Mark Riley: Albanese’s bold tax cut gamble pays off in Dunkley

There was no high-fiving in the Cabinet room at Melbourne’s Commonwealth office building yesterday as senior ministers gathered for the first time since Labor’s win in the Dunkley by-election.

The atmosphere was not one of elation but relief.

Suggestions that Labor was confident about winning before Saturday are wrong.

It wasn’t.

One senior minister admitted to me yesterday that in the final week of the campaign: “We were s......g ourselves.”

Why? Because they genuinely thought there was a real chance they were going to lose.

And the difference between a government winning and losing a by-election is massive.

If it wins, the political caravan moves on.

If it loses, it is game on.

A loss would have triggered massive problems for Anthony Albanese and his Government.

It would have thrown Albanese’s leadership into question, raised deep concerns within Labor that its low-and-middle-income heartland was abandoning it and confirmed that Peter Dutton presented a real threat to its hold on power.

Ministers tell me they believe one thing prevented them from losing — the stage three tax cuts.

More precisely, it was the fact that the tax cuts passed through the Senate last Tuesday — four days before the election — that helped Labor win.

Having them approved by Parliament made them real.

It allowed Labor campaigners to assure voters the Government not only understood the cost-of-living pressures they were facing but had now ingrained average tax cuts of between $1600 and $2000 into law to help them cope.

“That tipped the balance,” one minister told me.

“Without the tax cuts, we would have lost.”

Not “could have lost”, but “would have”.

That’s how concerned Labor truly was about the vote.

Dutton told Seven’s Sunrise that he never really believed the Liberals could have won the by-election, which makes the almost four per cent swing to his candidate, Nathan Conroy, appear even better.

But there was one way he could have increased his chances of winning.

It would have been risky. Very risky.

Labor strategists are now privately grateful that he didn’t take that risk.

He could have helped delay the passage of the tax cuts through the Parliament last week, which would have left Anthony Albanese facing attacks over his integrity in the final days of the Dunkley campaign.

Albanese would have been left defending his broken promise over the stage three reforms without the ability of waving approved tax cut dollars before voters’ faces as a pay-off.

That would have made it very messy for him as Dunkley voters headed to the polls.

It underlines how important the stage three votes in the Senate last Tuesday evening really were.

It also explains why Anthony Albanese and Finance Minister Katy Gallagher were so eager to hold a news conference that night — at a normally dead period of the news cycle — to begin the process of alerting Dunkley’s voters that the tax cuts were indeed coming down the pipe.

The Greens had tried to send the tax cuts off to a committee for detailed examination, which would have delayed their passage for at least several weeks.

And they believed they had the Coalition on side to vote with them.

Senior Government sources tell me the Greens were so confident of the Liberals and Nationals supporting them that they went to the Government offering to horse trade over their amendment.

Government ministers declined.

They figured that Peter Dutton wouldn’t back the Greens because he’d be accused in the final days of the Dunkley campaign of delaying the relief the voters so desperately needed.

Those ministers were right.

Backing the move to divert the tax cuts to a committee would have been perilous for Dutton, but he has proven himself many times to be a risk-taker and he must have considered the option.

It wouldn’t have been “blocking” the tax relief. He could have argued that he was using the agency of the Parliament to ensure the package was properly designed and that there would be no unintended consequences to their implementation.

He saw that risk as too great.

Instead, the Coalition voted against the Greens’ amendment and then they voted for the tax cuts.

And that, Albanese Government ministers are now convinced, was the difference between victory and failure for them in Dunkley.

It’s also why they are heaving a sigh of relief, not high-fiving.