Pocock offers 'fairer', electrified plan to deal with cost-of-living pain

The key crossbench senator has offered a "fairer" redesign of the contentious Morrison-era stage three tax cuts and called for greater electrification efforts and the ACT housing debt to be waived just as the Albanese Labor government is poised on Wednesday to open a raging battle over tax reform and trust in politics.

Several months out from the May budget and after relentless speculation throughout the government's 19-month term over tax cuts that it supported in opposition and promised to keep, Labor is set to amend the controversial stage three tax cuts which have been criticised for favouring the high end of town.

The government is set to offer significant tax changes benefiting low- to middle-income earners, while a scaling back is expected at the high end.

The Prime Minister on Tuesday reassured that "everyone" would get a tax cut while the federal opposition is gearing up to attack over "the mother of all broken promises".

Senator Pocock is calling for a rethink and a fairer tax system that works for all Australians.

"It doesn't feel like a very grown up conversation," he told The Canberra Times.

"I think our current debate lacks maturity and kind of a longer-term view on the kind of Australia that we are creating with these tax cuts."

"The major parties will be looking at just the next election. But if you lift your gaze beyond, whatever that date is, what does this mean for Australia in 10 years time?"

The stage three tax cuts, as legislated in mid-2019, are due to take effect in July and don't affect those who earn less than $45,000, but in a changed economic environment hit with inflation, they have been under attack for disproportionately benefiting higher-income earners and for potentially making inflation worse.

As legislated, the stage three cuts will apply a 30 per cent tax rate on income earned between $45,000 and $200,000 from July. People earning $200,000 a year or more are due to receive a $9000-a-year tax cut, while people earning $90,000 a year would get a $1000 tax cut.

A 2GB radio report on Monday placed the government keeping the current 45 per cent tax rate between $180,000 and $200,000. It would also, reportedly, raise the tax-free threshold.

"Middle Australia are doing it particularly tough," Anthony Albanese said. "I support tax cuts and everyone will be getting a tax cut."

Senator Pocock suggests going ahead with the stage three tax cuts but redesigning them, starting with reducing the lowest tax rate to 15 per cent.

"Then you reduce the next bracket to 31 per cent for $45,000 to $120,000 threshold and then you retain the 37 per cent bracket for incomes between $120,000 and $200,000 and you leave that top one on top unchanged," he said.

He also said raising the tax-free threshold, which has been stuck at $18,200 for the past decade, was "worth looking at".

The Greens want the tax cuts axed, arguing like many social welfare groups that, as legislated, they will largely benefit the rich, eventually make lower-income earners pay more by failing to compensate them for bracket creep and add to inflation by injecting $20.7 billion into the economy in their first year.

The party published updated Parliamentary Budget Office estimates on Tuesday, showing the cuts will cost an additional $10 billion over a decade bringing it to $323.6 billion over that period. The Greens suggest the money would be better spent directly on providing cost-of-living support to people who need it.

Senator Pocock said his offering would liberate almost a third of the overall cost.

"I think this option leaves you with $90 billion-plus worth of savings that could go into other things that we know that we need, like raising the rate of JobSeeker," he said.

But tax changes are not the only way to institute lasting relief.

The ACT representative suggests increasing Commonwealth rent assistance, unlocking CSIRO land in north Canberra and waiving the ACT's historic $100 million housing debt as a way to relieve housing stress by sending the money to social housing.

"I think there's a whole heap of stuff that the Commonwealth could be doing," Senator Pocock said.

But with energy bills ballooning and beyond "short-term" power bill relief, he wants fuel efficiency standards introduced and a greater commitment to household electrification so lower-income households can benefit.

"We've got to be looking at ways to ensure that more households can electrify and be less reliant on gas, expand social housing electrification, more solar panels on rentals, low-income households," he said.

"There's huge savings to be had there."

"As we saw in the US, they pushed the essentially electrification act through as an anti-inflationary measure because you're locking in the price of energy into the future and we know that energy prices are a big part of inflation."

Angus Taylor, the shadow treasurer, is fixed on the expected manoeuvre rather than the relief.

"This would be the mother of all broken promises. This is something that the Prime Minister and Treasurer have committed to over 100 times," he told the Sunrise program.

"Frankly, if the Prime Minister decides he wants to change this, it tells us that he is not good for his word. His word means absolutely nothing."