Anthony Albanese has indicated he may be willing to negotiate with the Senate crossbench to ensure the passage of the government's changes to stage three tax cuts.
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Under the reworked scheme unveiled by the prime minister on Thursday, anyone earning less than $150,000 will receive a larger tax cut while those earning more are in line for a smaller benefit than earlier promised.
The changes to the original stage three tax cuts that were first implemented by the coalition will need to pass parliament before they are due to come into effect in July, with the government needing the support of the Greens and crossbench.
Greens leader Adam Bandt has called for further changes to the tax cuts to ensure low and middle-income earners get greater financial relief.
Mr Albanese said the changes to stage three were sensible, but he remained open to negotiations.
"It has the same costs across the forward estimates, but it is a better package being put forward," he told reporters in Canberra on Friday.
"We'll wait and see. We'll wait for them to go through their mechanisms as well. We'll talk with all of the crossbenchers."
Mr Bandt said despite the changes to stage three, they were not adequate to provide enough cost-of-living relief.
"We now have the chance ... to really tackle inequality and the cost-of-living and housing crisis in this country," he told ABC Radio on Friday.
"If we're going to change the legislation, then we should do it in a way that really supports low and middle-income earners."
Opposition Leader Peter Dutton has heavily criticised the tax changes, challenging the prime minister to call an early election on the issue.
However, the coalition has not indicated whether it would repeal the changes if it became the next government.
"It's just a major break of trust ... the prime minister promised this on over 100 occasions, it's not just some throwaway comment that he made at a press conference," he told Nine's Today program.
"It's not just 1.8 million people who are worse off under this package, but over the coming years it's going to be for over four million Australians who are affected by it because of bracket creep."
Shadow treasurer Angus Taylor said the opposition remained in favour of the original stage three plan.
"There were benefits to lower income earners in the earliest stages, of course, and the third stage is all about taking out that bit, that 37 cents threshold and in the process, dealing a real blow to bracket creep," he told Sky News.
But the prime minister rubbished suggestions of calling a snap poll on stage three.
"The earliest election is August 2024 ... the tax cuts will take place on July 1. Peter Dutton will always go for the politics. This is about people, not politics," he said.
"When confronted with the changing circumstances, which is with the pressure which low and middle-income earners have been under, this is the best and most effective way that we can make a difference."
Treasury advice asserts the tweaks are "broadly revenue neutral" and would not fuel inflation, which is moderating in response to a series of interest rate hikes but remains above the target range.
The key economic agency also expects the reworked scheme to boost labour supply more than the original version, particularly for women, taking pressure off consumer price growth over time.
Reserve Bank Governor Michele Bullock is also comfortable the reworked scheme won't fan the flames of inflation, based on the federal treasurer's remarks.
Australian Associated Press
