'Conflict fatigue': Albanese rises with a message for the suburbs

Anthony Albanese has called on Labor to reconnect with aspirational Australians who rejected the party at the federal election, declaring that voters have "conflict fatigue" over political arguments that pit one part of the community against the other.

Mr Albanese, who is set to become Labor leader within days, said the party needed to end some of the "us and them" rhetoric that shaped its failed election campaign.

"People are looking for solutions rather than arguments, and they’re looking for what unites the community rather than what divides it," he said.

"I think we have to emphasise that. That doesn't mean that we shy away from the issue of inequality. It means, though, that we need to do that in a way that acknowledges the fact that the business community and the private sector create jobs for people."

Shattered by the election loss to Prime Minister Scott Morrison, senior Labor figures have thrown open a debate on every major policy, including a rethink on franking credits, negative gearing and whether to propose a market mechanism to reduce greenhouse gas emissions.

The policy review will follow the formal deadline of 10am on Monday for caucus members to stand for the leadership, although Mr Albanese is widely expected to gain the position unchallenged after finance spokesman Jim Chalmers withdrew from the contest on Thursday.

Acknowledging the way suburban and regional voters turned away from Labor last Saturday, Mr Albanese said many Australians wanted a stronger message from Labor about economic growth.

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"You need to treat people with respect. I think one of the issues that we had was being seen to be talking about the sharing of wealth when we also needed to talk about the creation of wealth," he said.

"One of the things about the suburbs is the issue of aspiration. People do aspire to improve their living standards, their wages, and they do want more opportunities for their kids."

Mr Albanese, a senior member of Labor's left faction and the deputy prime minister during Kevin Rudd's second period as prime minister, said he was a "proud supporter" of the unions but believed working with business was critical to success.

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"People have got conflict fatigue," he said in an interview. "They see politicians yelling at each other, they see a lot of conflict, and what they want is for people to come up with practical solutions that improve their lives.

"They want things that improve their living standards and improve their quality of life.

"And we need to listen to those people and engage with them."

Mr Albanese made no criticism of former leader Bill Shorten but set out his approach to the leadership in the wake of Labor's shock election loss, leaving it with a likely 67 seats compared to the Coalition's 78.

The race is now on for the position of Labor deputy leader, with a three-way contest in the party's right faction threatening to split its Queensland and Victorian branches after Mr Chalmers, Clare O'Neil and Richard Marles said they would consider replacing high-profile Sydney MP Tanya Plibersek.

In a sharp shift away from the Shorten era, Labor is now also canvassing a new climate change stance that calls for action to reduce emissions but drops a market-based solution to reach the target.

Labor's environment spokesman, Tony Burke, said the science had been compromised by the mechanism and it was now time to consider a direct-action model, as advocated by the Coalition, to avoid an "unthinkable" 15 years without action.

Labor's policy would force businesses that exceeded their emissions cap to buy credits from other businesses through a market-based scheme.

"The principle that we base targets depending on the science, we must not shift on," Mr Burke told the ABC. "If there is going to be any room for compromise, the compromise has to be in what the method is."

Mr Albanese told The Sydney Morning Herald and The Age that the key decision was about outcomes on climate change rather than the mechanism but that the first decision was for the government to propose a better policy after its disunity over the National Energy Guarantee.

"We need to take action on climate change, we need to listen to the science, but we need to do it in a way so that the transition in the economy is in the interests of working people and job creation," he said.

Labor is also grappling with its position on the $158 billion in income tax cuts the Coalition took to the election. The government is looking to ram the cuts through Parliament as soon as it returns to deliver a $1000 boost for many workers, but is refusing to split its seven-year package. The full package will also see tax cuts of up to $11,000 delivered to workers earning more than $200,000 a year by 2024.

Mr Albanese said Labor was prepared to support only the first stage of the package for low- and middle-income earners – potentially delaying tax relief for workers beyond the end of this financial year.

He said the government should not try to legislate changes that would come into effect years after the new Parliament.

"If the government plays politics with this by trying to introduce policies that have an effect on future parliaments, then I think that's hubris on behalf of the government," he said.

Labor MPs are furious at the impact of the party's franking credit policy and the confused message on the Adani coal mine in Queensland, which they say cost them the crucial northern seat of Herbert.

"We equivocated and sent all the wrong messages, not only to coal miners but working class people right across the country," Labor's agriculture spokesman, Joel Fitzgibbon, said.

Outgoing Labor senator Doug Cameron warned Mr Albanese not to abandon the "class warfare" that had characterised Mr Shorten's time as leader.

"The Labor left must not be diverted from critical analysis of inequality, climate change and the power and privilege of the big end of town," he said.

Mr Albanese and shadow treasurer Chris Bowen, have also urged the party to speak more to people of faith, who "no longer feel that progressive politics cares about them".