Labor's proposals would cut out the final stage of the package, worth $95 billion and not scheduled to come into force until 2024-25, and accelerate part of stage two to boost the immediate tax offset to more than $1300. Loading Mr Chalmers accused the government of holding workers and the economy hostage to tax cuts that would not occur until the mid 2020s. "We are worried that the government is doing an irresponsible thing here in committing such large sums five years out," he said. "The responsible thing is to give tax cuts now that will boost the economy." The Reserve Bank of Australia is tipped to cut interest rates again to a new record low of 1 per cent on Tuesday. The decision would be the second rate cut in two months, aimed at stimulating the economy out of its worst annual result since the global financial crisis.

Analysts believe the immediate tax offset, scheduled to be delivered with this year's tax returns, will be equivalent to a 50 basis point cut in interest rates and will pump cash back into the economy. Loading The Morrison government is likely to have enough support from the crossbench to pass the package without Labor, after negotiating a plan to bring down energy prices and cap gas exports with Centre Alliance. Mr Albanese told a Labor caucus meeting on Monday his concern with the third and most expensive stage of the package was that it would "permanently reduce government spending". The final stage of the package will cost $12 billion a year, matching the total amount of public money spent on medicine. It will also leave little room to spend more money on aged care despite a rapidly ageing population.

But some Labor MPs told caucus they were concerned that prolonged debate about tax cuts would deny them critical air time to raise concerns about other issues such as cuts to Sunday penalty rates, which were reduced by 10 and 15 per cent for 700,000 retail, hospitality and pharmacy workers on Monday. Mr Chalmers confirmed that if Labor's amendments failed, the party would convene shadow cabinet to make a final decision on whether to vote for the full package. Loading Replay Replay video Play video Play video He said Labor would lobby the crossbench to back its amendments, including Tasmanian independent Jacqui Lambie. Senator Lambie is the last vote the government needs to see its package through. "We intend to have conversations right across the crossbench," Mr Chalmers said.

Treasurer Josh Frydenberg said Labor was the "party of higher taxes" and had "learned nothing" from the election. Loading Centre Alliance senator Rex Patrick said he was confident the Coalition's package would pass. "There are no roadblocks, just bumps in the road that we have to smooth out," he said. Senator Lambie has yet to publicly declare her voting intentions on the tax package but has formed a voting bloc with Centre Alliance that is enough to see legislation through Parliament. Once fully implemented, the second stage of the tax package will see the $1080 tax cut more than doubled from 2022. By 2024-25, the 37 per cent and 32.5 per cent tax brackets will be eliminated altogether - leaving all incomes between $45,000 and $200,000 taxed at a rate of 30¢ in the dollar.