Bill Shorten says Labor made a “values decision” when it decided to retain the deficit levy and only apply an increase in the Medicare levy to workers earning more than $87,000.
The Labor leader will use a speech to an economic thinktank to defend a decision that divided his leadership group, saying the ALP “won’t ask millions of people on more modest incomes to pay more tax, and we won’t give millionaires a tax cut while making everyone else pay for it”.
Shorten will tell the Committee for Economic Development of Australia that, when Labor increased the Medicare levy by 2% in 2013 to fund the national disability insurance scheme, conditions were different.
“Wages growth was over 3%, we’d just tripled the tax-free threshold, giving low and middle-income Australians a sizeable tax cut, and our approach was paired with progressive revenue measures like reforms to private health insurance – bitterly opposed by the Liberal party,” Shorten will say.
The Labor leader will argue that, at the moment, wages growth is at a record low, underemployment is at a record high, living standards have stagnated, housing is unaffordable and some workers will face a cut in their penalty rates.
He will argue Labor has a right to be “sceptical of the Liberals’ motives and intent” when it comes to raising revenue to pay for the national disability insurance scheme.
“And we have every right to stand up for the people who count on us – people with disability, their carers and middle-class working Australians.”
The prime minister, Malcolm Turnbull, used a similar outing at CEDA on Wednesday morning to argue that Labor’s policies, which have the effect of increasing the top personal tax rate to 49.5%, were a penalty on success.
Turnbull contrasted the government’s aspirational values with Labor’s redistributive instincts but Shorten will argue the prime minister is engaged in “doomsday warnings about not cutting tax for the highest-income earners”.
The Labor leader will argue that the current top marginal tax rate is 49%. The 2% deficit levy for workers earning more than $180,000 is due to end on 1 July.
Shorten will argue that the decisions taken by the government in last month’s budget would mean workers earning $200,000 would pay an average tax rate of 34.1%.
Under Labor’s alternative, the same worker on $200,000 would be paying an average tax rate of 34.3%.
“I find it hard to believe this will herald the end of western civilisation as we know it,” Shorten will say.
The Labor leader will also argue the prime minister’s definition of success is too narrow.
“There are a lot of meaningful, valuable jobs, held by successful people, that will never be in any danger of earning over $180,000,” he will say. “The prime minister says our plan is against aspiration, effort, determination, you name it. He thinks it’s a tax on success. That speaks volumes for how he looks at the world, measuring success by the money you earn.”
Shorten will say Labor would like to deliver tax cuts for all workers but the priority has to be deficit reduction.
“We have to invest in Australia’s future, we have to keep the safety net strong and, as the Labor party, we have to, choose to, put working and middle-class people first.”
