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The people gave Coalition a mandate to cut taxes

Opinion Piece

Date : 01 July 2019

Author: The Hon Josh Frydenberg MP

Publication: The Australian

Six weeks ago Bill Shorten’s leadership team met for a vice-regal photo.

It was a study in hubris. Designed to hit the newspapers the day after their “inevitable” elevation to office, it reflected the Labor view that May 18 was a coronation, not a contest.

The Australian people had other ideas.

Their verdict was an emphatic rejection of Labor’s $387 billion in higher taxes and a vote in favour of Scott Morrison’s tax cuts for workers.

Opposition Treasury spokesman Jim Chalmers said it was a “decisive” result. It has forced Labor back to the drawing board and leadership under Anthony Albanese to undertake an “illuminating and cathartic” nationwide listening tour.

If it takes a “listening tour” to find out what Australians really think, what was Labor doing for the past six years?

In fact, Chalmers’s main takeout from the tour was not about Australians but about himself, calling it “good for the soul”.

With the Labor bus back in the garage and his “road trip” behind him, Chalmers is now all too keen to claim that Labor has changed course.

Suddenly aspiration is in, with Labor saying “it’s never been more important than now”.

The “top end of town” is out, with Chalmers admitting “some of the language we used last term didn’t strike the right chord in the community”.

And Australians earning $200,000 a year are no longer the enemies in Labor’s class war.

As if this rhetorical repudiation of the Shorten platform weren’t enough, Chalmers went on to say, with a straight face, that Labor’s “highest priority” was tax relief.

The problem, however, with Labor’s new rhetoric is that it is just that. It can’t be believed.

Labor was, is and will always be the party of higher taxes.

Higher taxes to chase higher spending is in its DNA.

The shadow cabinet that ticked off on the pre-election policies, which would have seen Labor become the highest taxing government in Australia’s history, remains largely unchanged.

The Labor Party’s national platform, which explicitly rejects a speed limit on the amount of tax a government can impose, saying it “serves no useful economic purpose”, is still current.

And Chalmers, in his previous role as finance spokesman, was the co-architect with Chris Bowen of Labor’s $387bn of higher taxes on retirees, superannuants, renters, homeowners, family businesses and income earners.

There is now no hiding from the fact Chalmers said he was “pleased” and “proud” of Labor’s “courageous tax changes”. Not to mention his enthusiastic support for the mining and carbon taxes, “the fruits of which” he says “are yet to be properly understood”.

He claimed in his book Glory Daze that the carbon tax was “easily as significant as any of the big economic reforms of the Hawke-Keating period”.

That’s right, for Chalmers, higher taxes are more important than floating the dollar, enterprise bargaining or tariff reductions.

It is no wonder then, with Chalmers as Treasury spokesman, that Labor continues to oppose our full package of tax cuts that have been endorsed by the people.

What really matters is not the language that Labor may conveniently seek to modify postelection but the beliefs and values that led them to that language in the first place.

So let’s be clear what the Coalition’s tax cuts are about: rewarding effort, encouraging aspiration and putting more money into the pockets of hardworking Australians.

In the short term, they extend the low and middle-income offset to $1080 for those earning up to $126,000 a year.

More than 10 million taxpayers will be better off once the legislation is passed and taxpayers put in their 2018-19 tax return.

From July 1, 2022, the 19 per cent threshold will be extended to $45,000, and from July 1, 2024, the tax rate for those earning between $45,000 and $200,000 will be reduced to 30c.

The net result is a simpler, flatter tax system where 94 per cent of Australians will pay no more than 30c in the dollar.

These reforms also tackle bracket creep that sees workers hit with a higher marginal rate as they work additional hours, win a promotion, take a second job or see their wages go up to compensate for inflation.

Take, for example, someone earning $180,000 in 2008. That is the equivalent of earning $284,000 a year in 2024-25.

In this period, their tax bill would have increased by 76 per cent compared with a 58 per cent rise in income.

Rather than getting on board with our tax cuts, Labor comes up with a different excuse every day.

First, it says it benefits the “top end of town” when in reality it is targeted at low and middle-income earners, doesn’t change the top rate of tax and maintains the progressive nature of our tax system. Someone on $200,000 will pay 10 times as much tax as someone on $45,000.

Second, Labor says it shouldn’t be asked to commit to a tax cut in the medium term, ignoring the fact it took to the election tax increases and spending commitments that were locked in for perpetuity.

Third, it claims the budget can’t afford it, even though it is already baked into the budget forecasts, which will see the economy continue to grow and continued surpluses.

And yesterday we learned in a shambolic interview from new Labor finance spokeswoman Katy Gallagher that Labor has its best excuse yet: that it can’t take a decision until it sees what the crossbench does.

In other words, Labor can only vote for it, if it can’t oppose it.

To paraphrase Groucho Marx, these are my tax principles – if you don’t like them, here are some others!

Labor made no secret of its tax policies at the election.

Well, now the Australian people have spoken. They want the Coalition’s tax package in full.

The message to Labor is clear: don’t deny the tax cuts Australians voted for, and if you’re going on a listening tour, don’t ignore what they say.

Josh Frydenberg is the federal Treasurer.

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