Jason Wood (La Trobe, Liberal Party) Share this | Hansard source

I know that on budget night the Labor members were patting each other on the back for a fantastic budget and doing such a great job, and I can kind of understand what the thinking was—that if you remove the negative gearing on existing properties, that's going to do something amazing. We'll have all these people go and invest in new land and build a house and negative gear that and get the capital gains tax. There is one thing the Labor members haven't thought of. In suburbs such as Gembrook, Cockatoo and Emerald in my electorate of La Trobe, there's only a five per cent rental market. Are the people who are holding onto those properties likely to sell those properties and try to reinvest down in, say, Clyde North or the new growth corridors in Pakenham? The simple answer is no. Either they're going to hold onto those properties or, if they do sell, obviously an investor is not going to be come in and assist the rental market up there. In those little areas that I mentioned, there are going to be a lot fewer rentals.

Then we can go down to the south of the electorate. People talk about property developers. We're talking about hundreds of acres of land—or it could be 30 acres of land. That's not mums and dads and first homebuyers getting in there; that's property investors and developers going in there. So you're going to have a property investor going up against new homeowner. I just can't see that what Labor is proposing is actually going to work.

The budget was just a budget of broken promises, higher taxes, more debt, lower living standards and fewer homes for Australians. There is a projected decade of deficits worth about $150 billion, with gross debt of around $1.25 trillion, annual interest costs of over $42 billion per year—that's roughly $80,000 per minute. Higher taxes of about $50 billion in total were announced, including $15 billion from personal income tax. Government spending is at its highest level in 40 years, outside of the pandemic. There are 35,000 fewer homes being built. This is in Labor's own budget papers.

As a member of parliament, it's always tough when you get to say you've broken a promise. The Prime Minister has just made every member of parliament look bad, but in particular himself and the Labor members. I'm going to go through the times when he was asked about changes to negative gearing and the capital gains tax. On 9 April 2025, when asked if he would rule out changes to negative gearing and the capital gains tax, he said: 'Yes. How hard is it? For the 50th time.' For the 50th time he's admitting that he's not going to make any changes. From 17 to 22 April 2025, he repeatedly said there were no plans to change negative gearing or the capital gains discount, saying, 'I rule it out,' and, 'No plans.' On 22 April 2025, on live TV, the PM said he would not cut the capital gains discount. In August 2025, the PM repeated that the government would stick to the tax policy it ran on, saying, 'The only tax policy we're implementing is the one we took to the election.' Now, in May 2026, the PM acknowledged the government had changed its stance and said, 'We've changed our position.' It's a bit like Darth Vader in Star Wars when he says, 'We're renegotiating the deal.'

So many people went to that election knowing that, if the PM's word was his bond, they would be voting for the same capital gains tax, the same negative gearing and the same rules for trusts. Discretionary trusts are going to be hit really hard. From 1 July 2028, the budget proposes a 30 per cent minimum tax on discretionary trusts. Trust income is usually distributed to beneficiaries, who pay tax at their own rates. Under Labor, the trust itself would pay 30 per cent tax on its income first. As it goes in before distribution, less money would be available to distribute to family members and heirs. Trustees and families may need to restructure ownership, incurring legal, accounting and stamp duty costs. The ones who are really winning on this at the moment are the accountants. But, even when I talk to the accountants, they're saying they're hating it because they've got all their businesses in trusts too, so it's going to impact them. People have gone and put trust in Labor—in particular, when it comes to discretionary trusts. They now have to go to an accountant and pay money to actually get legal advice and potentially change their trust arrangements. We're not talking about 100 or 200 people. We're talking about hundreds of thousands of people.

In my previous role working with the multicultural community, I had a lot to do with our Indian community. I can say that there are a lot of Indian accountants out there. The main people they are serving are obviously from their own community because of language barriers et cetera, and they've advised them to use trusts. Tonight I messaged 10 or so multicultural people I know and business people, and all of them have trusts. We're not necessarily talking about people owning big companies. We're talking about the little guy or the family out there with a business. If the wife or the husband is not working for illness or whatever else, they just want to have the ability to put the money in the trust and actually disburse that money.

The other night I was at an event and was talking to electrical contractors. They're saying that the advice they've been giving their members for years is to set up trusts. I wonder how many tradies out there have set up trusts. So this is going to have a major impact. At the moment, if you look at Australia, you see we've got a situation where people are really struggling to make ends meet, and now small-business people have to fork out money to change their trust arrangements or, at the very least, get advice. This wasn't even mentioned prior to the election, so Labor can say, 'We didn't actually break our promise.' But I'll tell you what: no-one expected them to go after this.

