Spender, the member for the wealthiest electorate in Australia – Wentworth in Sydney’s eastern suburbs – said her community was split on their support for the recent changes to tax cuts. She noted that the majority of people in Wentworth would benefit from the changes and there was broad support, however there were some people who were going to lose out. 

“If you look at the stats, 66 per cent of Wentworth will benefit from these changes,” Spender said. “I know everyone has a view on Wentworth but it is much more diverse than most of the country would expect. In broad terms, most people are saying this is a good thing.”

She went on to say that “we are also the electorate with the biggest proportion of people who are going to lose out.” Of these people, she says, some have told her that they were counting on the original tax cut, while others have told her they are happy to see people on lower incomes getting more support. 

Before coming to a set position, Spender said she thought it was fair to consult widely with the community.

“I’d say there is this sense of the split,” she said. “And I do think based on the results we’ve had so far, there is a majority of support out there for this change.”

“There’s actually a really significant group of people who would have benefited, who are also saying, you know what, we want to help other people. This is a really hard time right now.”

However, Spender did point out that many people on higher incomes had contacted her saying they had been counting on receiving the larger tax cut. 

“They believed that the changes were going to happen. They put it into their budgets. They were planning to spend it on their mortgages and renting and you know, they do feel completely let down,” she said. 

“They all recognise they’re not the only people having a hard time in Australia. And many, many people are doing it tougher.” 

“Renting a unit in Bondi costs $900 a week, so you have to earn more than 150 grand to avoid rental stress. This is why my community is saying ‘look, we want real tax reform, not only temporary relief’.”

The Stage 3 tax cuts, which were originally legislated by the Morrison government in 2019, have been changed by the Albanese government to offer broader cost of living support to those of low and middle incomes. They are due to come into effect in July.

Broader tax reform

Spender, who appeared at the National Press Club alongside Richard Denniss, Executive Director of the Australia Institute, also discussed the need for broader tax reform in Australia. She said she will put a number of ideas forward to the community and the parliament for discussion, rather than finalised policy. She will be releasing a green paper on the topic mid-year.

Some of the options Spender spoke about included reducing taxes on labour income, looking at changes to super tax concessions, stamp duty and land taxes, the GST, company tax thresholds, payroll taxes and fuel taxes.

Spender said she was concerned about Australia’s over-reliance on income tax and her green paper would be focused on four objectives: intergenerational equity and housing affordability, productivity, real action on climate change and building an institutional framework for further tax reform. 

“I’m going to present these options to the community. These options will not be finalised policy. No doubt they won’t be perfect,” she said. 

“And I’m sure I’m going to be having robust conversations with my community with a broad range of stakeholders and with parliament once they’re released. They will naturally evolve as I try to build consensus. And I look forward to the scare campaigns that no doubt my opponents will dream up.”

Spender said she would like to see both major parties come to the table and discuss the possibilities on tax.

“This is the challenge that I put to the major parties. I challenge major parties to deny that we have long term problems. They know that this is true and they feel it and we feel it in the community,” she said.

“I challenge them to pretend that tax isn’t one of the issues isn’t one of the solutions to the major problems this country faces and I challenge them to be part of the solution. Rather than wedging each other from the side.

“The challenge for the major parties now is to find the courage to work towards building a better Australia. That’s what I’m going to do. That’s what my community expects and that’s what the rest of the parliament needs to do.”

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The Stage 3 tax cuts, which were originally legislated by the Morrison government in 2019 and are due to come into effect in July, will undergo some significant changes under the new plan. 

Under the new plan, the government will reduce the lowest rate of income tax from 19 cents in the dollar down to 16 cents and will include those earning less than $45,000 a year in the Stage 3 changes. Previously, these taxpayers were not included. It also means everyone will pay less tax on their first $45,000.  

“This is a significant boost for the take home pay of Australians of modest incomes and for the many Australians who work part time,” Albanese said at the National Press Club.

Albanese explained that an early childhood educator, aged care worker or cleaner earning $50,000 will now receive a tax cut of over $900 a year. He also proposed that women with young children will be among the key beneficiaries of the changes. 

“These tax cuts will provide meaningful help for parents returning to work, particularly women with young children. Because one of the things that we know is that when women with children are making decisions about how many hours an increase in their take home pay is a powerful incentive,” he said. 

“And this is where our broad and fair tax cuts are better for workers and also deliver for business by increasing workforce participation.”

In other changes, the second tax rate will be reduced from 32.5 per cent to 30 per cent and it will apply to incomes up to $135,000. The 37 per cent tax rate will be retained (it was to be scrapped under Morrison’s plan) and will apply to those earning $135,000 to$190,000. Meanwhile, the 45 per cent tax rate will start from $190,000, up from $180,000 (but lower than the $200,000 proposed under Morrison’s plan). 

Albanese said the plan “delivers a tax cut for every taxpayer and more help for middle Australia, more help for families under pressure with their cost of living and a better deal for 5.8 million working women”.

“Every woman taxpayer will get a tax cut and 90 per cent will receive a bigger tax cut under our plan.”

