Only the truly gullible believed all that guff that Albo spouted before the election about restoring integrity to government. You know the sort of rubbish messages like ‘My word is my bond’, ‘We promise to be a transparent government’, or ‘You can believe in our commitments’.

Of course, we have heard it all before.  Recall Julia Gillard banging on about sunlight being the best disinfectant for good government. She pledged unequivocally not to introduce a carbon tax by a government she might lead. (Didn’t you just love the Labor apologists declaring that she hadn’t really said that, that it was qualified, that it was taken out of context? None of these assertions was true, but I guess it was worth a try.)

It’s absolutely clear that Albo and his side-kick Jimbo never had any intention of implementing the Stage 3 tax cuts. As John Roskam of the IPA notes, Albo wasn’t even apologetic when announcing the ditching of Stage 3 and offering up alternative tax cuts that would potentially hoover up many more votes for Labor.

The very idea that the rich should pay a little bit less under Stage 3, even though they pretty much pay all the tax, never sat well with a political economics graduate whose hero remains rabid, left-winger Professor Ted Wheelwright.

As for the Treasurer, I actually now think of Jimbo simply as a grasping, ambitious politician; he can’t be taken seriously as an economic policy maker. He is being supported in his endeavours by the increasingly politicised Treasury which churns out confected analysis to back up whatever Jimbo decides.

Notwithstanding over one hundred assurances on the part of Albo and Jimbo that the Stage 3 tax cuts would be implemented in full, it was clearly the case that the pair always intended to ‘redesign’ the cuts, the verb preferred by Treasury.

The word is that Jimbo had wanted to move earlier, perhaps as part of last year’s Budget. But it was the Dunkley polling that really put the wind up Albo and convinced him to break his solemn pledge – pause for laughter here.

Looking through the ‘independent’ analysis undertaken by Treasury – independent, my arse – to back up the redesign, it is obvious that several months of work had gone into assessing the effects of the reworked tax cuts relative to the legislated ones.

There are two important points that need to be made about this piece of work by Treasury. The first is that normative statements about what is fairer and what is less fair are territory that public servants should not traverse. It’s OK to outline the distributional impact of changes on different income deciles, but it’s up to politicians to interpret the findings.

The second point is that Treasury’s short paper includes what economists call ‘behavioural responses’. It has always been the practice – and I stress always – of Treasury to refuse to include these second-round effects based on people changing their behaviour.

Policy A costs a certain number of dollars – generally measured in billions of dollars these days – assuming that all things stay the same. If there are changes in behaviour because of Policy A – and that is often why Policy A has been introduced in the first place – this will only be accounted for down the track.

In the case of the redesigned tax cuts, however, the Treasury took the politically inspired decision to include the assumed labour supply response, emphasising in particular the impact of the drop in the tax rate from 19 per cent to 16 per cent for those earning between $18,201 and $45,000.  These taxpyers are assumed to work more hours or take up new positions because of the lower tax rate, particularly secondary wage earners in households.

It’s very convenient to include this analysis because the potential for the redesigned tax cuts to be inflationary can be offset by this predicted supply effect.

So how will all this play out? Do people really care that Albo broke his promise to retain the Stage 3 tax cuts if they are going to see more money in their take-home pay as a result? Are lots of voters happy with the ‘soak the rich’ messaging of the government?

The obvious point that needs to be made is that if you don’t pay much tax, it’s not possible to grant you much of a tax cut. That’s a fact. Taxpayers who earn between $18,201 and $45,000 make up 30 per cent of all taxpayers but contribute just over 3 per cent of total income tax revenue. (By contrast, those earning above the top tax bracket make up around 4 per cent of all taxpayers and contribute over 35 per cent of all income tax revenue.)

So those low-income earners who are going to jump at the chance to work longer hours or take a new position could see maybe an extra 15 bucks in their weekly pay packet.  Better than a kick in the guts, but not life-altering.

For those with mortgages, the more life-altering outcome would be to see interest rates come down. But bear in mind here, there are not going to be 13 cuts to the cash rate, matching the 13 increases to the cash rate that have occurred since 2022. A more normal cash rate is likely to be in the 3s.

It’s why a sustained drop in inflation is so important. The government is taking a risk in its actions that could potentially lead to a delay in the cash rate being cut. The same could be said of the profligate state governments. In all likelihood, the Reserve Bank will not move until it is convinced that inflation is heading towards its target range of two to three per cent per annum and will stay there.

Of course, a drop in inflation doesn’t mean that prices will go back to where they were before this largely government-induced bout of inflation started up. Grumpy voters will just have to suck up the higher prices for the many necessities of life – it’s one reason why it’s so important to avoid inflationary outbreaks in the first place.

If Albo were prepared to break his word on the Stage 3 tax cuts, it raises the issue of why we would believe anything he says. The government has no plan to alter negative gearing – sure. The government has no plan to ditch cash refunds for franking credits – sure. The government has no plan to alter the tax arrangements of trusts – sure. The list goes on.

It’s a case of watch this space and don’t believe anything a politician says. It reminds me of that old joke: When do you know politicians are lying? When their lips are moving.