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Shadow Minister for Science and the Arts

Shadow Minister for Government Services and the Digital Economy

Manager of Opposition Business in the House




25 JANUARY 2024


SARAH MACDONALD: Lots of texts and calls still coming in about the stage three tax cuts, the change to them, which broke an election promise they were promised under the former government. But Anthony Albanese did promise he would implement them. They are coming in, but they will be different. They're going to be geared towards the middle income earners more, and those on higher incomes will still get a tax cut, but not as much as they were anticipating. We've chatted to a few MPs for electorates this morning. Let's go to Bradfield now, the lower North Shore area, Roseville, that kind of part of Sydney. Paul Fletcher is the MP. And joining me now. Good morning.

PAUL FLETCHER: Sarah. Good to be with you. And probably more middle to upper North shore.

SARAH MACDONALD: Middle to upper, sorry

PAUL FLETCHER: Yes Roseville, Chatswood, Roseville up to Hornsby, Asquith, Normanhurst. They're kind of yeah.

SARAH MACDONALD: We had someone from Chatswood earlier on saying, I'm in, the over 200 and I'm really happy about the changes to this. I don't think I should have got such a big tax cut. I'm still getting one. I think it's good. How do you respond?

PAUL FLETCHER: Well, what we now know is that Mr. Albanese lied to get into government. He told the Australian people repeatedly that he would honour the stage three tax cuts, which were, of course, in legislation and have been for several years. And indeed, if you go to the tax office website, the rates that are embodied in the stage three tax cuts are there as due to come in on 1st July this year because they have been legislated for several years. On over 100 occasions, Mr. Albanese and other senior labor figures have committed that they would maintain the stage three tax cuts. So it's been a deeply cynical exercise, but what is also extremely disappointing is that this really signals, I think, in many ways, the end for meaningful tax reform in Australia. If you look at, say, the introduction of the capital gains tax under Hawke and Keating in the 80s, or the introduction of the GST, the Goods and Services tax under the Howard government, those were important structural tax reforms. And the stage three tax cuts are also part of an important structural tax reform, which is about giving people incentive to work harder, because the key design feature is that from 45,000 a year to 200,000 you know that you will only pay one rate of $0.30 in the dollar. Now that is what, amongst other things, labor is tearing up based upon what they've dropped to the media so far. Of course, we still haven't seen.

SARAH MACDONALD: I want to take a few points you've made there. Paul Fletcher, you mentioned the GST. That was the GST that John Howard promised would never, ever get. Tony Abbott made promises about no cuts to certain sectors and he went ahead with it. I mean, this I know the coalition's making hay of the lie that they're calling it, but this has been done throughout history.

PAUL FLETCHER: This is a cynical lie from Anthony Albanese, who said his word was his bond. He went to the Australian people promising to maintain the -

SARAH MACDONALD: But coalition leaders have done the same thing and Julia Gillard has too.

PAUL FLETCHER: Sarah, can I just make this point about the importance of incentive and aspiration? The rationale for the stage three tax cuts is that, you know, that if you do some extra overtime, if you go and get an extra qualification, so your income goes up, that you know that between 45,000 and 200,000, your tax rate will not increase, it will be at $0.30 on the dollar all the way. So a tax bracket is removed under the stage three tax cuts. This is about encouraging people to put in the effort to earn more, knowing that they will keep more of their money in their pocket rather than it going to government.

SARAH MACDONALD: Well, the situation has changed though, hasn't it? And people are struggling more. We've got conflict overseas. Record inflation and those who earn are in the middle and the lower incomes are really struggling. Don't they deserve some help?

PAUL FLETCHER: Well, certainly what they deserve is a government that has a clear plan to get inflation under control and to get government spending under control. This government has spent some $220 billion extra since coming to government. Personal income tax burden is up 27%, so it's a big spending big tax in government. The consequence of that is high inflation and huge cost of living pressures on ordinary Australians. What we need is a government that gets spending under control to bring inflation down and remove those pressures on Australians. But what we also need is a government that is honouring the commitments that it has made, so that people know that when government says this is what the tax arrangements will be, or the tax rules will be, that they can organise their lives in accordance with that and that will be honoured. And what we also need is a government that backs Australians who want to have a go, people who say, look, I'm prepared to work harder, to do an extra shift, to get that extra qualification in the knowledge that my tax rate will not be different between 45,000 and 200,000. That is about aspiration and about lower taxes. And the Liberal Party that's what we believe in. The Labor Party clearly does not believe in that. And this is bad news for any Australian who wants to work harder and have a go.

