Budget in Reply Analysis
Opposition Leader Bill Shorten has drawn the battlelines for the next federal election following his budget in reply speech last night. Mr Shorten maintained the message he has been running throughout his time as leader – that he would make Australia a fairer and more equitable nation.
There are three key themes to Mr Shorten’s speech, which will form the platform for his bid to voters to make him Australia’s 30th Prime Minister.
Income tax cuts:
In his speech on Thursday night, the Labor Leader outlined what has been dubbed the ‘working Australians tax refund’ that both matches, and then raises the Government when it comes to tax relief for low and middle-income earners.
Mr Shorten pledged to give those earning between $50,000 and $90,000 a year, a $928 tax offset with the amount tapering down to $140 for those earning up to $120,000. This amounts to an extra $398 compared with the Government’s proposal, however, it would not kick into effect until 2019-20. Meanwhile those in the highest tax bracket – earning over $180,000 p/a – would pay a top marginal tax rate of 49 per cent with Labor pledging to reimpose the 2 per cent deficit reduction levy.
On the issue of health – a traditional electoral strength for Labor – Mr Shorten has committed to slash waiting times in public hospitals along with 20 new MRI machines and 500,000 free scans. Moreover, the Opposition Leader also announced an increase in funding to public hospitals of $764 million over three years and a total of $2.8 billion over six years.
In higher education, Mr Shorten announced that a Labor government would abolish the current cap on university places. Labor has cited modelling undertaken by the Mitchell Institute that indicates that an extra 200,000 students would become enrolled at university over a 12-year period.
In addition, Labor has also promised to scrap upfront fees for 100,000 TAFE students to address current skills shortages. The scheme forms part of a $470 million package that Labor argues would boost TAFE, apprenticeships and skills for Australians.
The Labor leader’s speech was in some ways predictable and in other ways bold. Predictable in the sense that he maintained the same attack lines he has been running against the Government for some time; bold in the sense that, unlike Opposition Leaders for the past 25 years, he was prepared to outline several policy proposals and not limit his speech to a mere political attack on the budget.
On income tax cuts Mr Shorten is playing to the Labor base. He’s taking the part that Labor could not possibly argue with – tax relief for low income earners – but opposing cuts for those on higher incomes. What is also interesting is that a game now appears to be being played out by both the Coalition and Labor on the area of tax cuts on which they both agree. The Treasurer is refusing to separate his tax package (that includes offsets for higher income earners) while Labor is undertaking to support the part for those on low incomes if the government splits the legislation. Both sides will no doubt try and blame the other for failing to provide tax cuts for people earning less than $90,000 p/a should the tussle drag out.
Health is an area that historically has almost always favoured Labor. No one can forget how Mr Shorten used the issue of Medicare to devastating effect in the last federal election. In the policies he outlined last night, the Opposition Leader is seeking to cement Labor’s reputation as the Party that cares more about healthcare. Ditto when it comes to the higher education and TAFE policies he announced last night.
Meanwhile, the Government is already out claiming that the numbers don’t add up when it comes to Labor’s tax plans. Expect to see the Coalition accelerate this line over the coming days as they attempt to discredit the Opposition’s tax package. Moreover, the Government will most probably look to keep the issue of tax cuts front and centre for two reasons: first it was the signature announcement contained in the budget; two they would feel far more comfortable fighting Labor on an issue such as tax than other areas such as health and education.
The other implication to consider – as mentioned at the end of Mr Shorten’s speech – is how both the budget and the budget reply speech will impact on the spate of upcoming by-elections. The Opposition Leader dared the Prime Minister to ‘put his budget to the test’ in the upcoming polls, due to take place in mid or late June. Expect to see both the Government and the Opposition campaigning hard on their respective policies announced this week across all five by-election seats in what some pundits are already dubbing a mini-election.
The SAS Group is your trusted partner for government, media and corporate engagement.