both here and internationally are going to be quite different in a couple of years,” Mulino told the ABC.

“What we need to see is fiscal and monetary policy working together but also government introducing broader policy settings that help us deal with this inflation challenge.”

Jones said that the government was not walking away from its previous policy of supporting the package, but was “trying to frame a budget in a very difficult set of circumstances”.

“Everywhere we look, it’s trouble, it’s difficult, but that’s the job we’ve been given – framing a budget in these very difficult circumstances,” he told Sky News. “We’re looking to ride through these difficult set of circumstances and set Australia up for the medium term.

When asked if the government could rule out amending the package – which scraps the $120,000-to-$180,000 tax bracket, lifts the top tax bracket threshold from $180,000 to $200,000, and puts in place a 30% tax rate for those earning between $45,000 and $200,000 – Jones said the budget was still being worked through.

“We have got to deal with the cards that we’re dealt,” he said. “We’ve got to ensure that as we’re putting together this difficult budget we don’t make a bad situation worse.”

He said there were divisions within the party over the policy, but they were not along the party’s factional lines.

“One of the good things about the Labor party is there’s lots of really bright people with strong thoughts and opinions,” he said. “You’d be surprised if there wasn’t differences of opinions on just about every issue.

“This is not a left-right thing … You’ll find strong opinions on this on every side and every different flavour, and in my experience of our party over in excess of 30 years … those sort of left and right things really don’t hold up when you’re dealing with difficult and challenging economic policy questions.”

Earlier on Wednesday, the finance minister, Katy Gallagher, said the government was looking at the deteriorating economic context internationally and pressures domestically as it finalised the budget.

“Let’s not pretend that the economic circumstances aren’t changing and haven’t changed since May,” Gallagher told ABC Radio National.