GRACosway Weekly Wrap Up: Tax cut legislation in the spotlight

21 June 2019


  • The Australian Electoral Commission (AEC) has published the final Senate results following the May election.
  • Finance Minister Mathias Cormann has called on Labor to pass the Government’s tax package when Parliament resumes next month.
  • The NSW and SA Budgets were handed down on Tuesday.
  • Union heavyweight John Setka has continued to dominate headlines as the dispute between Labor and the unions heats up.
  • Australian Conservatives SA Senator Cory Bernardi announced on Thursday that he will deregister his political party, fuelling speculation that he may attempt to re-join the Liberal Party.
The AEC published the final Senate results on Tuesday, which confirm the Government has increased its number of Senators to 35, while Labor will have 26 seats in the Upper House and the Greens will hold nine. As has been the case since 2007, the crossbench will hold the balance of power in the Senate if Labor and the Greens do not support Government legislation. In addition to the Greens, six minor party or independent senators round out the crossbench, including two from One Nation and two from Centre Alliance, along with Cory Bernardi and Jacqui Lambie. From 1 July, the Government will need four out of six crossbench votes to pass legislation where it does not have the support of Labor or the Greens – a better scenario for the Government than the 45th Parliament. The AEC is now able to officially return the writs.

While PM Scott Morrison is on his first family holiday since taking up the top job last August, the Government’s focus is on passing its income tax cuts package when Parliament resumes on 2 July. Finance Minister Mathias Cormann has previously refused to split the three-stage plan to get it through the Parliament and has called on Labor to put aside the “politics of envy” and back the package. While Labor is yet to reveal its position on the legislation, it is understood the party supports the first stage of the plan, which will deliver tax cuts for low and middle-income earners for the 2018-19 financial year. However Labor MPs are reportedly divided about the second and third stages of the plan, with Opposition Leader Anthony Albanese calling a meeting of the frontbench for Monday. Notably, Labor backbencher Peter Khalil has encouraged his Party to “wave the tax cuts through”, while other Labor MPs are calling for greater freedom for MPs to express views counter to party policy.

The NSW and SA Budgets were handed down this week, revealing slowing jobs and wages growth and signalling a warning for the Federal Government. There is concern that economic modelling for the Federal Budget did not adequately represent the current weakening of the Australian economy. According to analysis by The Australian, levels of debt across the states and territories are expected to more than double from $81 billion in 2018-19 to $184 billion by the 2023 financial year. The slowing economy has also led to a significant drop in GST payments to states, and prompted NSW Treasurer Dominic Perrottet to call for reform of federal-state financial arrangements. GRACosway’s insights into the NSW and SA Budgets are available here and here.

The ongoing controversy around CFMEU Victorian Secretary John Setka has forced a split in the union movement, with 13 unions now backing the call by ACTU head Sally McManus for Mr Setka to resign. In response, the Electrical Trades Union has threatened to withdraw support to Labor and audit State and Federal MPs to “make sure they’re clean”. Meanwhile, Mr Setka’s deputy Shaun Reardon resigned on Thursday, citing “irreconcilable differences” with Mr Setka.

The WA Parliament will sit next week, and Budget Estimates will take place in the ACT.


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