A critical pair of Senate crossbenchers are demanding action on rising power prices, before supporting the coalition government’s signature income tax cuts.
The government is locked in negotiations with the Centre Alliance, as it prepares to put its $158 billion tax package before federal parliament in three weeks time.
It needs the support of four of the six crossbenchers to legislate the tax relief.
Centre Alliance senator Rex Patrick wants to give tax cuts to Australian workers but is concerned a softening economy might leave the country unable to afford the 10-year plan without cutting essential services.
He has been briefed by the Reserve Bank of Australia, Treasury officials and the consumer watchdog, but remains unconvinced the tax cuts are in the economy’s best interests.
Senator Patrick also wants the government to pull together an energy plan so that rising power prices do not nullify the boost in pay packets.
“We don’t want ourselves in the situation where we grant the tax cuts – which are designed to give people more disposable income – and then suddenly they find themselves forking that out to electricity companies,” he told AAP.
“And the problem is that people who are unemployed, or pensioners, they wouldn’t get the benefit of the tax cuts.”
Senator Patrick also wants to see the coalition come up with a comprehensive plan to fix gas shortages.
He will not be “prescriptive” or demand immediate action but expects an undertaking from Finance Minister Mathias Cormann that specific steps would be taken.
Senator Cormann says the government has a range of policies to lower energy prices, including a price safety net, measures to stop price gouging, a program to underwrite new projects and a possible new coal-fired power plant in Queensland.
“Of course, the government is committed to bringing energy prices down. We’ve taken a very strong agenda to the last election to bring energy prices down,” he told ABC’s Radio National.
“We will continue to engage with all non-government senators in order to secure the passage of the lower taxing agenda which the Australian people voted for.”
Senator Patrick’s comments come after One Nation leader Pauline Hanson said she was not in favour of the last part of the plan – giving tax cuts to high income earners – “at this stage”.
Senator Hanson, who also carries two Senate votes, argues more important projects should be funded first.
She wants the government to build a coal-fired power station, get on with a 1930s plan to divert water inland and launch a royal commission into the family courts, in return for her support.
Labor supports the first parts of the three-stage tax plan, which will put more cash in the pockets of low and middle income workers.
But it is also uncomfortable with the later stage which will flatten the tax rates schedule by mid-2024 and benefit many higher earners, suggesting it’s risky to pass structural tax cuts so far in advance.
The government is adamant it will not split the package.