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Paul Bongiorno: Never-ever promises are nonsense and voters know it

Governments should be allowed to change their minds when circumstances change, Paul Bongiorno writes.

Governments should be allowed to change their minds when circumstances change, Paul Bongiorno writes. Photo: TND

The redesign of the stage-three tax cuts hopefully is a watershed moment in the conversation the nation needs to have over expanding the revenue base to pay for the sorts of things that a modern, healthy, educated, secure and caring nation demands.

In other words, there may be just a chance that the mindless ruling out of any reforms that are desperately needed to the tax system will be seen for the nonsense that they are.

Western Australian independent Kate Chaney put it well when she said the reality is “we are just frozen on tax reform and we can’t actually say you can never change your mind on anything”.

Chaney said when circumstances change “we also need to be able to change policy”.

Newspoll confirmation

And if the latest Newspoll is any guide a significant majority, 62 per cent, agree with Chaney.

The survey found most Australians believe that the Prime Minister did the right thing by changing the five-year-old Morrison tax cuts to give lower- and middle-income people a greater share.

A buoyant Anthony Albanese welcomed his caucus back to Canberra with a defence of his broken promise. He said “we have changed our position because economic circumstances have changed”.

He laid down a sensible principle that will surely be tested in the cauldron of partisan politics should he attempt to put it in practice in addressing other contentious and expensive tax concessions on negative gearing and capital gains tax.

“You need to be prepared to listen to people and ensure that your actions are appropriate for the time, and in 2024 every taxpayer deserves a tax cut and we are going to give it to them,” he said.

Fair’s fair

On the fairness test the respected Grattan Institute says its analysis shows the new rates and thresholds to the tax scales mean more than 80 per cent of taxpayers should pay the same or even less tax over the next decade.

This blows a huge hole in the cries from the heart we have been hearing from the opposition over Treasurer Jim Chalmers’ failure to address bracket creep where people are pushed into paying higher taxes as they earn more.

You have to hit $197,000 in 2024-25 to be worse off than under the Morrison scheme.

These are people in the top 5 per cent of taxpayers, but the former prime minister’s plan to redistribute wealth from lower-income Australians to the highest-income earners has been significantly reversed despite the Greens wanting more.

Other accusations from the Murdoch tabloids and the opposition are that Albanese was lying when he said the government’s position had not changed in the week before the cabinet met.

Treasury reveals all

Treasury officials revealed on Monday that Chalmers had in December asked his department to come up with the best ways to give the maximum number of Australians cost-of-living relief without blowing the budget further or fuelling inflation.

The stage-three rejig was not asked for by Chalmers or Albanese – it was presented to the Treasurer on Saturday, January 20, three days before he took it to the Albanese cabinet.

It was economic advice, not political advice, according to senior treasury official Diane Brown, which the government could have rejected.

But underlying the need for further tax reform is the fact the new arrangements cost the same as Morrison’s. They put no further pressure on inflation or the budget because they have already been factored in.

Chalmers says they come with a $359 billion price tag over 10 years. If the Liberals want to restore the top-end largesse, according to Grattan’s calculations this would cost an extra $115 billion over the decade, blowing a bigger hole in the budget.

Sobering reality

There is a sobering conclusion to Grattan’s analysis. It says the government’s tax plan will make it harder for this and future governments to meet community demands for more spending in areas such as health care, aged care, disability care and defence.

Australia Institute chief Richard Denniss says Albanese’s decision to recast Scott Morrison’s 2018 tax cuts to suit the economy of 2024 “is the biggest and most honest piece of tax reform in Australia for years”.

But Denniss says it’s time we admit we can’t have world-class services with a third-world tax system.

Demanding politicians rule out forever closing expensive tax loopholes, resource rent taxes or introducing wealth taxes to stop the wealthiest Australians and companies paying next to no tax at all is nation-defeating nonsense.

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

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