Next week, MPs will return to Canberra for the final parliamentary sitting fortnight before the winter break, ending several weeks of suspended animation.
A number of government policies are creeping towards a resolution of one kind or another. The national energy guarantee will either sink or swim over the next couple of months, and I suspect some government MPs will also use the opportunity of parliament’s resumption to start making noise about the next phase of the emissions reduction fight – new vehicle standards.
In 2017, the government released a series of proposed targets for vehicles in discussion papers seeking input from industry. Under the strongest target considered, new cars would have to cut their CO2 emissions by 45% below current levels by 2025 – from 192g of CO2 a kilometre to 105g.
While the key decisions are yet to be made, the internal grumbling is already under way. Nationals and some Liberals are huffing and puffing about the sanctity of man and his SUV.
Honestly, all this would really drive a saint mad. The same group of naysayers (members of a government that voluntarily signed the Paris climate agreement, just for the record) have already prevented Josh Frydenberg from settling on an emissions reduction target for electricity that would have delivered abatement at lower cost than having to chase significant (expensive) emissions reduction in transport – and now they also want to object to the government trying to land a strategy for vehicles.
But as irritating as these utterly predictable shenanigans are, the real definitional fight of the political fortnight will be on tax. A short recap might be in order, given political tragics have doubtless been distracted by Donald Trump’s efforts to completely upend the global order over the past couple of weeks.
The Turnbull government used the May budget to set up the please like me conversation it wants to have with voters on personal income tax cuts. The rest of the parliamentary players have been mulling their options ever since.
Labor supports phase one of the tax cuts. The government’s proposed low and middle-income tax offset will give $530 to 4.4 million taxpayers with incomes between $48,000 and $90,000 in 2018-19.
Labor is yet to determine a position on stage two, which lifts the top threshold for the 19% rate from $37,000 to $41,000 and lifts the top threshold for the 32.5% tax rate from $90,000 to $120,000. Labor is hostile to stage three, which abolishes the 37-cent tax bracket from mid-2024, in the process delivering a mighty handout to high income earners.
Labor wants to split the bill to allow passage of stage one and possibly stage two, while sinking stage three. But the government says it won’t split the bill, not on your nelly.
Now we enter Canberra’s favourite game of Senate bingo. Turn your eyes now to the Greens, because without the Greens, Labor has zero chance of splitting the package (or more precisely, moving amendments to strip out various schedules).
What will the Greens do? Well, we don’t know yet, because the party is yet to make a decision. That will happen next week.
You might not have noticed, because everyone has to emote like shrieking banshees to be noticed these days on our cluttered political stage, but the Greens are opposing all tax cuts. Nope, nope, nope has been the party’s post-budget stance. If they persist with that disposition, then splitting the package becomes entirely hypothetical, because the numbers won’t be there.
If the Greens to decide to set aside nope in an effort to work with others to try and torpedo the tax cuts for high-income earners, then there is a prospect of getting the numbers to strip out schedules.
The South Australian independent Tim Storer will only support phase one of the package, which makes him an implicit yes for splitting the bill. Stirling Griff of the Centre Alliance says his Senate bloc of two is also open to splitting the bill.
The Centre Alliance supports phase one and two of the income tax cuts, and might yet support phase three, but won’t make a decision on that until next week. Centre Alliance has commissioned its own analysis on the impact of stage three, and wants to digest that before making a decision.
Even if they do sign up, Griff thinks stage three is entirely hypothetical in any case given it will be delivered two election cycles away. He told me this week: “We don’t have a problem with splitting the bill”. That takes the splitters faction very close to having the numbers.
In the event efforts to split the tax bill fail, either because the numbers don’t materialise or because the government point blank refuses to accept the Senate’s handiwork, then Labor will have to make a choice.
Does it then wave the lot through (despite its objections) in order to give low and middle-income earners certainty around getting their cash rebates next July? Does it say yes on the proviso that it will scrap the tax cuts for higher-income earners if it wins the next election?
The alternative is sinking the package. It’s a big thing to stand between a voter and a tax cut. It would be a hard thing to do politically, both for Labor and for the various crossbenchers. It would take some bottle.
It’s hard, but not impossible. In the event that’s where things end up at the conclusion of our game of chicken – Labor can point to the government’s unreasonableness. It can say (correctly) that the numbers are there now to pass stage one (and perhaps two) of the plan, and the reason that hasn’t happened is Scott Morrison has refused to split the package, because the treasurer is being a man-baby.
So stepping through all that is a long way of me saying the major parties (and the Greens and various crossbenchers for that matter) are on the brink of some significant political calls over the coming fortnight.
The government will have to decide if it really wants to play all or nothing with the income tax package, and Labor (and others) face the same decision.
Also in the back of people’s minds around the parliamentary precinct as the winter begins to grip is the timing of the next federal election.
Many in Labor are convinced the government will pick the fight on tax rather than look for a settlement and then dash for the polls some time over the next few months – particularly if the Liberals end up performing well in the byelections in Longman and Braddon at the end of July. The hint of momentum would be hard for a battered government to resist.
The logic of that is hard to argue with, except the prime minister keeps insisting he won’t do that – that he will run full term. He says that every time he is asked.
Now, is the prime minister a man of his word? Thus far Malcolm Turnbull has made much of not breaking any promises (unlike another prime minister who may have occupied the post immediately before him), but as is sometimes observed in the classics, only time will tell.