When it comes to the capital gains tax, the old rule was a 50 per cent discount on capital gains for assets held for 12-plus months. The new rule is that the 50 per cent discount will be replaced by inflation indexation plus a 30 per cent minimum tax on gains, applying from July 2027. Again, the accountants are going to be trying to work out how much a property has grown in value after 2027 if it was purchased before that. You're going to have the ones doing well. Obviously the land value is coming out. Again, that's more money being paid from people who've gone into business and have gone into investments. Again, it's them who are paying the price. This policy raises taxes for ordinary Australians. As I said before, rental supply will be less and will obviously be much less in established areas because investors won't go there, and the new home buyer is going to be competing with an investor.

Sellers will often pay more tax under the new rule than under the old 50 per cent discount, which is obvious. Not just big investors but small landlords, retirees and long-term owners will face higher tax. These could be people who planned for their retirement 20 years ago, and now they're going to be hit. The higher tax reduces the take-home profit when the property is sold. Some investors may sell or stop buying established homes, which will, as I said, shrink the rental market. If you're a property investor, are you really going to go and buy an existing home when you can go and buy a new home with negative gearing and the capital gains benefit? That's where they're going to be going.

At the same time, they're going to be competing against the first home owner. Fewer rentals and fewer listings will push up rents. People that are on capital gains for retirement may get less income and less security. The new rules add complexity and require more accounting, valuations and of course paperwork. Replacing the 50 per cent discount with indexation plus a 30 per cent minimum means many sellers—especially lower-rate taxpayers and owners of long held assets—will pay more tax, get less after tax and face harder retirement and succession planning.

Remember: Paul Keating tried all this. It didn't work, and they had to bring it back after two years. That was when it comes to negative gearing. From July 2027, negative gearing will only apply to newly built homes. For properties bought after the cut-off, the rental losses can reduce your wages. They can only be used against further rental income or capital gains. Small landlords who buy existing homes are the ones most affected. Some landlords may sell up. It could mean fewer rentals and higher rents. New houses take years to build.

I've actually been out there in the past. I'm not negative gearing any properties at the moment, and I haven't for many years, but I have bought land, developed it and put three properties on it. I must admit it was during a bit of a crisis and I didn't make too much money out of it, but the builders actually went into liquidation. It wasn't an easy ride and it caused a lot of stress. That's probably why I never did it again. We're now expecting others to go and do the same thing, and when you're subdividing, you need town planners and everything else like that. So it's going to be really tough when it comes to this.

The budget is bad for young Australians. Labor's pitch to youth under the budget has not worked. Many believe they will be worse off under Labor. Youth are denied the pathways to buy a house and create wealth. As has been mentioned in parliament, the Prime Minister has benefited from negative gearing and from capital gains tax reductions. They're taking that away from generation X and millennials, and they're going to be the forgotten ones. A lot of them are hearing, too, that when they're investing in things like crypto they're going to get hit.

The budget's tax and housing changes risk making it harder and more expensive for young Australians to buy or rent homes. Homes won't appear overnight; building enough new homes takes years, so most young people won't see quick improvements. People who already own property keep the old tax rules, so the younger buyers will face competition. Small landlords will sell or stop buying because, as I said before, they won't want the stress of subdividing land, going through council and getting building permits et cetera.

Changes to capital gains tax make future profits harder to predict, which can scare off buyers. One thing, too, which we've seen in Victoria in particular, when it comes to the corruption of the CFMEU in the suburban rail project, money was diverted from the electorate of La Trobe, my electorate, which was for road sealing on Wellington Road and in the Dandenong Ranges. It was all put towards this Suburban Rail Loop, and the corruption there—I believe it's an amazing amount of billions of dollars.

We heard Premier Allan come out today and say there are no links to bikies et cetera. What a lot of rubbish. You've got the CFMEU and bikies—it's come out in the royal commission how they worked hand in glove, with paybacks, kickbacks and preferred building providers or suppliers and materials. It's corruption at its worst. When you're getting these huge wages for CFMEU members, when it comes to someone who wants a developer they're competing against builders and traders working on these major projects, and the CFMEU wages are forcing project costs—not only the rip-offs on these huge tunnels and the North East Link but also the local guy or family who have been trying to subdivide. They now have to compete with these massive wages. I just say to government members: you're going to lose seats over this because people on the ground are furious, especially small businesses and hairdressers who have their business connected to a trust—the tradies et cetera. They're all talking at the moment and they're letting their customers know, especially young people, that they'll be paying a lot more in the future when it comes to building, and they're not going to get the benefits, as the older generation have, when it comes to negative gearing and capital gains.

I come back to trusts and what Labor has done there. There are 800,000 trusts in Australia and people are now seeing their accountants—it's just a diabolical mess and it's going to make investment in Australia a lot tougher. When it comes to the IT sector, we've heard they want special dispensation for capital gains and investors. But you know what? It should be for any Aussie who's prepared to have a go at business and employ Australians. They must get the same advantages.

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