Topics: Albanese’s broken promise; Stage three tax cut changes;
25 January 2024
David Bevan: Simon Birmingham is the most senior Liberal in South Australia. Senator Birmingham joins us now. Good morning, Simon.
Simon Birmingham: Good morning, David and good morning to your listeners.
David Bevan: Simon Birmingham. Well how do you respond to Daniel’s comment? You’re all a bunch of liars. Uh, at least this is a better broken promise because of the outcomes.
Simon Birmingham: Well, I don’t think there’s anything such as a better broken promise, particularly not when you’re talking about the types of promises in relation to the tax that every single hard working Australian pays and the solemn promises that politicians take. John Howard did show the way. If you’re going to change the pre-election promises you make on a tax that all Australians pay, then of course you should put that to the people. The stage three tax cuts have been to the people twice at the 2019 election and the 2022 election, but on both occasions the government elected the Scott Morrison in 2019 or Anthony Albanese in 2022, promised to keep these tax cuts in place and promised it because they were part of a package. They’re called stage three for a reason, because stages one and two prioritised earlier tax assistance and reform to low- and middle-income earners. Stage three was really an important reform piece, and that’s perhaps the biggest sin the Albanese Government is undertaking beyond the breaking of the promise. And that is they appear to be on the reports junking the reform element of this, which was the abolition of the 37 cent in the dollar tax bracket.
David Bevan: But are we not allowed to change our minds? And these stage three tax cuts were, um, legislated years ago. Is it not acceptable for a government to say things have changed and we’ve come up with a better way. It’s not that we’re abolishing stage three tax cuts. We’re actually handing out just as much money to the people returning their tax money to them. We’re not going to collect as much. We’re keeping that promise. The quantum is the same. We’re just shifting it. And Simon Birmingham, you’re now going to have to go into an election telling people of between, what, 40 and $150,000? We don’t want you to have an extra $804 in your pocket.
Simon Birmingham: Well, a couple of points, David. Firstly, on your suggestion around changing your mind, I think that really depends on how you’ve actually structured it. Anthony Albanese and Jim Chalmers were asked on more than 100 occasions prior to the election whether they stood by these tax cuts. They were asked because people were doubtful and they reassured time and time again on more than 100 occasions they would stand by these tax cuts. They gave that assurance to Australians before they voted and their government was elected on that promise. Amazingly, of course, they’ve continued to repeat that promise, even continuing to repeat it just a couple of weeks ago, when, of course, we now know they were secretly preparing and laying all the groundwork to break the promise in the way they’re doing. So I think the whole idea you can change your mind. We’ve got to look at the circumstances and circumstances here on something that was contentious, was argued over. They were tested on again, again, again, again. And all of those times they promised to keep it. But in terms of the structure of it and the changes, I think that is where they are really letting Australians down, because what stage three did was eliminate bracket creep for the vast majority of working Australians for a long time into the future. By getting rid of that 37 cent in the dollar tax bracket, it was ensuring that anybody earning between $45,000 and $200,000 wouldn’t be paying more than 30 cents in the dollar as their top marginal tax rate. And that meant that if you took on an extra shift, took on a part time job, took on a promotion, you could do so knowing you weren’t going to be pushed into a higher tax bracket. Now, if Labor’s abandoning that, then the consequence of it might be that for the next year or two, some Australians will be a little bit better off, but in 3 or 4 years time, let alone in 5 or 6 years time, many of them will see those gains completely wiped out and go backwards, because bracket creep will remain a fundamental problem.
David Bevan: Well, you would only see- You would only see those gains wiped out if you were heading towards $150,000. Because that’s when you’re going to move into the into the higher tax brackets.
Simon Birmingham: Well, David, we’ll have to see what the final package is.
David Bevan: I think there’d be a lot of our listeners right now, Simon Birmingham saying, well, look, again, if you are on close to $150,000, you can afford to cop extra tax. And this is the problem you’re going to face when you when you go out to sell this.
Simon Birmingham: Well, and this is, you know, this is the class warfare that Labor’s wanting to try to create by structuring their changes this way. But let’s understand we’re talking about more than a million Australian taxpayers. This isn’t just a handful of Australian households. This is actually a lot of Australian households.
David Bevan: Okay. You say a million will be- You say a million will be worse off. But how many are better off under these changes?
Simon Birmingham: Those who are better off may find it’s a very short-term gain [interrupted] than if bracket creep were to stay in place.
David Bevan: How many are better off? How many?
Simon Birmingham: We don’t know for sure, David, because we don’t know the plans. What I do know is that those in that income bracket earning more than $150,000 also pay more than 44% of total income tax in Australia. So these are the people who pay the vast bulk of income tax relative to everybody else. So we should understand we want to keep the incentive there for people to be working hard for people to be getting ahead. And that, as I said, this was a stage three, stages one and two already delivered, already prioritising addressing bracket creep and tax cuts for low- and middle-income earners.
David Bevan: How many will be better off under these changes?
Simon Birmingham: Well, if you could get a Labor MP on to answer your questions, perhaps they could confirm what the changes are and tell you that, David.
David Bevan: Going to be several million people. Many, many more people will be better off under these arrangements than those who would be worse off.
Simon Birmingham: For how long?
David Bevan: Okay, uh, let’s-
Simon Birmingham: Bracket creep remains a bigger part of the tax system. They will see those benefits eroded far faster than under the actual structural reform that these tax reforms had in place, which Labor is now abandoning.
David Bevan: Well, Luke says on the text line, if it helps far more people than it hurts, then I think the political outcome will be fine. More people, more poor people than rich people, says Luke. Di’s called ABC Radio Adelaide. Good morning, Di.
Caller Di: Good morning, David.
David Bevan: What are you thinking? Di.
