The BGA Australia Team, led by Managing Director Michael “Mick” McNeill, wrote an update to clients on the return of Australia’s Parliament and Prime Minister Anthony Albanese’s proposed tax cuts.

Context

  • Australia’s Parliament returned February 6, with Albanese’s Labor government facing a by-election on March 2 amid heated debate over tax policy and calls by business for substantial tax reform. Albanese has announced the government will amend tax cuts inherited from the previous government, a broken 2022 election promise.

  • The prime minister hopes to lift support for Labor in key seats under cost-of-living pressure by making the tax cuts more generous to lower- and middle-income earners. With the Liberal-Nationals Coalition struggling to regain support in affluent and socially progressive seats lost in the 2022 election, Labor is hoping to put opposition leader Peter Dutton under pressure ahead of an election expected to be called early next year.

Significance

  • The Business Council of Australia has called for “a national discussion on tax reform,” with the aim of lifting productivity and addressing the fiscal “time bomb” of an ageing population. “Teal” independent members of Parliament, representing affluent socially progressive electorates, are also calling for broader tax reform. The relationship between the business community and the government has cooled, partly due to pro-union labor laws and refusal of the government to intervene in an industrial dispute affecting some of Australia’s largest ports.

  • Lowering inflation and alleviating cost of living pressures have been the government’s immediate economic concerns. Following a series of interest rate increases, inflation has declined and there is growing optimism that the Reserve Bank of Australia’s next interest rate move will be down. With an election likely to be held between March-May 2025, the government is counting on a soft economic landing and a well-received budget on May 14, 2024.

Implications

  • The opposition claims Albanese’s integrity is shredded, that he is appealing to “class warfare” and that higher middle-income earners will soon be pushed into higher income tax brackets under the new package. The opposition also claims that the package is a sneaky way to raise revenue.

  • The Liberal-Nationals opposition has yet to decide whether to grudgingly support the tax cuts in Parliament. If the opposition opposes the legislation, Albanese will need crossbench support in the Senate. The left-wing Greens are calling for greater tax cuts for lower income earners and greater spending on social services in exchange for their support.

  • Following the death of a federal Labor member of Parliament, a by-election will be held March 2 in a suburban seat in the state of Victoria. The Labor candidate has a 6.3 percent margin and Labor is widely favored to retain the seat, but a Labor loss would be another hit to Albanese’s leadership following the resounding defeat of the Indigenous Voice referendum in October 2023.

We will continue to keep you updated on developments in Australia as they occur. If you have any questions or comments, please contact Managing Director Michael “Mick” McNeil at mmcneill@bowergroupasia.com.

Best regards, BGA Australia Team

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Managing Director

Mick is a highly-experienced government relations expert and trusted advisor on consensus building, conflict resolution and legislative developments. He has played an integral role in helping parties achieve desired outcomes in areas of national security, health policy, foreign policy and reputational crisis management, as well as media relations, communications campaigns, immigration and human rights. Mick has two decades’ experience working with government as a media analyst, political adviser and NGO advocacy manager. After a stint serving as an adviser to an Australian senator, Mick took on the role of the locally engaged senior political specialist at the U.S. Embassy in ... Read More