Pauline Hanson refuses to back third tranche of tax cuts to high-income earners as stand-off between Coalition and Labor continues

Labor is standing firm on its demand for the Morrison government to split the bill for income tax cuts, as the Coalition calls for the Senate to “respect the verdict” of voters and pass the package in full.

Amid the stand-off between the Coalition and Labor over the government’s key election pledge, the passage of the legislation could come down to crossbench senators who are leaving open the possibility of supporting the plan.

On Monday, Pauline Hanson indicated she would oppose the third stage of the government’s $158bn tax cut package, saying she was “not sold” on the economic argument of the boost for higher income earners.

She called on the government to prioritise “nation-building” projects, naming a coal-fired power station, the Bradfield water scheme first proposed in the 1930s and a royal commission into the family courts system as key to her support.

Coalition pushes Labor to pass full tax package after Pauline Hanson signals opposition Read more

“I strongly believe the people of Australia gave One Nation the shared balance-of-power responsibility to ensure this government starts constructing nation-building projects,” Hanson said.

“If there are three things I want to achieve before leaving parliament, the government now know what they are.”

The Coalition is on track to hold 35 seats in the new Senate when parliament returns in July, and needs 39 votes to secure the majority needed to pass legislation.

If it gains the support of conservative Cory Bernardi, the Coalition will still need to secure three more votes from the Senate crossbench, expected to comprise Jacqui Lambie, and two senators from each of One Nation and Centre Alliance.

Centre Alliance has offered the Coalition a lifeline, suggesting that the minor party “would love to give hardworking Australians a tax cut” if it was confident income tax rebates would not cause cuts to services down the line. It is awaiting briefings from Treasury and the Reserve Bank of Australia.

While the government is still hopeful of securing a deal with minor parties, the finance minister, Mathias Cormann, called on the Labor leader, Anthony Albanese, to abandon the “politics of envy” and side with the government to pass the tax cuts into law.

“Will he just persist with Labor’s failed politics of envy, which was so comprehensively rejected by the Australian people at the last election, by standing in the way of the income tax relief that Australians voted for? Or will he show the Australian people that he has learned and listened by embracing the plan that we took to the election and Australians supported?” Cormann said on Monday.

Albanese said the opposition was ready to pass the first stage of the tax cuts that will deliver up to $1,080 in tax relief to low and middle income earners this year, but has said the party is unconvinced of the need for a 30% tax rate for all workers earning up to $200,000 by 2024-25.

“To talk about six years’ time is a triumph of hope over economic reality to suggest that people know what the economy will look like at that point in time,” Albanese said.

Coalition's income tax plan will gift highest earners $33bn Read more

Labor’s shadow treasurer, Jim Chalmers, said it was a “bad idea” to commit five years out to “big tax cuts” for high-income earners who were less likely to spend the extra money than lower income earners.

“We call on Scott Morrison to split his tax plan up so that the parliament can urgently support and pass tax relief for people on low and middle incomes in this country,” Chalmers said.

The newly appointed shadow minister pointed to advice from the Reserve Bank which has flagged support for an injection of disposable income into the community as Australia’s growth slowed.

“The best way to get that is to stop playing games in the Senate and to make sure that we can pass the first tranche of the government’s tax plan, which would give up to $1,080 to the people who need it most and the people who are most likely to spend it in the economy,” Chalmers said.