Caller Di: Well, first of all, I think it’s a great carry on over this particular broken promise. Um, as far as I read it, the promise is still there. But it’s been tweaked because when these texts arrangements were first put in train, we were in a different economic situation. But now with cost of living and so many people struggling, I just think it makes sense to give people that are on lower and middle incomes a bit of a hand up. Now. It doesn’t affect me. So, I don’t have any vested interest at all, but I just sort of think people that are on 200K a year are probably doing okay. Thank you very much. That was all. I just think this great carry on about oh this is a broken promise and this is so typical one you know, yada yada yada. Um, it just seems that it’s better if people, on low and middle incomes get a bit of a bit of a hand up, that’s all. And bracket creep will happen. It always has. But perhaps down the track that will be looked at by whatever government is, is in at the time, um, for Simon Birmingham to carry on about bracket creep. Um, it’s always been there and it always will be, I guess.
David Bevan: All right, Di. Thank you very much for your call. Debbie says I am a high income earner. I have worked hard to earn it. Some people work hard and they don’t earn a lot. They need the tax break more than me. I want the people who need it to benefit, not me. Uh, those people to benefit, not me. Why can’t we think of others? More tax brings services. We want our cake and eat it too. Noel’s called from Reynella East. Good morning. Noel.
Caller Noel: Yeah. Look, uh, just a couple of points. Uh, we write contracts with France and break those because it’s for the best interests of the country. And the higher income earners are the ones that can take advantage of tax breaks. Negative gearing, for instance. So, yeah, I think this is a really, really good decision.
David Bevan: Okay. Noel, thank you for your thoughts. Um, we’ll wrap this up. We’ll come back to it later on this morning, because I’m sure Phil Coorey from the Financial Review will want to be buying into this. But Simon Birmingham, before you leave us is the problem you’ve got in this message in trying to win back, say, oh, I don’t know, the Teal seats, these are well off seats. But the reason you lost those seats is there are people who are like Di from the Riverland who are saying, well, I’m prepared. Or this other texter who’s earning serious money. Debbie, I’m prepared to pay more because I want other people to have services and that kind of message, um, is why you lost the Teals.
Simon Birmingham: Well, David, we’ll go to the next election with policies committing to lower, simpler, fairer taxes as we always seek to pursue. We’ll be consistent with the values. And we’ll want to be having a look at how we try and overcome what Labor is doing here. And that will be challenging because, as I said, Labor is junking significant reform to the income tax system. It’s not just about tweaking the rates, it is about them abandoning reform that was going to eliminate bracket creep for the vast majority of Australian workers. And that is the real tragedy out of what Anthony Albanese and Jim Chalmers are doing, that it will see, uh, Australian workers face that ongoing penalty. And that will be what we’ll have to highlight to people, regardless of whether they’re a Teal seat type voter or a classic Labor marginal.
David Bevan: Okay, let’s go to Walter. Walter from Woodville. Hello, Walter.
Caller Walter: David, how are you?
David Bevan: Good. What are you thinking?
Caller Walter: Well, number one, Simon is trying to keep going with this idea that bracket creep causes everyone to suddenly pay more tax overall. Not that they’re actually shifting in the top part of their income. And this is always an argument. And a lot of people still think that, oh, I’ll go in a higher bracket and I’ll earn less complete rubbish. What the government hasn’t done is adjusted these pay scales for inflation. And most importantly, I think, is to increase the tax free threshold. It’s 18,200. They should have put that up to 25,000. That would give money to the people who really need it. It would end up with a bit of a tax break for those at the top, and it would have no inflationary pressure. Um, and talking about tax reform under the libs, they’d just give a free pass to what, the top 100 companies in Australia. I mean, how much tax do they pay. Yes, certainly high income individuals pay a large proportion of the Australian tax grab, but the companies that manage to shift it and most people were in the $200,000 bracket, tell me they haven’t got a trust or they’re dumping money into their super. Uh, you know, he’s being extremely uh, yeah. Not straightforward with what is really happening.
David Bevan: Walter, thank you for your call. And Craig from Largs Bay. Hello, Craig.
Caller Craig: Goodbye, David. David, I think a lot of people are forgetting that when the stages one, two and three tax cuts were originally legislated, the Labor Party hated the concept of the stage three part, but had to agree to it to get the, stages one and two for lower income people through the parliament. Now, it’s really clear to anybody who remembers that debate that the promises made by the Labor Party coming into the election, they would hang on to the stage three was really a very, very defensive, uh, electoral promise.
David Bevan: So you never believed them?
Caller Noel: No. No, because it was it was absolutely clear they hated them. They they hated them and it just surprises me that the Labor Party was so scared, I guess that, uh, they didn’t trash the concept of the stage three tax cuts when they had the opportunity at the election.
David Bevan: Well, what’s important here is that the actual policy outcome and a lot of people are applauding the policy outcome because it will help lower to middle income people at the expense of higher income earners. That’s what a lot of our listeners are saying. Uh, so there’s the policy outcome or the issue of a breach of faith undermining, uh, our faith in our in our political process. I mean, again, you’ve heard some people, Craig say, well, it doesn’t matter because they all tell lies.
Caller Noel: Well, of course there’s, there’s all sorts of different ways to tell them though, isn’t there, David.
David Bevan: Craig, thank you for your call. Craig from Largs Bay. Simo Birmingham, thank you very much for fronting up. Liberal Senator Simon Birmingham from South Australia, Shadow Minister for Foreign Affairs.
Simon Birmingham: Thank you, David.
David Bevan: We did, as I say, put in a call to I don’t know, it must’ve been at least half a dozen Labor MPs from South Australia, federal MPs, and they all said, uh, can’t do it today. Sorry about that. Which is interesting.