AARON PATRICK: Will the Liberals really go to an election opposing tax cuts?

There was a moment on Wednesday morning when Peter Dutton explained what the Liberal Party was for.

“We manage the economy ... we manage national security,” he told a television presenter.

Usually, Liberals mention that they stand for lower taxes too. A reason for the omission became apparent a few hours later when Mr Dutton, and all other Coalition MPs in the House of Representatives, futilely voted against the $17 billion tax cut that is the centrepiece of the 2025 budget.

Does Mr Dutton really plan to conduct an election campaign opposing a tax cut, albeit one of great modesty?

The strategy should become clearer on Thursday, when the Opposition Keader gives the Coalition’s formal reply to the Budget. Political tradition, and expectations, dictate Mr Dutton will present an alternate economic plan for government.

Twilight Zone

For now, though, the Coalition is operating in a tax policy Twilight Zone.

The Budget’s tax cut is one of the few big Labor policies it has not adopted.

What is Mr Dutton’s election strategy, they ask. Is he going to cut spending, or not? Are personal income tax cuts on the table?

John Roskam is one of those Liberals who have spent most of their lives arguing for smaller government and lower taxes. A senior fellow at the Institute of Public Affairs think tank in Melbourne, he urged the Coalition to make a detailed case for shrinking the public service years ago, preparing voters .

“Liberal supporters and potential Liberal voters are crying out for an economic vision that must include tax reductions and tax reform,” Mr Roskam said Wednesday.

Instead, Mr Dutton and Treasury spokesman Angus Taylor have expressed an aspiration for smaller government without disclosing how they would deliver it.

Treasurer Jim Chalmers has begun taunting Mr Dutton over the explanatory gap. “This Opposition Leader wants to cut everything except taxes for workers,” he said in question time Wednesday.

Stop the game

Many are over the tax cut game. Every few years a Government reduces tax rates, claiming to be great economic managers.

In reality, they give back some of the extra tax raised when inflation pushes workers onto higher tax levels.

“I am just sick of the fact we don’t have an indexed taxation system,” said Tom Venning, the Liberal candidate for Grey in South Australia. “The reason is so the government of the day can say we gave you a tax cut.”

Poor public policy, they make for great politics. Even though newspaper coverage of the budget tax cuts was highly sceptical, the Labor government had found another issue to “wedge” Mr Dutton by getting him to oppose a policy instinctively Liberal.

(Another was Prime Minister Anthony Albanese’s openness to sending peacekeeping soldiers to Ukraine, which Mr Dutton opposes.)

Top issue

The economy remains the No. 1 campaign issue for both parties. Whichever emerges as the most convincing economic manager will likely win.

Unemployment remains low, and inflation fell a little in February, according to figures out Wednesday, boding well for more interest rate cuts this year. Consumer confidence is weak, but rising.

As of Wednesday morning, the Coalition’s position was that its refusal to add to the economic stimulus, which tax cuts will do, would help interest rates fall faster.

While everyone wants a tax cut, Australians are looking for a Government that will end the living standards stagnation of the past decade, according to Yaron Finkelstein, a former principal political adviser to Prime Minister Scott Morrison.

Voters are asking: ‘how are you going to fix this so it doesn’t keep going. They’re genuinely tiring of Band-aid solutions, he said.

The complexity of managing a large economy exposed to the unpredictability of international trade in the era of Trump means there is no easy solution.

The Coalition has already offered options. They include reducing workplace restrictions and tax breaks for small businesses.

They will have been forgotten by many voters, which is why Thursday’s speech is so important. There may be signs of what the opposition plans.

In question time, the opposition raised the impact on housing of what it says will be 1.8 million immigrants who would arrive under five years of the Labor government.

Mr Taylor mentioned the figure in interviews, and Mr Dutton made it the focus of an online ad. “The budget confirmed what we already know: that immigration is still out of control,” he said in the ad.

In last year’s budget reply, Mr Dutton blamed crime on out-of-control immigration. This year, he may promise to help get more Australians into homes, deploying his own wedge against the Labor Party.