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RUBY:

From Schwartz Media I’m Ruby Jones, this is 7am.

While many Australians were focused on watching the Olympics this week, the federal Labor Opposition quietly made some significant policy changes.

The party has now fallen in line with the government's tax cuts for the wealthy… despite previously labelling them unfair and ineffective.

The backflip comes as Labor tries to minimise potential attacks from the Coalition, ahead of the next election.
Today - Columnist for The Saturday Paper Paul Bongiorno on Labor’s small-target strategy, and if it will work for them.

It’s Friday, July 30.

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RUBY:

Paul this week, the federal Labour leader, Anthony Albanese, announced some fairly big policy changes. Can you tell me about them?

PAUL:

Well, Ruby, on the very same day, the nation celebrated the extraordinary feat of continuously winning Olympic gold in the pool in Tokyo.

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"To become a legend, you have to beat a legend. And that's what we've seen Australia win gold."

PAUL:

Anthony Albanese did a political triple backflip with Pike. It was a move he hopes will bring him just as glorious a victory. You know, it was curious timing to outline a new political direction because if Albanese thinks his latest announcement is critical to helping him win the election. Well, why was he doing it when the country's so distracted?

I think the obvious answer is Labour simply couldn't waste another minute allowing the Prime Minister, Scott Morrison, to distract from his own significant failures to make the opposition the issue.

RUBY:

Mm ok, so what exactly did Anthony Albanese announce, Paul?

PAUL:

Albanese told a media conference in Brisbane after virtual shadow cabinet and caucus meetings that the Labour Party had signed off on a new tax policy.

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As Labour leader I am absolutely determined to look to the future, not relitigate the past.
What that means is not refighting the last election, but contesting the coming election with a vision for the nation that is positive, that is optimistic, that provides a pathway to build stronger

PAUL:

Essentially, he was announcing a reversal of the party's opposition to the federal government's tax cuts targeting high income earners.

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A Labor government would deliver the same legislated tax relief to more than nine million Australians that has already been legislated through the parliament.

PAUL:

A Labour government will deliver the same legislated tax relief to more than nine million Australians. The Morrison government is promising to do.

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These are not easy decisions, their big decisions. But this is the right decision that we are making today, weighing up a whole range of considerations.

PAUL:

Now, these tax cuts flatten the tax rate to 30 per cent for everyone earning between 45,000 dollars and 200,000 dollars a year.

They do nothing to make the system fairer. Indeed, they widen the gap between the high end and the rest. Certainly the biggest winners from the 17 billion dollars a year cost are those earning above 150,000 dollars. They were legislated two years ago, Ruby, by the Liberals, and that was over the objections of Labour and they set to take effect in 2024-25.

RUBY:

And so what were those objections? What did Labor say back then, Paul, two years ago when these tax cuts were legislated?

PAUL:

Well, Chalmers at the time said that the tax cuts were unfair and ineffective.

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Stage three is the least responsible, least affordable, least fair and least likely to be effective.

PAUL:

Labour at the time pointed out the lion's share of this tax relief, some 80 per cent of the 132 billion dollar cost over the first five years when it goes to the top 20 percent of income earners, those on 150,000 dollars a year and above, and that's billions of dollars of foregone revenue, putting things like funding the NDIS and aged care under pressure.

RUBY:

Mm, so that’s a fairly big turnaround there, Paul, from Labor - from calling these cuts unfair and ineffective, to now adopting the Coalition’s policy, so why are they doing this?

PAUL:

Well, Ruby, it's, I think, hard nosed politics. Labour's making the calculation it needs to run a small target strategy, this time in contrast to the last election and make the government the big target. One senior Labour strategist told me the announcement was long overdue. If the past two defeats had taught them anything, Albanese would need more time in the run up to the election to convince wavering voters that he would not be taxing them to death, as the Liberals so successfully claimed against Bill Shorten in 2019.

RUBY:

OK, so is this purely a political approach then, Paul? The strategy being to mimic the coalition as closely as possible in order to try and avoid being attacked in the way that Labour was last time? If so, how is this gone down within the party? Is this something that everyone is on board with?

PAUL:

Well, Ruby, there was some concern from Labor MPs that the backflip would be hard to sell. But according to my sources, there was unanimous backing for the actual change because it would deny Morrison the unfettered opportunity to fight the election on his terms. One Labour MP put it to me bluntly, we're sick of opposition, he told me.

The Greens leader, Adam Bandt, he accused Labour of betraying its principles.

