Labor remains at loggerheads with the Morrison government over its $158 billion package of tax cuts, increasingly the likelihood Senate crossbenchers will determine its fate.
Luckily for the government, minor party Centre Alliance doesn’t see any “road blocks” to negotiations that could earn its support for the tax relief.
The coalition needs the backing of Labor or four-out-of-six crossbenchers to get the three-stage plan through the upper house after parliament resumes this week.
Labor is sticking by its refusal to back the full plan.
It is offering to support extra tax relief only if the second stage of the package is brought forward and the third stage is shelved.
“We’re arguing a case, we think it’s a strong case,” Labor leader Anthony Albanese told reporters in Canberra on Monday.
“I haven’t given up on the government seeing common sense yet.”
Finance Minister Mathias Cormann insists that isn’t going to happen.
“We have been consistent all the way through,” he told reporters.
“We will not split the income tax relief package. It’s a plan that we put to the Australian people, it’s a plan that was endorsed by the Australian people and it’s a plan that’s in our national interest.”
So far on the crossbench, former Liberal Cory Bernardi is the only person to have resolutely backed the full package.
But Centre Alliance, which carries two votes, is negotiating with the government on measures to reduce gas prices so the tax relief isn’t chewed up by rising power bills.
“We’ve still got a few things to nut out with the government, we’ll do that over the next couple of days, but I don’t see any road blocks,” Centre Alliance senator Rex Patrick told ABC’s AM.
“Presuming we can get an assurance that we can get energy prices down, I think we’re basically in a position where we’ll end up supporting it.”
One Nation and the Greens don’t support the plan, but returning senator Jacqui Lambie is yet to declare her hand.
The first stage of the plan will deliver up to $1080 to low and middle-income earners when they lodge their tax returns in the coming months.
The second stage will top up a low income tax offset which means more people – earning up to $45,000 instead of $41,000 – will get a 19 per cent tax rate.
The final stage will flatten the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.
Among Labor’s concerns about the third stage is that it will be unaffordable for the budget in five years time.
Frontbencher Andrew Leigh says the final tax cuts could prevent increases to welfare payments in the future, including those for jobseekers.
“The opportunity cost of locking in extremely expensive tax cuts is that it becomes much more difficult to increase Newstart,” he told Sky News.
Think tank the Grattan Institute has on Monday called for the third stage to be delayed, fuelled by similar concerns.