New data on Australia’s ageing population and shrinking workforce should push the government to review the stage-three tax cuts, independent senator David Pocock has said.
Pocock said economic circumstances have “changed significantly” since the Morrison government legislated the tax cuts, with Labor’s support, in 2019.
He said the tax cuts were the “single biggest issue” raised at his first community town hall after the May election and would make Australia’s wealth gap worse.
The Greens have said they will use their balance of power in the Senate to push the government to dump the cuts. Pocock, who can make or break government legislation, said the flat tax rate legislated to come into effect mid-next year was not something the nation could afford.
“Circumstances have changed significantly since these tax cuts were legislated,” he said.
“There is a very strong case, backed up by extracts from the population statement 2022, to revisit the design of these tax changes.
“Intergenerational wealth disparity is growing. We need a long-term plan to address it, together with how we fund the services our community relies on from Medicare to the pension, Austudy and support for the most vulnerable.”
Pocock said he would continue to communicate directly with the treasurer “and continue to make the case for change where and when I can”.
The treasurer, Jim Chalmers, has released sections of the latest population statement, due to be published in full on Friday, which showed Australia was continuing to face a demographic challenge due to its ageing population.
That is also affecting the working population. Given Australia’s reliance on personal income tax (one of the highest in the OECD), the predicted fall in the working population corresponds with budget worries over how to pay for services such as the aged pension and the healthcare system.
The stage-three tax cuts are predicted to cost the budget $254bn over 10 years in forgone tax revenue. Chalmers has repeatedly said the government’s position on the cuts has not changed.
But he has been slowly making the case about how much Australia’s economic conditions have changed, and will continue to change in 2023, compared to when the tax cuts were legislated four years ago.
That has led weight to speculation the government may be considering at least delaying the cuts.
“The impact of interest rate rises determined by the independent Reserve Bank will be a big factor in our economy in 2023,” Chalmers told reporters on Monday.
“And of course in Australia, we’re always conscious that natural disasters have the ability to throw us off course – so optimistic but realistic as well.
“This year will be about more than battening down the hatches, more than building our buffers against another global downturn.
“It will be about building a better future so that Australians can grow out of this global downturn the right way – strong, inclusive, sustainable, the kind of economy and the kind of country that we want for our people.”
