Labor leader Anthony Albanese said it was “economically irresponsible to pass legislation which won’t occur until the next election or potentially the one after that”.
“This is Labor leading from opposition but being prepared to partner with the government to have constructive outcomes in the national interest,” he said.
The decision from shadow cabinet follows weeks of internal debate about Labor’s position on the policy.
Opposition MPs Peter Khalil and Joel Fitzgibbon urged Labor to support the full package if the Coalition refused to split it, but shadow cabinet rejected that suggestion on Monday.
Within hours, Finance Minister Mathias Cormann ruled out splitting the package.
“Labor have still not learnt the lessons from the election,” he said. “Our plan prioritises low and middle-income earners, takes the bracket-creep monkey off people’s back, is economically necessary and fiscally responsible and, importantly, it is what Australians voted for.”
Shadow treasurer Jim Chalmers said it was unfortunate that the government’s highest priority was stage three of the tax cuts, which do not come into force for another five years.
“If the government comes at this solution that we’re proposing, we are prepared to get stages one and two through the Parliament quickly if they agree to defer consideration of stage three to a subsequent sitting,” he said.
In a speech to be delivered at the National Press Club on Tuesday, Dr Chalmers is to argue the economy is “floundering” on the Coalition’s watch.
“Middle Australia is struggling, and the Reserve Bank is hurtling towards the end of the monetary policy runway, with coherent fiscal policy from the Liberals nowhere in sight,” he will say. “There couldn’t be a worse time for a government which has no idea how to turn things around.”
In a shift away from the ”top end of town” rhetoric that characterised the election campaign, Dr Chalmers will say Labor understands the need for budget discipline and the job-creating role of business.
The first sign of that compromise was revealed on Monday in Labor’s proposal to the government to bring forward part of stage two of the tax package at a cost of $3.7 billion to stimulate a sagging economy.
That stage would accelerate an increase of the 37 per cent threshold from $90,000 to $120,000, due to start in 2022, to next month, and specifically target middle-income earners.
The government forecast a surplus of $7.1 billion in 2019-20. Bringing part of stage two forward would cut that in half.
Mr Albanese also urged the government to bring forward infrastructure investment to get the economy moving in Sydney, Melbourne and south-east Queensland.
He cited the Melbourne Metro and Link Field Road in Brisbane’s northern suburbs as examples of projects that could have “shovels on the ground”.
“We know that projects like that are necessary now and we think that a bring-forward of the government’s proposed infrastructure investment would assist the economy, create jobs right now [and] help to boost productivity into the future,” he said.
Eryk Bagshaw is an economics correspondent for The Sydney Morning Herald and The Age.