Labor’s capitulation on Morrison’s tax plan highlights the ALP’s ‘fantasy game’

The Labor frontbench remains trapped in a 'fantasy game of budget football'.

The Labor frontbench remains trapped in a 'fantasy game of budget football'. Photo: AAP

There was a terrible moment for the Labor Party on Thursday night when Penny Wong declared the cross bench had “fallen for the hostage trick” on tax cuts.

The government had held tax cuts for workers in 2019 hostage to tax cuts for the rich in the future, she warned.

If only Centre Alliance and Jacqui Lambie had shown some spine. 

The only problem was that Senator Wong was literally describing the Labor Party’s own – belated – capitulation over the Prime Minister’s $158 billion tax plan. 

Just minutes after her hostage talk, she joined her colleagues in squeezing onto the government benches to vote for the tax cuts she had just complained about.

It’s true that the alternative – being photographed voting against tax cuts for millions of workers – was also not palatable. 

Some Labor Party true believers are already describing this “diabolical” week as Labor’s “Tampa” – not on asylum seekers policy but on tax policy.

But there was a way for the Labor Party to emerge from this week with some dignity. 

It’s called picking a lane. 

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Senator Wong lambasted Senator Lambie and Centre Alliance. Photo: AAP

Whether it was holding the course to progressive tax policy the ALP carefully crafted over six years or simply accepting Scott Morrison had won the election and voting for the tax cuts, the Labor Party needed to act decisively. 

Instead, it chose to pick all of the above. This is also known as the pleasing nobody option. 

First, we were subjected to Anthony Albanese telling us workers on $200,000 a year are not the top end of the town – which is absolute rubbish, just quietly, they totally are. A very small component of taxpayers earn $200,000 year. 

Straight after making that point, Mr Albanese held a shadow cabinet meeting where he presented as a fait accompli a tax policy to delay tax cuts in 2024 for the rich.

That position would deny or delay tax cuts to the workers on $200,000 he just told us were not rich. So what was the point of all that?

One big problem is that the hard reality that Labor is not the government has escaped many.

The Labor frontbench remains trapped in a fantasy game of budget football, convinced they can’t vote for tax cuts because of the cuts to spending it will entail. 

They are still talking as if the budget is their responsibility to manage. It’s not.

Mr Morrison won the election. Yes, it was galling to be beaten by a smug Prime Minister who the Labor Party believes was devoid of policies, but win he did. 

And you can hardly accuse him of hiding his $158 billion tax cut plan, it was literally the only thing he ran on.

Several weeks ago, a Labor MP offered a blunt assessment of the tactic of waving the tax cuts through.

His preferred approach was “boiling a big pot” and putting Mr Morrison in it. 

It was not the Labor Party’s job to save the Liberals from themselves he argued.

If the tax cuts are not affordable, let the Prime Minister wear it. 

If the Prime Minister needs to cut hospitals spending to pay for his massive $11,000 a year tax cuts for people earning $250,000 let him explain that.

His “victory” on tax could sow the seeds of his own defeat. This was the lesson of John Howard and WorkChoices.

Instead, Mr Albanese tried to be too smart by half about Labor’s position in a dithering display that left many of his own MPs horrified.

His tax position was so complicated, convoluted and catastrophic that MPs raced for the exits on Thursday night to board planes and return to their electorates.

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Mr Morrison made no secret of his tax plan. Photo: AAP

One of the smaller mysteries of the week was why Labor’s treasury spokesman Jim Chalmers was wheeled out on Thursday to talk about the ALP’s final tax position when they didn’t have one.

The Prime Minister and his Treasurer could barely believe their luck that the Labor Party, having voted for the tax cuts, is also reserving its rights to repeal the tax cuts if it wins the next election. That includes the abolition of the 37 cent tax rate.

“I could say, well, if he does do that, then someone who is on the average full-time earnings in 2024-25 – that will be around $100,000 – they will be $1,375 worse off as a result of repeal of such legislation,” Treasurer Josh Frydenberg said.

The Prime Minister said the simple fact was that the repeal of the abolition of the 37 cent tax rate remained ALP policy.

“I would go even further – it is Labor’s policy. It hasn’t changed. It’s their policy to deny dividend imputation credits as well, that hasn’t changed,” Mr Morrison said. 

“It’s their policy to abolish negative gearing as we know it, that’s still their policy. Capital gains tax increases by 50 per cent – still their policy. Higher taxes on small business – still their policy. I mean, if they haven’t got the message by now, that higher taxes kill aspiration in this country, they never will.”

At shadow cabinet, Mr Albanese also complained about leaks. 

Albanese complained there were more leaks in the last three weeks than the previous six years, which is either a dig at Bill Shorten’s supporters or a self-defeating criticism of his own political management. 

For six years, the Labor Party set the agenda, outgunned the Liberals on policy and dominated Parliament. 

This week the party seemed a spent force, jettisoning its own tax policy, MPs still wargaming in their heads a budget they have no hope of delivering for three years, possibly longer. 

If Anthony Albanese was supposed to be the wily political tactician that the Labor Party was lacking in Bill Shorten, this week does not bode well for the future. 

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