Julian Leeser (Berowra, Liberal Party, Shadow Minister for Indigenous Australians) Share this | Hansard source

This is a bad Labor budget built on broken promises funded by a tax assault on aspiration, designed to punish the very Australians who invest, build businesses and plan for the future. Last week, I launched a survey of my electorate. So far, nearly 2,000 people responded, from every suburb and town across the electorate. Their verdict was unambiguous, and I want this parliament to hear it: 68 per cent of respondents believe Labor's budget tax changes will worsen Australia's economy; 75 per cent of small business owner respondents said the budget would worsen the economy; 70 per cent said the CGT and negative gearing changes will make it harder for Australians to invest, save and build for the future; 75 per cent of small business owners oppose the trust tax; and 64 per cent of respondents agreed that trust changes amount to a death tax by stealth. Unprompted, more than 100 respondents mentioned broken promises or dishonesty, and that tells you something.

From 1 July 2028, discretionary trusts will face a minimum 30 per cent tax on distributions with no grandfathering. Businesses structured legally over decades on professional advice will find the rules change beneath them. There's been no transition period, no compensation and no acknowledgement from this government that the people affected by these changes did nothing wrong. They followed the law, planned carefully and took risks, and now the rules have been rewritten around them. Throughout both the 2022 and 2025 election campaigns, the Prime Minister made specific, repeated promises not to change taxes on small businesses, on farmers, on negative gearing or on capital gains, and he's broken every one of those promises. More than 100 survey respondents used words like 'broken promise', 'lied' or 'betrayed' in their written comments, unprompted, in response to a question about tax policy.

Kath from Berowra Waters put it plainly: Labor didn't run on these changes, and they've not been adequately explained. When you change taxes, taxpayers have a right to know what is happening first, and Labor hasn't done that. Alan from Galston started his business with his wife 36 years ago. He always planned to sell it and retire on the proceeds. That was the deal. It was the unspoken contract between the government and the people who take the risk of building businesses. This budget has torn up that contract. Nathan from North Epping has effectively paid himself next to nothing for the past 10 years to build his business, with a sale as the prospect of growing wealth for the future. Now that prospect comes with a tax liability he never planned for. Jeff from Epping has invested a seven-figure sum in a dairy manufacturing business in regional Victoria, currently employing 32 people and expecting to employ over 100 within 12 months. He told me that the proposed changes will make him substantially worse off on any exit.

Estimates suggest that there are around 642,000 discretionary trusts in Australia, and well over 300,000 will be affected. This isn't a tax on the wealthy; it's a tax on the people of Berowra. It's a tax on the tradesman who incorporated, the pharmacist who structured her practice and the couple who built something together over 30 years and hoped to pass it on.

The trust tax is also a tax on families, on what parents spend a lifetime building to pass onto their children. Sixty-four per cent of survey respondents agreed it mounts to a death tax by stealth. Hannah from Berowra has a testamentary trust in her will, not to minimise tax but to ensure that if both parents die her children's inheritance cannot be spent by a guardian before those children reach adulthood. Under this budget, the government takes 30 per cent before those children see a dollar. Helen from Waitara, raising a child with a significant disability, spent nearly $4,000 in legal fees this year to establish a testamentary trust to protect that child's future. These aren't tax avoiders; they're parents, and this government proposes to tax what they leave behind. The cruelty of this measure is not abstract. These are people who sat down with their solicitor, thought about what would happen to their children if they were gone and took legal steps to protect them. This budget penalises that foresight. It punishes responsible planning, and it does so without warning, without mandate and without compensation.

