![Treasurer Jim Chalmers with prime minister Anthony Albanese. ‘Labor’s messaging that the [stage-three tax] cuts have had to be reduced because of the broader economic danger they pose to already-tense households has the powerful political benefit of being true,’ writes Van Badham.](https://media.guim.co.uk/688787388cd5e3996a1c4aa7b8f6e11d1657fb7d/0_40_4504_2703/1000.jpg)
It’s Christmas Day for a columnist when a governing party reverses a decision for which you have previously given them a righteous bollocking. So HO HO HO to me, as this week brings the joyful tidings that the federal Labor caucus have put their Santa hats on and chosen to unstupid the planned “stage-three” tax cuts.
The scheduled cuts are a legacy of the Morrison Coalition government. They passed with qualified support from Labor and some of the crossbench, including Jacqui Lambie, back in 2019, back when Scott Morrison had improbably won an election and Labor, the Fates and the black stuff of the universal firmament did not, could not, work out why.
The cuts were Morrison’s signature policy, a scheduled flattening of the tax rate that represents a pure distillation of neoliberal Friedmanite economics, a mass injection to the principle of trickle-down capital flow or a raw, unadorned bias towards rich people … although I really shouldn’t restate the same thing three times.
Labor and crossbench intervention saw the initial package of cuts broken up into three tranches, with the fattest and juiciest of these – stage three, for those on an annual income of $200,000 plus – stalled until 1 July of this year.
The point was made at the time that the unnecessary several extra thousands of dollars that would be pumped into the plumpest Australian pay packets would come at a cost of $40bn of job-rich, service-providing, infrastructure-building government spending that would otherwise redistribute opportunity and share wealth to the broader population.
In the simple dichotomy of centre-right versus centre-left politics that was once the universal paradigm of western democratic politics, traditionally Labor was placed on the pro-redistribution side. When the electorally bruised party backed Morrison’s cuts in anyway, I described the party’s support as an “unfathomable betrayal of principle”. I was right.
In hindsight, we can all, perhaps, imagine how losing an election to Scott Morrison would provoke literally anyone to wilful, desperate acts of political self-harm. Labor even repledged to the cuts before the last election.
But having regained their wits and, with them, government, Labor are living in an Australian political reality with a cost-of-living crisis, a skills shortfall, undernourished services and crumbling infrastructure. While trying to meaningfully do something about it, the cuts have squatted like a banish-resistant demon since the party’s first day in office.
For Friedmanite Liberals and Nationals whose own endgame is flushing public money through private markets and a washing away of the interventionist state, the looming cuts were always a way of imposing their own policy priorities, as if from beyond the grave.
The rubric chanted and rechanted from Labor’s enemies in sections of the press and opposition benches was that to abandon them was to commit an unpardonable political sin of breaking a promise. But this week, an emergency cost-of-living-themed Labor caucus considered the cuts, considered the reality of a delicate inflationary environment that piles of money to rich people would make worse … and broke it anyway.
As the world has changed, so has the political calculus. The prime minister has announced the tax cuts for the richest Australians will be halved, and cuts will extend instead to lower- and middle-income earners.
Conservative acolytes insisting that eminently sensible and – wouldn’t you know? – incredibly popular tax policy means political death to Labor are perhaps failing to consider that Peter Dutton has been a dead man walking on the issue of integrity for some time. The nine years of Coalition government of which he was so visible a part of broke promises on everything from submarine deals with France to a pinky-swear commitment to not shred the ABC. Holding Labor to a higher standard than his own party merely reminds the electorate of his own lack of virtue.
Labor’s messaging that the cuts have had to be reduced because of the broader economic danger they pose to already-tense households has the powerful political benefit of being true. Meanwhile, Dutton’s stated project of rebranding the Liberals as a party for workers doesn’t work with his public championing of the over-$200k set – the class of the law firm partners, CEOs, executives and senior management who have profited from worker misery for years.
Commentators wishing to make hay of Labor’s “broken promise” deserve to be asked to just whom in the electorate this promise was made. The greatest beneficiaries of Morrison’s largesse were the cashed-up, boutique cohort of habitual Liberal voters. Those among this community who broke against their party of habit in the last election didn’t vote Labor – they overwhelmingly went teal or, in teal-free Queensland, even Green.
The sublime punchline here is that the rich-representing teal and Green MPs have long been outspoken advocates against the cuts that would most benefit their constituencies, the political equivalent of wearing The Row. Anyone else of the upper-income echelons complaining they will be afforded less extra unnecessary thousands is now wearing a T-shirt with a conspicuous brand; vulgar and merely showing off.
The demographics of swing voters and those in Labor’s base are those who’ve recently been most pinched and those for whom the changed policy will provide the greatest gift. Beyond the tax relief, it’s a federal Labor party emboldened by the demands of circumstance to prioritise the needs of the moment over the promises of the past.
Oh, Merry Christmas, everyone!
Van Badham is a Guardian Australia columnist
The headline was amended on 25 January to more accurately reflect that the stage-three tax cuts have been revised rather than reversed
