is that it will help the Reserve Bank reduce inflation, when, in fact, Labor’s policies are tipping a net extra amount of $44 billion into the economy since it formed government.
Chalmers says the government expects to save more than 80 per cent of the revenue upgrades – much more than the Howard government, which recycled it into personal income tax cuts and family benefits, and the Abbott-Morrison-Frydenberg government. It’s a good start. The dilemma with prime minister Anthony Albanese’s mantra – “no one held back, no one left behind” – is that the government will struggle to make tough decisions.Government payments are set to be permanently bigger at above 26 per cent of GDP over the forward estimates – about $25 billion to $50 billion bigger in real terms than the pre-pandemic 1990s and 2000s.Politically, it is understandable a new Labor government wants to do “Labor things” after nine years in the wilderness.
The tax take is tipped to hit 23.9 per cent of GDP in 2023-24, equal to the former Coalition government’s notional tax cap. It is a tax level that was last exceeded by John Howard and Peter Costello in the early 2000s during the early days of the China mining boom that is now considerably bigger.