From 1 July 2027, negative gearing on established residential properties purchased after budget night will be abolished. The 50 per cent capital gains tax discount is replaced with a minimum 30 per cent rate. The government's own Treasury modelling concedes that these changes will result in around 35,000 fewer new homes over the next decade. Independent economists forecast upward pressure on rents. That doesn't help renters. It punishes them. Michael from Arcadia withdrew superannuation and bought an investment property that houses two people. Following this budget, he says that the CGT changes will make that investment unviable. He plans to terminate the lease and sell. Two people will be evicted and need to find somewhere to live. Multiply that decision across hundreds of thousands of small landlords running the same numbers, and you understand why housing economists are forecasting rental pressure and why the government's claim to be helping renters is so dishonest. Toni from Pennant Hills made decisions based on this government's guarantees. Those guarantees have been broken. Andrew from Mount Colah spent his entire working life planning carefully for self-funded retirement through superannuation and shares. He retired last month at 65. The month he got there, the goalposts moved. His careful planning to provide a cash pension for himself has been scuttled at the finish line by this federal budget.

The rentvesting pathway—renting near work while investing elsewhere to build equity—has also been destroyed. Nathan from North Epping named this explicitly. The CGT changes have made rentvesting virtually impossible. Young people who couldn't afford to buy near where they work now have lost that stepping stone too. This wasn't a loophole. It was a legitimate and widely used strategy that allowed ordinary Australians to enter the property market on their own terms. The government has slammed that door without offering any alternative.

The reduction in the private health insurance rebate for Australians over 65 has not received the attention it deserves. Peter from Westleigh and his wife are on full age pensions and are desperately trying to maintain health cover that costs them $5,000 a year. Helen from Hornsby, a self-funded retiree, faces an additional $3,000 a year and told me she'll be forced onto the age pension sooner as a result. Pamela from Berowra has been a private health member since she was 17. She's now 84 years old and wonders whether she can continue to afford $600 a month. Rowena, a retiree from Normanhurst, wrote something that should trouble every single member of this parliament. Labor says we can earn more and keep more of what we earn, but she can't earn more and now she has to spend more of what she's already earned. She has to choose between her health cover and being able to afford to hire someone to help her take a shower. Norm from Westleigh called it a slap in the face for the people who've paid their taxes all their working lives, and he's right.

The consequences are entirely foreseeable. People will drop private health cover and enter the public hospital system at the moment their healthcare needs are the greatest. The cost of that shift won't disappear. It'll simply be transferred from private insurers to the public purse and to every Australian who waits longer in a public hospital queue because the system is absorbing many more patients than it planned for.

No account of this budget's impact on small business is complete without addressing energy costs, because the budget does nothing in a structural way to address them. Angus Taylor has made this case consistently. Labor's ideological commitment to an all-renewables grid, the closure of baseload power and the failure to develop more gas supply have driven electricity prices higher for every small business in Australia. The cafe, the gym, the print shop and the medical practice in Berowra are all paying more for power than they should. Every dollar spent on electricity is a dollar not spent on wages or investment. John from Normanhurst works in the building industry and he was blunt: nothing in this budget will improve the housing supply or stimulate development, and the energy policy settings embedded in construction requirements add significant cost to every new build. The coalition will pursue a technology-neutral energy policy that prioritises affordability and reliability, not a $150 quarterly rebate that runs out in December. That rebate is a bandaid on a wound that requires surgery. It doesn't lower wholesale prices, it doesn't improve grid reliability and it disappears before the summer is over.

When a government changes fundamental rules without warning, without mandate and without grandfathering, it creates sovereign risk. It causes investment to stop and it causes planning to become impossible. Ross, a Hornsby resident, drew the sharpest historical comparison. When John Howard changed his position on the GST, he took it to the election and won a mandate. This government campaigned for these exact changes in 2019 and were defeated. They promised not to implement them in 2025, won the election and then implemented them. His conclusion was absolutely right. This is a government that cannot tell the truth.

Philip, a Dural resident, said the most fundamental concern, even beyond the toxic nature of these changes, was the utter dishonesty of a government that refuses even to acknowledge that it has broken promises. Craig from Westleigh is approaching retirement, having structured his finances around a discretionary trust in good faith. He told me simply: I trusted this was something that wouldn't change.

Sovereign risk isn't just an abstract concept for economists; it's what happens when a small-business owner in Galston realises that planning for his future is futile because the government can change the rules after the fact, with no consequences. It erodes confidence and it erodes trust, and once that trust is gone it takes years to rebuild.

