Labor’s ‘Tax Cuts For The Teals’ Gift Coalition Golden Opportunity To Win Over Small Businesses, Families With A Comprehensive Reform Agenda

Written by:
7 February 2024
Labor’s ‘Tax Cuts For The Teals’ Gift Coalition Golden Opportunity To Win Over Small Businesses, Families With A Comprehensive Reform Agenda - Featured image
Originally Appeared In

In this article, Daniel Wild contextualises and disseminates the IPA’s research into Australia’s present cost of living crisis.


The Opposition must strike now to win over the millions of Labor voters who are now open to voting Liberal in the wake of the Voice referendum, writes Daniel Wild.


With federal parliament returning this week, many have rightly pointed out the Prime Minister and government have been unshackled by its broken promise on the stage three tax cuts.

But so too could the Coalition, should they seize the opportunity.

The full realisation of the Coalition’s tax cuts was always in doubt due to the drawn-out implementation period spread over three terms of government.

Therefore, it would not be unreasonable for many in Labor to have asked themselves why they would use their, potentially limited, time in government to deliver their opponents’ policies.

The broken promise could very well damage the Prime Minister’s personal standing, but as the latest Newspoll shows, it may not damage Labor as a whole.

The focus of the proposed changes is the kind of approach many in the community expect from a Labor government.

It is on brand.

Whether or not the additional tax cut, equivalent to just a large McDonalds meal a week, will be enough to convince low-income earners the government is on their side with cost-of-living concerns remains to be seen.

But pulling the lens back from the immediate politics of the Dunkley by-election reveals the Coalition has a unique opportunity to continue to set the policy agenda.

Over the past six months the direction of major debate has largely been set from the Opposition benches.

Peter Dutton’s deft and effective leadership saw the government on the backfoot over the failed Voice referendum, the release of criminal immigration detainees into the community, and on the critical cultural issue of Australia Day.

In reneging on its election commitment, the federal government has, perhaps momentarily, put the Opposition on the policy backfoot.

The Coalition must recognise and accept that stage three is now dead.

That does not mean the government should not be held to account for its broken promise.

Nor does it mean not offering an alternative set of policies to provide relief for middle to higher income earners.

But what it does require is an understanding that the political and cultural landscape of 2024 is different to that of 2018 when stage three was legislated.

Perhaps most obviously, there were no Teals in 2018.

And there was no defeated Voice referendum, where almost 40 per cent of those who voted for Labor at the last federal election voted No to the Voice.

In addition, some 63 per cent of low-income earners voted No, compared with 55 per cent of high-income earners.

The defeat of the Voice would not have occurred without a sizable number of lower-income working-class Labor voters rejecting it.

These are the exact people the Prime Minister is attempting to make good with through his tax cut changes.

From today’s vantage point, whether fairly or unfairly, stage three now looks like tax cuts for the Teals – the very people who supported the Voice, oppose Australia Day, and promote extreme climate policies.

The opportunity for the Opposition is to again seize the initiative, not through a bidding war, but through a comprehensive tax reform agenda focused on workers, families, and small businesses.

This should include income tax splitting, to give families more flexibility over how they arrange their work affairs and how they choose to raise their children; indexation of the income tax brackets to end bracket creep once-and-for-all without creating distributional consequences; and a substantial reduction to the small-to-medium enterprise tax rate.

At the same time, almost entirely missing from the debate about the cost of living has been the policy drivers of inflation, of which there are three: unplanned, record levels of migration that is putting immense pressure on schools, roads, hospitals, and housing; collapsing economic productivity cruelling our capacity to generate wealth; and rapidly rising energy costs, not just for families, but for businesses, which flows through the economy and puts upward pressure on prices.

The federal government has no plan or policy to deal with these three critical matters.

Instead, they are offering a marginal additional tax cut for lower income earners, which no doubt will be welcomed by these individuals, but pales in comparison to the amount taken out of their pockets through increases in the cost of living.

Labor will almost certainly go ahead with further tax changes – Finance Minister Katy Gallagher’s less than convincing comments on negative gearing changes last week almost assures this.

Capital gains tax will surely be in the mix too.

The community may be more willing to accept these changes now than when Labor was in opposition in 2019.

But it is also the case that millions of working-class Labor voters, who may never have contemplated voting Liberal, are now open to this prospect post the Voice referendum.

They just need to be given a reason to.

Support the IPA

If you liked what you read, consider supporting the IPA. We are entirely funded by individual supporters like you. You can become an IPA member and/or make a tax-deductible donation.