Stage 3 Done Better

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The Albanese Government’s decision to redesign the Morrison-era Stage 3 tax cuts is a win for equality and the economy, with $84 billion dollars delivered to low- and middle-income earners over the next ten years.

The cuts, due to come into effect in July 2024, were set to be the most expensive and inequitable tax cuts in Australia’s history.

If they were listed as expenditure, they would be the ninth most expensive program item in the budget.

Australia Institute research has consistently and emphatically highlighted the inequitable nature of these cuts and how they can be improved.

Over the course of the past five years, the Institute’s work has included research and analysis that changed the national conversation around Stage 3, highlighting the package’s inequity and fundamentally flawed design.

During October’s Revenue Summit, our proposal to restructure the Stage 3 tax cuts garnered national attention and demonstrated that even if the cuts could not be scrapped altogether, there was scope for them to be significantly improved.

Ahead of an appearance at the National Press Club, Dr Richard Denniss, Executive Director of the Australia Institute reiterated that redesigning the Stage 3 cuts was the right thing to do for the economy and for people suffering the most through the cost of living crisis.

“The changes to Stage 3 will see $84 billion dollars delivered to low- and middle-income earners over the next ten years,” said Dr Denniss.

“Those arguing against these changes are standing against the Australians who are struggling today to pay for groceries, rent or petrol.

“Contrary to what some will say, this is not the end of Australia’s tax reform conversation.

“Ensuring the retention of Australia’s progressive income tax system is the keystone of any discussion. We now need to look at other forms of efficient taxation, including resource rent taxes, pollution taxes and wealth taxes, to raise the revenue needed to fund public services now and into the future.”

The redesigned package will now be debated in parliament during the coming weeks.


The Australia Institute’s Chief Economist Greg Jericho breaks down the proposed changes.

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