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SCOTT:

From Schwartz Media, I’m Scott Mitchell, filling in for Ange McCormack. This is 7am.

The stage three tax cuts the Labor government said they’d deliver will be altered, and they’ll now benefit lower and middle-income earners much more.

So what does the change mean for us all? Is there such a thing as a good promise to break? And does this decision signal that Anthony Albanese is taking a new approach to being prime minister?

Today, columnist for The Saturday Paper Paul Bongiorno, on what to make of the big changes coming to our pay packets.

It’s Monday, January 29.

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SCOTT:

Welcome back Paul for 2024. It's great to talk to you.

PAUL:

Well, thanks Scott, it's great to be back. So breathing, feeling pretty relaxed after the holidays, even though I did manage to get one of those bugs that was running around affecting everybody. But I tell you what, I'm fit and ready to go.

SCOTT:

We love to hear it, Paul. And we're talking on a Monday because there is big news in Canberra.

Audio excerpt – News Reporter:

“He admits he's broken an election promise, though won't say those words.”

Audio excerpt – News Reporter:

“Broken promises, lies and a tax cut controversy. It's safe to say it hasn't been the smoothest…”

Audio excerpt – News Reporter:

“Opposition leader Peter Dutton has come out swinging, labelling Anthony Albanese a liar and demanding an election.”

SCOTT:

Last week, the Albanese government announced this big change to their policy on tax cuts. And I want to start by asking you, Paul about some of the reactions people might have seen and heard by now, it’s really blown up into a bit of a media storm. What's this all about?

PAUL:

Well, this is all about the opposition. Really, only having one major thing to throw at Albanese over this, reworking of the stage three tax cuts. And that, of course, is the whole basis of any government in that it goes to trust; who can you trust to do the best thing in government? What the opposition has grabbed on to is a broken promise, and the claim that Albanese is now a liar. And even before all the details of this change in tax policy were fully released, well, the Libs and the Nats were already in this sort of attack mode.

The rhetoric only ratcheted up as the week went on. The deputy liberal leader, Susan Ley, appeared on RN Breakfast with Patricia Karvelas. She was incensed by this change to the tax cuts. Susan Ley asked Karvelas, why she would ever interview senior Labor figures like Treasurer Jim Chalmers ever again.

Audio excerpt – Susan Ley:

“How can you believe anything he ever says again? I mean, what is the point of interviewing you, Jim? Jim just talked about building trust. Will you build trust by doing what you said you would do?”

PAUL:

She said that Labor supported the stage three tax cuts to win an election, and now it’s clear that was a lie just to win an election.

Audio excerpt – Susan Ley:

“So this is not just a broken promise, Patricia. This is a lie, a lie to win an election. Every single seat, every Labor MP one, was one of a lie.”

PAUL:

But I've got a cut in here that I have absolutely no doubt that it's not a lie, that Albanese fully intended to stick to the stage three tax cuts and had to be dragged kicking and screaming, to this decision.

Well, the Murdoch press followed this line. Indeed, you might say they encouraged the opposition in this line.

In prosecuting the case, that policy shift was a government defining broken promise. The Australian called it Albaneses tax ambush, while The Daily Telegraph in Sydney called Albanese a “Liar-Bility”. It is a better package.

And in my view, it'll be just as hard for Dutton and the Murdoch media to keep selling this story. In fact, harder than it will be for Albanese to explain the package that has been very carefully and cleverly put together.

SCOTT:

Right, Paul, so let's talk about what was actually announced by the government. What have they done here, and how is it different to the policy they backed at the last election?

PAUL:

Well, the Prime Minister went to the National Press Club and gave a long and detailed explanation. Stage three tax cuts, you may remember, were legislated by the Morrison government back in 2019. And they're due to begin next financial year, starting in July. And they've been long criticised by some economists for disproportionately cutting tax for the highest income earners in Australia, while giving nothing to low income earners and little to those in the middle.

Well, Albanese made the case that while, yes, Labor did go to the last election promising to keep them in full, the economic times have changed drastically.

Audio excerpt – Anthony Albanese:

“I recognise, as the Treasury analysis confirms, working households have experienced the fastest rise in their cost of living.”

PAUL:

And right now, giving a tax break that favours the wealthy and leaves middle Australia and low income Australia mostly in the lurch. Well, Albanese made the case this was a promise that wasn't worth keeping.

Audio excerpt – Anthony Albanese:

“That's why over summer, I asked Treasury and Finance to present us with options to help people with their cost of living, whilst importantly continuing the fight against inflation.”

PAUL:

And by the way, he was looking at options other than changing the tax cuts. But it's clear the Treasurer and Treasury said you can't exclude this huge elephant in the room. So Treasury and the treasurer came back with recommendations not to go, beyond what the stage three tax cuts were offering, but to reshape them and to reshape them in a way that would best help middle Australia and lower income Australia deal with their cost of living pressures.

Albanese promised. Our government will deliver a tax cut for every single Australian taxpayer. All 13.6 million taxpayers, not just some those earning less than $45,000, will now get a tax cut, Whereas under the Morrison package, they were left out.

Audio excerpt – Anthony Albanese:

“The average wage in Australia is $73,000. A person earning that will now get a tax cut of more than $1,500 a year, more than double what they would have got under the plan put forward by Scott Morrison.”

PAUL:

The changes also mean the top bracket will kick in for people earning over $190,000. People earning between 50,000 and 130,000 will see the biggest benefit. Albanese said his government had to tackle the immediate challenges people are facing.

