Labor won’t reverse the stage three tax cuts. Get real. It’s in for the long haul

Well that was quick. A chorus of voices arose to suggest, demand, plead that the Morrison government’s stage three tax cuts be put on hold or cancelled by the Albanese government in commitment to its progressive roots.

Then Anthony Albanese said no, it won’t be doing that. And really, that was that. There’ll be a bit more nibbling at it, but it’s over. The rather odd sally in favour by veteran Liberal MP Russell Broadbent to cancel the cuts he’d voted for was the kiss of the whip for this issue.

Labor would be committing political self-harm of the first order by cancelling or even modifying the stage three cuts. It waved them through when they were brought to Parliament in 2019 (something your correspondent argued in favour of) in order to not get snarled on the issue.

Politically, in pursuit of a Labor majority, it was absolutely right to do so. Had it not done so, its opposition to the cuts may well have been the means by which it was held below a full majority. Having lost in 2019 partly due to the franking credits stuff up, it was leaving nothing to chance. The decision, and its ramifications, indicates where we are all at, what Labor is now, and what’s possible. Spoiler alert: not much.

Yep, the stage three cuts are a boondoggle, no doubt about it. Creating one huge tax bracket from $45k to $200k, and lowering base rate from 32.5% to 30%, is an absurdly inelastic manoeuvre — a first instalment on flat taxation. But its purpose, when first proposed, was political rather than economic.

The giveaway to the higher third of that bracket above $150,000 is galling, to say the least. But the bracket shift at the lower end responded to a form of “bracket creep”, occurring because working-class and middle-class jobs — construction, electrical, nursing, teaching — were starting to earn some big bucks, a result of strong unions and the creation of professional strata within the occupations. If some nurses and teachers are earning $120k, and construction and other trades are heading to $150k, the existing brackets were becoming punitive to working-class prosperity.

There hasn’t been much acknowledgment of this in progressive discourse. Instead there has been an implicit and explicit call to focus tax policy around collective commitment and the common good, even if that meant self-sacrifice from wage earners who might otherwise benefit directly from the cuts. But that is a typically progressivist stance, validated as moral action and reaffirming progressivism as an identity. The business of the working-class movement was never charity; it was the advancement of humanity through the advancement of the class. The lower- and mid-range of the stage three tax cuts do that: return money to people in occupations that did not expect to enjoy such income levels.

To simply dismiss that as “selfishness”, as some progressives do, is a blinkered approach to what these new wage levels have meant, individually and socially. They may well apply to a minority within such occupations, but they offer the opportunity, pretty much ruled out till recently, that a two-income working-class or working-middle-class couple could be making some serious money simply by staying in the occupation they have — rather than having to transfer into management, to which there is a substantial, and policed, class barrier. That not only offers a new present prosperity, but also a greater opportunity for intergenerational wealth transfer within these occupations. There hasn’t exactly been an outcry against the tax cuts from this sector of society.

The refusal to see this aspect of the tax cuts is a double nostalgia. First, for a time when the working class was a more unified thing, but unified by modest wages and ceilings on their rise. The division now runs through the working class, since the interests of asset-holding, high-wage people are contrary to the low-waged and benefits recipients. Second, it’s a nostalgia for the Whitlamite era, when we were on the road, or trying to be, to a social democracy — in which individual and family good were bound up with common good, universal provision, and an enabling and guaranteeing state.

But that possibility is gone now, and it’s been gone for some time. It only really existed for a few decades after World War II, and it was decisively killed by a series of Hawke-Keating initiatives. The triple whammy of extension to negative gearing, the privatisations of public service utilities in the early 1990s, and the focusing of life-course management on superannuation made us (back) into a country focused on individual family welfare management. The steady undermining of Medicare and the extension of private school subsidies from Howard onwards have only served to emphasise and increase that.

The roots of such social familialism are deep in our history, running down to the Harvester judgment of 1907, and there was only one brief chance, post World War II, to convert to a more European social democracy, and we didn’t make it. Now most Australians look out over a social landscape in which the long journey of self and family life must be managed as an individual.

That is a tough terrain on which to try the “taxes buy civilisation” argument, especially when people can see corporations paying no taxes at all. It’s to the difficult task of taxing corporations better that progressives should look. That’s not going to break Labor’s promise of “no new taxes” — call ’em levies — and corporations have no friends. The task of clawing back money from corporations as they siphon it out of everyday life will be the major challenge of the near future.

Let’s face it — Labor would be politically mad to go back on the cuts. It would get the Coalition back into the game in an instant. At the moment, it can languish indefinitely. Labor has its eyes on the prize now: a decade in power, with the foundations laid in the first 18 months of this government. Steady, unhurried, thoughtful, modest policymaking and implementation, aimed squarely at the asset-owning working and middle classes, and resisting calls to extend much more than basic consideration to welfare recipients, refugees, First Nations peoples, or special cultural/identity groups.

It will aim to show capital that it can integrate the competing sectors, together with labour and environmental demands, to create a smooth and dependable framework for accumulation. It will show the labour movement it can deliver steady improvements, without for a moment offering to change the system that locks workers and unions out of actual self-representation. It is essentially turning itself into a conservative government.

The “Menzies spirit” that the freak show on the right goes on about, waving the “forgotten people” speech like some tract? That will be with Labor, and personified by Albanese. Albo waving from the balcony at a Gang of Youths concert is like Our Sir Robert waving his sun hat for the cameras from the members stand during the Fourth Test. It shows a man at home in his own skin among his own people in his own time. The right will respond by trying to get Peta Credlin elected.

But this political-cultural centrality was only won by breaking decisively with cultural progressivism. The long Labor-progressive alliance? That’s gone now, done. Labor will land squarely where the general public is, and that’s sometimes basically, and in a very limited way, progressive — the Voice, same-sex marriage — and sometimes not.

Those who want to get a progressive agenda up, or merely visible, have relatively few options capable of breaking through. Join the Greens, or a party further left, start a minimal program populist party — the Low Income People’s Party, or the Party of the Poor — and try to draw in a wider movement. Or join Labor and begin the long insurgency to reset its policies. You first.

People will need to kick the sort of illusions that have propelled this somewhat plaintive go on the stage three tax cuts. Some believe the government is using the pressure build-up to look as if its hand is forced before cancelling the cuts. I will be truly astounded if that happens and will admit my error. Still, I think Labor’s honeymoon is not over (desperate hope of the press gallery), but progressives’ is. Time to brush off the confetti and commit to the long disappointment. From now on, the only banging on offer will be the freezing of the pipes in winter.