SARAH MACDONALD: Paul Fletcher is with us. The MP for Bradfield Lower and Upper North Shore of Sydney, or Middle and Upper North Shore. We're talking about middle and upper, uh, taxpayers now getting less of a tax cut than they were anticipating and more of that going to the middle. We did hear Sussan Ley sort of winding back her promise to overhaul these if the coalition gets into government. So what is the stance from the coalition officially?

PAUL FLETCHER: Well, let's be clear. We are opposed to the removal of the stage three tax cuts, based upon what -

SARAH MACDONALD: Well, they're not being removed. They're being adjusted

PAUL FLETCHER: Based upon what labor has leaked to the media. We'll get the full details. Presumably when the Prime Minister speaks to the Press Club today. But we've had this stage political management exercise, obviously driven by short term political pressures by desire,

SARAH MACDONALD: But they're not being removed. So where do you stand on the adjustment of them Paul Fletcher, change to them?

PAUL FLETCHER: This is the abandonment of the stage three tax cuts. Let's not have weasel words here. -

SARAH MACDONALD: What would you do if you were in government.

PAUL FLETCHER: The stage three tax cuts are very clear. That's why they've been legislated for two elections. It's very clear.

SARAH MACDONALD: So will you change them if you get into government and go back to where they were favouring high income earners?

PAUL FLETCHER: Well, the first thing I'd say is we are root and branch opposed to this government killing off the stage three tax cuts.

SARAH MACDONALD: They're not killing them off, they are changing them. They’re still happening. You’re saying they are killing them off!

PAUL FLETCHER: No no weasel words. The stage 3 tax cuts are very clear. They are legislated the numbers are very clear and government is now walking away from them.

SARAH MACDONALD: They are still having them! You are saying they are overturning them. That’s not true.

PAUL FLETCHER: It is absolutely true               

SARAH MACDONALD: There is still going to be stage 3 tax cuts but they are being changed, they are not getting rid of them.

PAUL FLETCHER: The stage three tax cuts involve a flat 30% tax rate from 45,000 to 200,000. That is the central design feature of them. And what labor has now leaked to the media in stories over the last couple of days is that central design feature is being abandoned. So let's not have weasel words.

SARAH MACDONALD: There will be 30% for up to 135,037 after those three tax cuts.

PAUL FLETCHER: And we are root and branch opposed to that, and we will oppose that change Now, beyond that, we need to wait and see what the details are in terms of what is announced, and our response will come in due course after careful consideration, you know, through the lead of the shadow Treasurer, Angus Taylor, through Shadow Cabinet, all of our normal processes.

SARAH MACDONALD: All right. Well, you know, I know that Peter Dutton is very much hoping to catch some of those outer suburban seats where people are on incomes that will benefit more under these tax cuts. So you don't think you've been wedged here like you were wedging the Labor Party on the tax cuts in the original phase?

PAUL FLETCHER: Uh, what I think has happened here is that in response to short term, political pressures, and because Labor basically does not support aspirational people who want to have a go, they have cynically abandoned a promise. And the problem with that is that we are is that this is undermining, structural reform of the tax system, which is so important. Every economist will say that you need to address bracket creep. The best way to give people incentives is to keep rates as low as possible and to be consistent, so people know with consistency what the rules are, and then they can organise themselves in reliance on that. All of that, sadly, uh, has been junked by Mr. Albanese for a short term political objective. And I think that's deeply regrettable at a time when we know the personal tax burden on Australians is increasing, we know our economy has a productivity problem and this is going in totally the wrong direction.

SARAH MACDONALD: Thanks for your time this morning.