Interview with Patricia Karvelas on ABC RN Breakfast

Subjects: Stage 3 tax cut changes

E&OE………

Patricia Karvelas

The Coalition is looking more likely to support the Government's changes to the Stage 3 tax cuts, with the policy going through the Shadow Cabinet overnight and heading to the Party Room later today. There are a wide range of views on whether the party should abandon its former policy. Andrew Bragg is a Liberal Senator from New South Wales. He joins the programme. Andrew Bragg, welcome, and Happy New Year. It's February, I shouldn't have said that. How are you?

Senator Bragg

Happy New Year, PK.

Patricia Karvelas

Are you prepared to waive these tax changes through if you don't get the support for any of the amendments you push?

Senator Bragg

Well, the main point here is that this is only a short term sugar hit to try and help Mr. Albanese shore up his job. Basing the whole tax system around one by-election is not a good idea. And of course, we won't stand in the way of tax relief for Australians, but reinserting a tax bracket which was abolished just a few years ago is not a good idea.

Patricia Karvelas

Will you argue in the Party Room today for the Coalition to ultimately vote against Labor's tax changes?

Senator Bragg

I don't think we should stand in the way of Australians getting a tax cut. But the problem here is that it's a tax cut today, but higher taxes in the future because, of course, bracket creep will guarantee that more Australians, when they do more work, more hours, more shifts, will ultimately pay more tax in the long term, which is why we abolished the 37 cents in the dollar threshold in the first place.

Patricia Karvelas

Okay, so where does that leave you then? What do you think should happen? Do you think you should wave it through after making the argument? And then what tax policy do you support?

Senator Bragg

Well, as I say, we have always been a party of lower taxes. We don't want to stand in the way of tax relief for Australians. But we have to make the important point here that returning a tax bracket into the system, i.e, a new tax, which is the 37 cent threshold, is a very bad idea because it would damage aspiration. And so we don't believe that that should be part of our policy, and that's something that we'll consider between now and the next election.

Patricia Karvelas

But if it's not your policy, is it your view that you should argue for that flatter tax going into the next election?

Senator Bragg

Well, that's been our policy for two elections. Of course, Labor also had that policy for two elections, and now they've broken a promise to try and save Mr. Albanese's skin before this by-election. But the point is that we've always been committed to having a pro-aspiration tax system. We don't believe that returning a tax bracket, which was just abolished, is a good idea. But we also don't want to stand in the way of tax relief in the immediate term for Australians who, of course, are battling under the cost of living crisis, which has been exacerbated by Labor's mismanagement. The main point also is that this is now Labor's only economic policy. They spent the first 18 months shovelling money into the coffers of the unions and the super funds, and they've finally come up with a new policy, which is a broken promise.

Patricia Karvelas

Okay and that's something that certainly they will be judged on. But just on your idea for tax reform, you say you don't want to stand in the way of people getting tax relief. If you ensure that people who are middle and lower income keep what they're getting into the future, it will end up costing the budget more if you're going to proceed with getting rid of that tax bracket, right?

Senator Bragg

That's right. That's something that will need to be balanced in our policies that will be developed before the next election. And unlike Labor, we will take our policies to the election. Of course, this is a very regrettable chapter in Australian tax policy history to see the whole tax system written around one by-election.

Patricia Karvelas

Well, they would contest that.

Senator Bragg

[Laughs]

Patricia Karvelas

They would say that it's not just about that by-election, that they think that this is a fairer policy. I mean, Australians do need cost of living relief. If you look at all of the public polling and the private polling that's been referred to, clearly, Australians are largely in favour of this, right?

Senator Bragg

Well, that's right. And of course, one of the biggest issues in the cost of living is housing, and Labor's housing policy is a shambles. I don't think they're going to get the new supply that is needed. They won't look at things like allowing people to use their super for a first home. They're totally wedded to the vested interests of the unions and the big super funds. They've finally come up with one economic policy, and it's a broken promise.

Patricia Karvelas

Do you think that putting the budget into a bigger deficit to try and pay for the tax plan that you think originally should have been proceeded with is worth it? I mean, that's a pretty big decision.

Senator Bragg

We've got to do the modelling and all the analysis on new policies, of course. It's always been the case that if you give Australians a tax cut, you get an economic dividend from that, whether it be a tax cut for individuals or a tax cut for companies. We have a very high reliance on direct taxation on people and companies. And I've always believed that we should be striving to cut taxes as much as we can because that is ultimately what will promote economic activity.

Patricia Karvelas

Either way, you want to see a flatter tax system broadly and the Coalition to support that, but you still are prepared to wave this through?

Senator Bragg

We don't want to stand in the way of tax relief for Australians in the immediate term.

Patricia Karvelas

Is that because you know it would be what, political suicide?

Senator Bragg

Well, as I say, we've always been the party of low taxes. We don't believe in high taxes.

Patricia Karvelas

You essentially don't like this model, and yet you're going to wave it through. I'm just trying to get to the bottom of the reason. It's politics, right?

Senator Bragg

Well, you have to announce your policies before the next election, and that's the timetable we'll be sticking to for announcing our tax policy, which will be announced before the election, as opposed to Labor, which has changed their policy midstream.

Patricia Karvelas

Now, I understand they have absolutely changed their policy, and you haven't landed quite on yours, but you don't want to stand in its way. Do you also think that it's unwise to create a situation where the Government has to negotiate with the Greens on this?

Senator Bragg

Well I mean, that's not really something I've given a lot of thought to. We don't want to stop Australians from getting tax relief in the immediate term, but we'll make the point about the medium to long term policy settings we think would be appropriate. We don't want to see bracket creep as a feature of our system. Effectively, that's what's going to be delivering a budget surplus in the very immediate term. And over the long term, we think that we should have a flatter tax system to reward aspiration.

Patricia Karvelas

Thank you so much for joining us. I really appreciate it.

Senator Bragg

Thanks, PK.

Patricia Karvelas

That's Liberal Senator Andrew Bragg giving us a perspective on how the party room might consider this later today.

[Ends]