Albanese explained the average wage earner in Australia, on $73,000 per year, will get a tax cut of more than $1,500, more than double what they would have received under the previous plan. Meanwhile, a worker earning $100,000 a year will get a tax cut of over $2,100.

“Over $800 more for the middle income earners because of our changes,” Albanese said.

“A family on the average household income, which is around $130,000, with one partner that is on $80,000 and the other on $50,000…That combined tax cut will be over $2,600.”

How will women benefit from the changes?

According to analysis from the McKell Institute, the new changes to the Stage 3 cuts, particularly its inclusion of those on less than $45,000, will mostly benefit women. Women account for 63 per cent of workers earning less than $45,000 and they would have missed out under Morrison’s initial plan.

“If the parliament adjusts the Stage Three package to include those making less than $45,000 a year it could make a significant difference to the lives of low-income workers,”  Edward Cavanough, CEO of the McKell Institute. 

“Given the cost of living crisis, and its disproportionate impact on women, including those on less than $45,000 a year could make a very significant social difference.”

Sam Mostyn, Chair of the Women’s Economic Equality Taskforce, noted that the taskforce had recommended gender analysis of tax and that the changes would benefit women.

“The Womens Economic Equality Taskforce recommended gender analysis of Australian tax & transfers system,” she said in a post to X. “@Treasury_AU analysis of redesigned stage 3 tax cuts shows the important benefit to women in these changes. Very good for women & our economy.”

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That transparency will come in late February when the gender pay gaps of employers in Australia with 100 or more team members are made public.

The result will be scrutiny of employers by their team members, questioning what they will do to close such gaps and how quickly they can make it happen. Further external scrutiny will come from potential new hires, an employer’s wider industry, their clients, competitors, and the media.

It’s a shame, then, that some of the progress pay transparency could provide for closing the gender pay gap could then be undermined by tax changes that are set to favour men over women.

Those tax changes are coming via the Stage 3 Tax cuts due to start in July.

At first glance, the demand for equal pay from larger employers could seem like the perfect opportunity to address the gender imbalance of who will benefit from these tax cuts, should women receive salary increases that push them up higher income brackets.

But there is no way advancements on equal pay can keep pace with how fast these tax cuts will be distributed. This equal pay won’t just happen, it will require a significant fight. And the coming pay transparency work will, unfortunately, do little to make up for how the female-dominated care sectors like early childhood education continue to be undervalued.

As such, these tax changes remain one of several elephants in the room of the Albanese Government’s push to address women’s economic security. A push that has included a number of positive initiatives, including reform of the Workplace Gender Equality Agency to give it the power to publish employer gender pay gaps, as well as last year’s pay rise for aged care workers, the appointment of the Women’s Economic Equality Taskforce and raising the age limit for single parenting payments. But a push that is seeing positives undermined by a fear of tweaking or moving on from commitments made by a different government and during a very different time (to be fair, the Coalition are already clearly preparing their ‘broken promise’ talking points)

As the legislated tax cuts currently stand, no tax cut is coming for those earning less than $45,000. Rather, the changes favour high-income earners, raising the top tax bracket to $200,000 and taxing all incomes between $45,000 and $200,000 at the same rate of 30 per cent. This will mean those earning $200,000 a year will receive a tax reduction of $9075 a year compared to a $125 a year reduction for those on $50,000. (Check out our recent explainer here)

Men are set to take 67 per cent of the savings from these tax cuts compared to 33 per cent for women, according to analysis by the Australia Institute.  

Updated Parliamentary Budget Office estimates released by The Greens and published in The Guardian today reiterate the inequity in the figures to come, with the cost of the cuts now estimated to be $323.6 billion over the next decade. The figures reveal that the lowest-earning 40 per cent of households will get nothing during the first year of the cuts, while the next 20 per cent will share in $1.2 billion, and the top 40 per cent will receive up to $15.9 billion. The Greens say the changes will deliver 77 per cent of the tax cuts to the wealthiest 20 per cent of society over the next financial year. The Greens say these tax cuts “give $2 to men for every $1 to women.”

Elderly single women, as well as female sole parents, are overrepresented when it comes to those on low incomes. Sixty-one per cent of mothers are raising children on less than $60,000 a year, according to a 2023 study by the Council of Single Mothers and their Children. Eighty-seven per cent say they are concerned about their long-term financial wellbeing.

Acting Greens leader Merheen Faruqi says she and Nick McKim have written to the Treasurer, urging him to scrap the Stage 3 tax cuts.

“Labor’s tax cuts for the rich are getting bigger by the day, and will turbocharge inequality and inflation,” she shared on social media.

The prime minister is set to address the National Press Club this coming Thursday, where he will outline new cost-of-living measures that will “put extra” dollars in low- and middle-income earners’ pockets.

On Tuesday morning, Albanese hinted that rather than scrapping the tax cuts, they could be expanded to include lower-income earners with a promise on KIIS FM radio that “everyone” would get a tax cut in the next financial year

Such a move would be a welcome and necessary tweak to the legislated stage 3 tax cuts package. But it’s unlikely to dramatically remove the full extent of gender inequity these tax cuts are set to provide.  

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