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Albo’s broken tax promise, will anyone care?

Prime Minister Anthony Albanese… All prime ministers break promises. (AAP Image/Lukas Coch) 

Why should we still be surprised when a PM doesn’t keep his word, asks political columnist MICHELLE GRATTAN.

All prime ministers break promises. But there are some whose breaches go into the history books – and Anthony Albanese has just joined that group.

Tony Abbott famously pledged no cuts to health, education or the ABC. That took out (unneeded) insurance before the 2013 election.

Julia Gillard said she wouldn’t introduce a carbon tax. A reassurance for a tough contest in 2010.

Who can forget John Howard’s insistence there would “never ever” be a GST. It was calming, but deceptive, in the run up to the 1996 poll.

Paul Keating’s L.A.W. tax cuts showed even promises enshrined in law can be flaky.

That’s the story of the stage 3 tax cuts. Labor reluctantly supported the Coalition legislation for them. Albanese pledged unequivocally to retain them if he won office. It was all part of the small-target strategy.

Soon after the election, Treasurer Jim Chalmers tried to recalibrate stage 3. Albanese said no. He felt his integrity was on the line. He has kept reiterating ever since that the government’s policy on stage 3 hadn’t changed.

Regardless of his personal views, Chalmers has been defending those cuts and saying there are other ways to help people with the cost of living, despite the urging from economists and some interest groups for them to be reshaped.

Now, virtually overnight, the policy has changed, under the weight of both the cost-of-living crisis and, importantly, the shadow of a by-election in the Melbourne seat of Dunkley, held by Labor on a margin of about 6 per cent.

The government will pare back the cuts for the high-income earners and use the funds to increase the benefit for lower and middle-income earners, including giving relief to those earning less than $45,000 who would have received nothing otherwise.

A special caucus meeting was called to be briefed late Wednesday, followed by drinks (stiff for a few no doubt) at The Lodge. Albanese will argue his full case at the National Press Club on Thursday. The changes will have to be legislated but the Senate numbers are there.

There are always reasons, or wriggle room, to be found when explaining broken promises. The Abbott government argued it was just cutting future projections for health and education spending. Some in Labor maintained Gillard’s carbon price scheme was not really a “tax”.

Albanese can insist circumstances have changed, that middle Australians are hurting (as they were, incidentally, last year when stage 3 was still sacrosanct).

He said on Wednesday: “There are pressures of cost of living that, according to Treasury analysis and according to common sense, have most impacted low- and middle-income earners.

“Since 2019, there has been a pandemic, there has been a recession, there has been global inflation, there has been not one war, but two wars that have had an impact.

“But I’ll be very clear in accepting responsibility for policies put forward by my government. That’s what I do.”

Commentators will say that stage 3 is unfair and bad policy, and it’s more important to get the policy right than stick to your word.

How will the public react? Some voters will say: we need the help, never mind the promise thing, politicians are like that. Others will be losers by virtue of the changes, or will think worse of the prime minister for going back on his word.

How those two camps fall out in net terms is impossible to judge at this point.

RedBridge’s Kos Samaras, judging the likely implications, maintained in a Wednesday post, “Breaking a promise to assist people with the affordability crisis is unlikely to have any significant political repercussions for the federal Labor government.

“Only a small percentage, approximately 3.4 per cent, of Australians earn over $180,000 annually, which is primarily found in Teal, Greens, and inner urban Labor-held constituencies. Despite having high earning potential, these voters are not typically swayed by financial incentives when casting their ballots. Instead, they tend to have a broader perspective and prioritise other concerns.”

Breaking a significant economic promise does carry wider implications for a government – for instance in how the business community and investors regard its word on a range of other undertakings.

For Albanese there is a deeper question: will this broken promise damage people’s view of his integrity in the longer term? Their broken promises undoubtedly harmed Abbott and Gillard (although neither survived long enough to be judged at a subsequent election).

Certainly whatever Albanese promises in 2025, for a second term, will need to have several grains of salt added.

Last year, Albanese made much of keeping his pledge to Indigenous Australians to run a referendum on the Voice. That could have ended in triumph but turned into disaster.

This year he is trashing what was also a central promise. The stakes are high, the outcome uncertain.

Albanese’s action will reinforce people’s existing low trust in the word of the political class. Actually, the surprise in this story is that we can still be surprised when a prime minister breaks his word. How often do we forget the history? Cynical as it sounds, perhaps the real surprise is that it took this long for Albanese to do so.The Conversation

Michelle Grattan, Professorial Fellow, University of Canberra. Republished from The Conversation.

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Michelle Grattan

Michelle Grattan

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One Response to Albo’s broken tax promise, will anyone care?

cbrapsycho says: 25 January 2024 at 10:58 am

This is logical. The world has changed and there is no longer a good reason to keep tax cuts that don’t help those who need them most and that line the pockets of the wealthiest. Those who are upset about this are greedy and self-centred, so will never be happy anyway. Fortunately, that is a small percentage of people.

Of greater concern to many voters will be his support of the fossil fuel industry and his failure to protect the environment, harming habitat for people as well as for birds, animals and plants.

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