Finance Minister Mathias Cormann says the coalition’s proposed tax cuts are needed because of possible economic headwinds down the track.
The first part of the government’s plan is geared toward low and middle-income earners, while the second and third stages aim to flatten the tax structure in 2022 and 2024.
Labor supports the first part of the plan and is considering the rest, but leader Anthony Albanese is cautious as economic conditions five years into the future are unknown.
But Senator Cormann says the coalition will focus on building a strong economy and tax cuts will prevent Australians from “going backwards”.
“It is precisely because of the global economic headwinds that we may face from time to time that we need to ensure we are in the strongest position domestically,” he told ABC’s Insiders program on Sunday.
“That is why we need to ensure that we do provide income tax relief.”
Senator Cormann has also remained adamant that the tax package won’t be split up, describing it as a holistic plan.
“We want to ensure that all Australians have the best possible incentive to get ahead, to be the best they can be, so the economy as a whole lifts which is important in particular for low and middle income Australians.”
Senator Cormann is upbeat about the economy, ahead of a week in which interest rates are almost certain to be cut and a winter whirlwind of key figures will point to a pre-election business and investment chill.
Economists predict the Reserve Bank will cut the cash rate on Tuesday to a record low 1.25 per cent in order to drive growth and shore up jobs.
It will be the first move in almost three years and comes after a month in which home prices fell.
A second rate cut is widely expected in August, depending on how the economy tracks.
March quarter national accounts to be released on Wednesday are tipped to show soft economic growth.
The government is aiming to boost the economy with first-home buyer assistance and changes to mortgage serviceability rules to free up the ability of banks to lend.