And I think the most telling, if you like admission from the prime minister last week, was that everything the government had done last year with energy price build relief, cheaper medicines with more bulk billing, availability, all of these things clearly weren't enough, and it's clear that Labor's own polling reflected the polling that we saw published at the end of last year, showing the government was being marked down and people expected it to do much more. Well, it's pretty hard to do much more than to give 13.6 million Australian taxpayers a tax cut. This was obviously the most immediate way and the most dramatic way the government could demonstrate that it was hearing what the voters were demanding.

SCOTT:

Right, Paul? But the timing of this announcement is interesting, isn't it, because Parliament isn't even back yet. Why is Albanese announcing this now?

PAUL:

Well, Scott, that's very interesting. Over the many years, it hasn't been all that unusual for prime ministers to recall their cabinet or the ministry or the party room back to Canberra early to discuss some major development.

Audio excerpt – News Reporter:

“The surging cost of living. Prime Minister Anthony Albanese is preparing to hold crisis talks this week, recalling Labor MPs to Canberra two weeks early for a crucial summit. Live to Ben Downie.”

But what we're seeing here, of course, is a recognition from Albanese that he was going to ask his cabinet, his ministry and his MPs to endorse a major change of position. And he wanted to do it in a way that sent the message out to the electorate that this wasn't merely a captain's pick, that he had the full backing of his cabinet ministry and his MPs in making this major tweaking, of a promise that he took to the last election.

Those who thought breaking this promise could be a very risky thing to do when they saw that Albanese, perhaps the most reluctant to break it when he'd come to this conclusion, they realised things were pretty serious and this was a risk well and truly worth taking.

As you say, Parliament is not back yet, but I think the need, the political need and indeed the economic need was so urgent, the Prime Minister needed to do something dramatic to catch the attention of the nation as it came out of its summer holiday mode, but was still faced with those skyrocketing bills.

SCOTT:

Coming up after the break, by last week's decision could signal a change and the approach of the Albanese government?

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SCOTT:

Paul, we've been talking about the government's new tax policy and how quickly this all came together. Why did the government feel it had to act so urgently on this and do this now?

PAUL:

Well, I have no doubt that the reason why the prime minister is announcing this now is that he has a by-election in the Victorian seat of Dunkley. Now, while on paper there's a margin of 6.5% to Labor, the word is that Labor's own research in the seat showed that it would struggle to hold it, and indeed was in grave danger of losing it, especially as it is a seat made up by the very sort of people that we are now seeing are being addressed in the revamp of the stage three tax cuts.

But by the end of last year, the Albanese government wasn't where it wanted to be. Many were shocked. The year had gone off track. What was supposed to be a slow, considered year of reform and progress turned into a massive political challenge, and The Voice referendum suffered a devastating loss and showed that Albanese's political handling of issues left something to be desired.

The cost of living relief that was delivered in the budget wasn't cutting through, and wasn't being noticed or appreciated by enough Australians. With inflation staying high and wiping out much of the impact of some of the relief that had been offered. So by the end of the year, with the poll numbers slumping considerably, there was a mood in Labor that something had to change.

SCOTT:

Right, Paul. And and since becoming prime minister, you know, Albanese has, I think, generally taken an approach that he slowly brings the electorate along with a decision change has been something this government has carefully rolled out to the public. So does this decision signal not just a change in policy, but really a change in approach from the Prime Minister?

PAUL:

Well, I think it certainly does signal that, and many in Labor I know will be hoping that it signals that Albanese has taken on board, that his approach to communication has to change. You know, Scott, it's handy in this discussion to recall that Albanese isn't the first prime minister to break a promise.

John Howard did it. In fact, he made a an art form of it, you know, core or non-core promises, the GST, maybe the most famous, and, he got away with it, which I think is a clue that breaking a promise is a pretty big deal. How you do it and why you do it is an even bigger deal. And if you do it well enough, people might be miffed, but they will be prepared to accept, albeit reluctantly, what you've done.

There is a big difference, however, with this broken promise: Albanese, unlike Howard, imposing a new tax on everybody, or Paul Keating with his L-A-W law tax cut promise that he broke, Albanese isn't taking anything off people. He's actually giving something to everybody. And the people who lost their $3,000 are still paying $4,000, less tax a year once these changes come in.

SCOTT:

And finally, Paul, you know, big tax changes like this can often define governments. It's obviously something that affects, you know, really all of us. Just how big of a moment is this and will it be the defining issue of the next election?

PAUL:

Well it could well be. And it's interesting to note, Scott, that these changes have to get through the Parliament. They need the support of the Greens and the crossbench, and already the Greens are signalling that they don't think that these changes go far enough.

So it'll be fascinating to see what the next few months do to these changes and what the Greens demand for them to support it. I've got no doubt they will support it, but just what they'll support, is going to be fascinating to watch.

But for many who were looking for the Labor government - the Albanese Labor government - to be fairer and more competent, as well as more politically astute, well, many will be hoping that what Albanese did last week is a sign that what people were wanting, they're beginning to get.

SCOTT:

Paul, thank you so much for your time. It's great to have you back.

PAUL:

Thank you Scott. Bye.

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SCOTT:

Also in the news today…

The International Court of Justice (ICJ) has ruled that Israel must take all measures to prevent any genocidal acts in Gaza, but it stopped short of ordering a ceasefire.

While no findings of fact have been made by the court, it was decided allegations of genocidal acts were plausible enough that a full trial will now proceed.

And…

A group of about 60 neo-nazi’s who staged a protest and boarded a train in Sydney on January 26, have been told there is no place for white supremacy in NSW by premier Chris Minns.

The group were issued with rail infringement notices by NSW police, and six of them were taken into custody for further questioning.

I’m Scott Mitchell. Ange McCormack will be back tomorrow. Thanks so much for listening.

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