“Referendum on wages”: Bill Shorten spruiks pay rise, tax cuts and skills investment in 2019 budget reply

Opposition Leader Bill Shorten says the upcoming election will be a “referendum on wages”, asking small business to back efforts for a worker pay rise to boost consumption.

Delivering his budget reply last night, Shorten announced a number of new measures, including $330 million for apprenticeship subsidies and bigger tax cuts for Australians earning less than $45,000 annually.

“The next election will be a referendum on wages,” Shorten said.

“When we boost the spending power of working people the money flows back into the tills of small business.”

Labor has already committed to giving two million of Australia’s lowest-paid workers a pay rise if elected by enshrining a living wage into law.

Shorten said last night a “sensible” wages plan which balanced the needs of workers and business was overdue, describing wage increases under Labor as “moderate but meaningful”.

Labor has also pledged to reverse a Fair Work Commission cut to Sunday penalty rates if elected.

With an election expected to be called in the coming weeks, Labor sought to upstage several commitments outlined by Treasurer Josh Frydenberg in his 2019-20 budget on Tuesday.

Shorten said Labor will match the coalition’s tax cuts for those earning between $48,000 and $126,000 a year if elected, but would not legislate its third phase of cuts planned for 2022 and 2024, which would reduce the 32.5% tax rate to 30% for about 70% of Australian workers.

There will be higher tax cuts under Labor for those earning less than $45,000 a year, Shorten said.

“Labor will provide a bigger tax refund than the Liberals for 3.6 million Australians, all told an extra $1 billion for low-income earners,” Shorten said.

Mark Molesworth, BDO Tax Partner, said Labor’s tax reform should be “applauded” but urged the opposition to outline how it would improve the R&D tax incentive.

“We would urge Labor to commit to holistic, system-wide reform considering all taxes, particularly those dead-weight taxes that are a drag on business. In our view, tax reform is about more than one-out measures such as negative gearing, CGT discount and franking credit changes,” he said.

“Labor’s plan to increase wages will also have a flow-on effect to government tax revenue. In general, individuals will pay more tax on those wages than companies do on their profits.”

Labor also announced last night it will spend $330 million on 150,000 apprenticeship subsidies in areas with skill shortages if elected.

Skills investment, an area of concern for small business heading into the May poll, is being addressed by both major parties, with Labor last night proposing to match coalition subsidies for businesses hiring apprentices.

The government’s $525 million skills investment policy redirects most of its funding from the Skilling Australians Fund, which Australian Chamber of Commerce and Industry boss James Pearson says takes “some of the gloss” off the package if not made up.

In a statement on Labor’s budget reply released last night, Minister for Small and Family Business, Skills and Vocational Education, Michaelia Cash, said Shorten has a poor record on skills programs.

“Under Labor’s VET FEE-HELP scheme, the unethical actions of a number of unscrupulous training providers and their agents targeted vulnerable or unsuitable people who were lured — any way they could be — into signing onto a course,” Cash said.

Including $200 million for supporting Australian TAFE institutions, Labor’s skills package would deliver more than $400 million to the sector.

“Investing in the future always begins with education. This is where the difference between Labor and the government could not be more stark,” Shorten said.

“Labor is backing public TAFE all the way.”

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