Australia

Australia's big economic woes 'at home'

Jim Chalmers says the government should focus on what's holding back Australia's economy at home. (AAP)

The Morrison government should pay more attention to resolving economic challenges at home and less on those coming from overseas, a Labor frontbencher argues.

Australia cannot blame its floundering economy on global headwinds, according to Labor's shadow treasurer Jim Chalmers.

Instead, Dr Chalmers has appealed to the Morrison government to focus less on the international challenges facing the economy and more on what is holding it back at home.

"Australia's economic mess cannot be attributed primarily on the world," he told the National Press Club in Canberra on Tuesday.

"It is at least partly the fault of Australian policy - which means it's the fault of the Australian government, a third-term LNP government with no plan except to shift the blame."

Dr Chalmers said there are global uncertainties afoot, with the United States and China arguing over trade, Brexit coming to life and the potential for attacks on oil tankers in the Strait of Hormuz.

But the biggest concerns are what Australians are earning, how much they are spending and how efficiently businesses are working, he said.

"Australia's most pressing challenges, at least for the time being, are domestic and they're focused on incomes, consumption and productivity."

The comments come after Labor officially decided on Monday not to back the government's full $158 billion tax cut package when parliament resumes next week, unless the coalition changes it to their liking.

Labor is enthusiastically backing the first stage of the three-step plan, which will mean extra cash for low and middle income earners when they file their tax returns in the coming months.

But they will only support the second stage, which is due to kick in from 2022/23, if the government brings it forward to the coming financial year.

The second stage will top up a low income tax offset and mean more people - earning up to $45,000 instead of $41,000 - will get a 19 per cent tax rate.

They also want to defer legislation on the third stage, which will flatten the tax rate from 32.5 per cent to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

Dr Chalmers says Labor's plan is the one best placed to rev up the economy.

The ALP is still concerned the last stage of the coalition's tax plan will flow too significantly to people on higher incomes and prevent the economy from growing as fast as it could.

It has so far failed to secure a breakdown from the government of the impact the tax relief will have on various income tax brackets.

"For us this isn't only about finding out if the final stage tax cuts are a fair plan for growth, although that matters a lot," Dr Chalmers said.

"It's also about finding out if they give us a fair chance of growth - whether they will actually work."

Dr Chalmers' address comes after the Brisbane MP spent a week traversing 2800km of central and north Queensland to piece together why Labor failed to woo most voters.

The clear message from them was that the ALP shouldn't sulk over the loss but get back to work, he said.

The coalition also needs to take better responsibility for the economy, voters told the frontbencher.

"We need a government that takes responsibility for the economy, and brings people together in a common cause."

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