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Paul Bongiorno: AUKUS submarine project should torpedo Stage 3 tax cuts and other myths

Anthony Albanese will have to overcome the objections of Peter Dutton to pay for the subs, Paul Bongiorno says.

Anthony Albanese will have to overcome the objections of Peter Dutton to pay for the subs, Paul Bongiorno says. Photos: AAP/AP

It’s hard to avoid the realisation that the multibillion-dollar nuclear submarine deal with the United States and, to a lesser extent, the United Kingdom has made us an even more reliant client state.

Given the increasingly uncertain and potentially hostile world we live in   Australians, or most of them, will take some comfort from attaching ourselves more closely to Uncle Sam’s coat tails.

There has been an inordinate amount of hysteria about the rise of China with hyperbolic predictions of being invaded within three years, but our understanding of living in a free country is by a country mile much closer to the American model than what China has on offer.

But this new security blanket comes at an eye-watering cost and frankly, as Alan Kohler pointed out on Monday, our politicians face the sort of hard fiscal choices they have conspicuously been incapable of making in the past two decades.

This is where politics has almost nothing to do with rationality and everything to do with wishful thinking, partisan contest and enervating culture wars that sell short the national interest.

‘Difficult decisions’

On the weekend, before he departed India for his date with nuclear-powered destiny in San Diego, California, Anthony Albanese hit out at his political opponents back home with uncharacteristic bluntness.

superannuation tax breaks

Treasurer Jim Chalmers says super tax breaks may not be sustainable alongside the goal of budget repair. Photo: AAP

Faced already with unending structural budget deficits of an estimated $50 billion a year with an estimated $20 billion on top of that to pay for the nuclear-powered ambitions, the Prime Minister accused the Dutton opposition of a “juvenile response” to the government’s trimming of overly generous tax concessions for wealthy superannuants.

Albanese said the uproar over an annual projected saving of $2 billion “deserves contempt”.

He said the Expenditure Review Committee has been scouring the budget for savings and “we need to be prepared to make some difficult decisions”.

Albanese said: “You can’t have a circumstance whereby you’ve left  a trillion dollars of Liberal debt, but they’re not prepared to take any action whatsoever to repair the budget.”

The most difficult decision in the next 18 months would be to break the promise not to repeal the Stage 3 tax cuts due in July 2024.

Projected to cost $240 billion over 10 years, the Stage 3 tax cuts would go a long way to help pay for up to $200 billion in the same period the submarines will cost.

The repeal would fly through the Parliament with the Greens and most of the crossbench in the Senate flagging support – including Jacqui Lambie and her teammate, even though the Tasmanian senator was the crucial vote that legislated the cuts in the first place.

Taxing claims

Julian Leeser ignores draconian savings measures and a record budget deficit in his rhetoric. Photo: AAP

The Coalition would see such an attempt as a political gift and yet more evidence of Labor being “big taxing and big spending”.

On Sunday Agenda senior Liberal and shadow attorney-general Julian Leeser gave a breathtaking display of magic pudding economics.

Leeser said the Coalition government took defence spending from 1938 levels to 2 per cent of GDP committing $270 billion to defence by 2030: “And we did all of that without raising taxes.”

“We’ve demonstrated that you can provide for defence expenditure without raising taxes,” he said.

What the Opposition frontbencher did not say was that in the same period they attempted to raise $8 billion in draconian savings, including targeting the most vulnerable people on government support payments through the illegal robodebt scheme.

And then there is the matter of the record budget deficit heading towards $1 trillion.

Contributing in a significant way was the estimated $20 billion overspend on the JobKeeper program that saw businesses who did not need it allowed to keep the money shovelled out the door in a panic during the height of the pandemic.

Budget repair hurdles

All of this is surely enough to bust the myth the Coalition is an expert at managing money. It prefers massive borrowing to fund tax concessions and handouts rather than to correct the distortions.

Now in Opposition it is determined to put every political obstacle in the way of rational budget repair.

This strategy is born of the hope Labor’s commitment and credibility crumbles much as it did in the early Rudd period of the last ALP government.

The Coalition can also count on Australia’s near-monopoly Murdoch newspaper platforms lending enthusiastic support in the project of scaring the horses at every opportunity.

The Albanese government, though, is in a stronger position than the Rudd government was when it attempted to introduce a mining super profits tax.

But how courageous it is prepared to be is yet to be seen.

Paul Bongiorno AM is a veteran of the Canberra Press Gallery, with more than 40 years’ experience covering Australian politics

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