Bill Shorten has reversed his initial decision to repeal the Turnbull government’s tax cuts for medium-sized businesses after mounting internal pressure over his captain’s call earlier in the week.

Friday’s backflip follows a stumble when Shorten pledged to repeal the Turnbull government’s legislated tax cuts for firms earning between $10m and $50m in an off-the-cuff announcement on Tuesday, which triggered a business backlash, internal confusion and Labor MPs speaking at cross purposes.



Shorten’s comments on Tuesday caught many colleagues entirely by surprise. Labor’s direction on the policy had been workshopped internally, and had been considered by the shadow expenditure review committee, but had not been through the normal shadow cabinet processes.

In response to questions, Shorten said on Tuesday the opposition was still considering its position on tax relief for companies with turnovers between $2m and $10m, but asked whether he would repeal the tax cuts for firms between $10m and $50m that had already been legislated, Shorten replied: “Yes.”

The Turnbull government pounced on the rare stumble, declaring the decision would derail Labor’s byelection campaigns in Braddon and Longman, and in terms of its economic impact, would lead to less investment, lower growth, fewer jobs and lower wages.

On Friday, Shorten told reporters he’d recommended to shadow cabinet that businesses already in receipt of tax cuts should keep them. He said it had become necessary to “amend” Tuesday’s announcement because it was “causing confusion and uncertainty for business” and because Labor had received updated financial information.

The final decision only covers tax cuts that have been legislated and have taken effect, so that means the Turnbull government’s cut in the tax rate paid by medium sized firms to 27.5% will stay.

The staged tax cut to 25% beyond 2024-25 promised by the Turnbull government will still be rolled back if Labor wins the next federal election.

“We will not take the tax rate to 25%. We do not regard it as the right priority for Australia’s future,” Shorten said. “We are very upfront with our economic policy. We will not shy away from the difficult decisions”.

The shadow treasurer, Chris Bowen, said the import of the decision was tax cuts that had already been legislated and implemented would stay, and the rest would be repealed, including tax cuts for Australia’s biggest companies in the event the Coalition can get them through the Senate.

“Any business that has received a tax cut, has factored it in, will continue to receive it under a Labor government,” Bowen said.

Pressed on why he’d articulated one policy position on Tuesday and another on Friday, Shorten said smart politicians did not just lead, “they also have to listen”.

“I listen very, very carefully to other colleagues and to business,” the Labor leader said. “We have changed our position, we have amended our position because politicians who do not listen, politicians who just simply want to stick on one course of action regardless of all the facts, I do not think that helps anyone”.

In explaining the conflicting positions, Bowen said Shorten’s comments on Tuesday “was reflective of thinking at that time of what the expenditure committee thought could be afforded at that time”.

Bowen said the shadow expenditure review committee had agreed on the position that Shorten articulated off-the-cuff on Tuesday. He said since Tuesday, Labor had received updated advice that indicated preserving the tax cut for medium-sized businesses at 27.5% was affordable.

The shadow finance minister, Jim Chalmers, said: “In the Labor party we take collective decisions and we take responsibility for those collective decisions collectively”.

Shorten’s stumble and the breakdown in internal discipline which followed – with colleagues backgrounding against the leader – follows a speech by Anthony Albanese last week, in which he called for more bipartisanship and more constructive relations with business.

The Albanese speech, which was a public pitch about an alternative approach, unsettled Labor’s internal dynamics, and there has also been unrest between the factional groups over the replacement of the departing frontbencher Tim Hammond – a stoush that was finally resolved on Monday night.