This government has made young Australians the stated justification for this budget, and I want to test that claim against what the young people of Berowra have told me. Of the 2,000 responses, more than 10 per cent were under 45. Fifty-nine per cent of those under 45 said the budget would worsen the economy and 52 per cent opposed the trust tax. Mark from Berowra is a young Australian who invests in shares and property and works hard. He told me this budget has struck a hard nerve with him and his fellow young Australians. He asked: 'What's the point of getting an education? What's the point of working hard and innovating if 47 per cent just goes to the government?'

Shane from Cherrybrook identified a critical design failure—for younger Australians who can't afford property, non-property investment—shares, ETFs and managed funds—has been one of the few remaining ways to build the wealth needed to eventually buy a home. The CGT changes don't distinguish between a landlord with five investment properties and a 28-year-old putting aside $200 a month into an index fund. They are hit the same.

Nicholas from Beecroft made the point with precision that the minimum 30 per cent tax on capital gains literally punishes the lowest of low-income earners, including young people who need to sell shares to produce a home deposit. The government tells young Australians it's opening the door to homeownership, and yet it's blocked that door with a tax collector.

Anton from West Pennant Hills invested in small ASX listed biotech companies that do research and development, exactly the kind of productive investment that creates jobs of the future. Under the new CGT rules, the after-tax return no longer justifies the risk. He may as well invest in stable dividend companies. That's not good for Australian innovation.

Jonathan from Hornsby made the supply point plainly, saying that young people invest in shares to build capital for a deposit and now they'll be taxed too heavily on those gains. Labor's measures won't result in more first home buyers getting into a house when the real issue is supply. The government's own modelling indicates that there will be 35,000 fewer homes built as a result of this. That's not a housing solution; that's a housing problem. The answer is to build more through planning reform, reduced red tape and energy policies that don't inflate the cost of every new home. This budget offers none of that.

The contrast with our approach in the coalition is clear. We will fight these trust tax changes and, if they pass, we will repeal them. We will not destroy the negative gearing and CGT settings that mum-and-dad investors and first-time rentvesters depend on. We will work on supply, planning reform, construction capacity and energy affordability because that is what will actually help young people buy a home.

Let me discuss the tax that this budget ignores entirely, and that is bracket creep. When wages rise just to keep up with inflation, workers are no longer better off in real terms. If that rise pushes them into the next bracket, the government takes more. It's a stealth raid, and it happens every year. This budget does nothing about it. Think about what this means for the workers of Berowra—a teacher at Normanhurst Boys or Pennant Hills High, a nurse at Hornsby hospital, a police officer at Castle Hill or Hornsby or a paramedic or a firefighter stationed across the electorate. All of them work hard. They earn their pay rises through years of service. Every time inflation pushes their salary up, the government quietly takes a larger share. They're not richer. The government is just extracting more from the wages they've worked for. Darren from Mount Colah named it directly, saying that Labor kept the 37 per cent bracket when it was meant to be abolished. That's another broken promise making it harder for ordinary Australians to get ahead. It's not a dramatic headline. It doesn't appear in the Treasurer's budget speech as a line item. But it compounds, year after year, quietly eroding the purchasing power of working families who thought they were getting ahead.

The coalition's tax-back guarantee is our answer. From 2028-29, we will index the bottom two income tax thresholds to inflation, protecting 85 per cent of income earners, including every teacher, nurse, paramedic and police officer in Berowra, with relief of $250 in year 1, growing to more than $1,000 a year by year 4. From 2031-32, all thresholds will be indexed. When a nurse gets a pay rise at Hornsby hospital, she, not the taxman, will actually keep it. That's what fairness really looks like.

We oppose this budget and its tax increases. I can't support a budget that taxes and disadvantages my community as much as this budget does. This is a bad Labor budget. It deserves to be opposed. We will fight these toxic taxes every step of the way. If they get through, we will repeal them.

Debate adjourned.

Federation Chamber adjourned at 19:30

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