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This is a trickle down nightmare that will say someone on minimum wage paying the same tax rate as a CEO.

PAUL:

He said, with Labour backing the Liberals trickle down nightmare. Gough Whitlam must be rolling in his grave.

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Gough Whitlam will be spinning in his grave. Labour has abandoned its values by siding with the Liberals.

PAUL:

But I've got no doubt ringing in Albanese's ears after two election losses would be the former Labour prime minister's famous defence of his own pragmatism. Only the impotent, pure Whitlam used to say.

RUBY:

We'll be back in a moment.

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RUBY:

Paul, we're talking about Labour's new taxation policy and the attempt that they're making to minimise attacks from the coalition and move out of opposition. So is it going to work? Is it going to do that?

PAUL:

Well, Ruby, government MPs I've spoken to have no illusions that Labour's repositioning has made life harder for Morrison in the election campaign. Not that any of them think the prime minister is going to go to the people any time this year. The liberals are hoping the prime minister's midweek prediction that lockdown's will be a thing of the past by Christmas will be fact and not just wishful thinking. That's when Morrison promises the vaccine rollout would have ramped up to such an extent that all Australians who wanted the job would have at least received their first dose. Albanese's announcement has certainly flummoxed some senior ministers.

RUBY:

So you're saying that the government has been caught off guard by the taxation announcement Paul?

PAUL:

Well, Ruby, it certainly sounds that way. Finance Minister Simon Birmingham and his colleague, the Treasurer, say you simply can't believe Labour. That was their first response,

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The most agonising, the most halfhearted concession in Australian politics ever.

PAUL:

Birmingham was wheeled out on Monday afternoon to deride the announcement as the most agonising, the most halfhearted concession in Australian politics ever, and one that can't really be believed. He said Labour can't be trusted with it, but undermining Birmingham's contention that Labour would reverse its position if it won the election is the fact, I'm told, that the shadow cabinet discussed the option and rejected it. They war-gamed what would happen if they decided to try and backflip yet again once they were in power. And they were reminded of John Howard, who promised no GST and then nearly lost government after changing his position at the next election.

RUBY:

OK, so it sounds like this policy is set in stone then, Paul. But even if it does prove effective in terms of deflecting some of the coalition's attacks on Labour, does that mean that it is the right approach? Because aside from it being a reversal of their long held position, it is a policy that will see nurses and teachers end up paying the same tax rate as CEOs.

PAUL:

Well, you're right, they Ruby, there's no getting away from the fact the tax cuts are reckless and unfair. As Shadow Treasurer Jim Chalmers said during a parliamentary debate on them a couple of years back, their recklessness made even more so at a time when on the government's own predictions, there are deep budget deficits. As far as the eye can see, the recent Intergenerational Report doesn't see a return to budget surplus in the next 40 years. And it's not good economic policy. It's a cold, calculated political move. Labor's pivot on the high end income tax cuts is aimed solely at making Morrison and his handling of the pandemic and the vaccines and the quarantine the main focus of the election campaign.

And Labour hopes if enough voters who are fed up or angry with Morrison, well, they won't see the Labour Party as a scary alternative. That's what happened to them last time and people stuck with the government. The calculation is this time people won't have so much to be frightened about.

RUBY:

Paul, thank you so much for your time.

PAUL:

Thank you. Ruby, bye.

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RUBY:

Also in the news today..

NSW Premier Gladys Berejiklian yesterday announced a significant tightening of restrictions for Sydney’s south-west suburbs after the state recorded 239 new local Covid-19 cases.

The new rules mean residents in a number of local government areas will be required to wear masks when outside and abide by a 5km travel limit.

And Australia had mixed results in the pool yesterday at the Tokyo Olympic Games.

Izaac Stubblety-Cook won gold in the men's 200 metres breaststroke, while Kyle Chalmers picked up silver in the 100 metre freestyle. The women’s 4 by 200 metre team finished third.

7am is a daily show from The Monthly and The Saturday Paper. It’s produced by Elle Marsh, Michelle Macklem, Kara Jensen-Mackinnon and Anu Hasbold.

Our senior producer is Ruby Schwartz and our technical producer is Atticus Bastow.

Brian Campeau mixes the show. Our editor is Osman Faruqi. Erik Jensen is our editor-in-chief.
Our theme music is by Ned Beckley and Josh Hogan of Envelope Audio.

New episodes of 7am are released every weekday morning. Follow in your favourite podcast app, to make sure you don’t miss out.

I’m Ruby Jones. See ya next week.

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