Bill Shorten has doubled down on plans to end cash refunds for excess franking credits, saying the May 18 election was a fundamental choice between funding such "gifts'' and funding better health care.
As Prime Minister Scott Morrison used Labor's proposed higher tax burden to warn a change of government could cause a recession, Mr Shorten highlighted the franking credit cash refunds as an example of "the intergenerational bias in our tax system'' that Labor would "end".
Bill Shorten said franking credits are "now costing our nation over $6 billion this year and pretty soon it will cost $8 billion". Alex Ellinghausen
"If you are getting a tax credit when you haven't paid any income tax, this is a gift,'' he said.
"It is not immoral, nor is it illegal. But it is a gift. And it is a gift lifted from the taxes paid by working-class and middle-class people in Australia today.
"It is a gift that is eating our budget. It is now costing our nation over $6 billion this year and pretty soon it will cost $8 billion."
The comments come after AFR Weekend reported that the Centre Alliance had focused its campaign pitch against the changes so it could claim a mandate to block them in the Senate. A Labor government would be unlikely to get the legislation through the Upper House without the Centre Alliance votes.
Mr Shorten said "two minutes' worth of the gift" could be used to fund a knee replacement operation, 10 minutes' worth would pay a nurse's salary for a year, and one hour's worth would fund a hospital bed for a year.
"It is a fundamental choice in this election. Better hospitals for all Australians, or bigger tax loopholes?'' he said.
Bowen opens door to future tax cuts
With tax continuing to dominate the early stages of the election campaign, shadow treasurer Chris Bowen will today flag future tax cuts for low-and-middle-income earners to combat bracket creep.
In an acknowledgement that bracket creep might be needed to keep the budget in surplus. Mr Bowen will argue that locking in the Coalition's full three-stage tax cut agenda now could drive the budget back into deficit.
In a speech to the Australian Council of Social Services, Mr Bowen will describe the Coalition's stage two and stage three tax cuts, which begin in 2022 and 2024 respectively, as "fiscally reckless and irresponsible''.
Labor has already promised to match or better the Coalition's stage one tax cuts, which begin on July 1, for people earning up to about $120,000.
Today, Mr Bowen will open the door to doing more if Labor wins the election and more can be afforded.
"Federal Labor will continue to prioritise cost-of-living relief to low-and-middle-income earners and return bracket creep when it's prudent to do so, only when the economic and fiscal circumstances allow,'' he will say.
Stage two involves lifting the upper income threshold for the 32.5 per cent rate from $90,000 to $120,000 and stage three involves abolishing the 37 per cent rate and applying a 30 per cent tax rate to all income between $45,000 and $200,000.
Tax cuts regressive: Bowen
Mr Bowen will argue the flat 30 per cent rate is unfair, claiming it is regressive because a nurse would pay the same marginal tax rate as a surgeon.
And he will argue that the $290 billion stages two and three will cost next decade is unfunded.
The cuts, and a string of budget surpluses, are premised on an unexplained plunge in government spending in 2023-24 onwards.
Based on the current rate of spending, the stage three tax cuts would push the budget back into deficit in 2024-25.
"What we will see if the Liberals get their way, is a fiscal crunch befitting the Tea Party where they bake in tax cuts for high income earners into the budget with unspecified spending cuts that will really bite over the next decade,'' he will say.
Prime Minister Scott Morrison rallies the youth vote in Brisbane on Sunday. Dominic Lorrimer
At a campaign rally in Brisbane, Mr Morrison again warned of recession if Labor won office and increased the tax burden by what the government says would be $387 billion over a decade.
Of this $387 billion, about $230 billion is the impost caused by not adopting stages two and three, while the rest is what Labor plans to raise over 10 years with its proposed changes to negative gearing, capital gainst tax franking credits, and family trusts.
PM invokes recession warning again
"People in this room know about 18 per cent interest rates and the recession we had to have under Labor. God forbid we would ever have another recession,'' Mr Morrison told a campaign rally in Brisbane.
"I don't want my children to ever have to live through a recession but if you stick to the policies of the Liberal National Party, that is the best defence that you can ever think of for going against a recession."
Mr Shorten and Mr Morrison will be in Melbourne today where the Coalition risks large losses. Controversially, the Victorian state Labor government has started running taxpayer-funded ads to help federal Labor.
The ads accuse "Canberra" of cutting the state's hospital budget by $305 million and the education budget by $500 million.
Mr Shorten will focus on health with a $250 million promise to cut back elective surgery waiting lists while Mr Morison will detail $154.5 million in local infrastructure projects.
Last week, the Centre Alliance slammed the door on supporting Labor's franking credit crackdown.
Shadow finance minister Jim Chalmers said Labor had to win the election first.
"We've been very clear. We are seeking a mandate for our tax changes and we'll deal with the hands that we're dealt in the Senate."
By Phillip Coorey - Phillip is The Australian Financial Review's Political Editor based in Canberra. He is a two-time winner of the Paul Lyneham award for press gallery excellence. Connect with Phillip on Facebook and Twitter. Email Phillipat firstname.lastname@example.org
14 April 2019