Peter Khalil (Wills, Australian Labor Party, Assistant Minister for Defence) Share this | Hansard source

This is a government that has, I think, been characterised by the fact that it has made hard decisions. We make the hard decisions. We're making the hard decisions because, effectively, they're the right decisions to make. You see that in the debate around this year's budget, and in our record of delivery over a period of time, because we are focused on helping workers, we're focused on helping first home buyers and we're focused on helping small businesses, so that more Australians can earn more and keep more of what they earn and also get into the housing market and get ahead.

The tax package is pro aspiration, pro worker and pro investment. And that is very good. It is very good for my incredibly diverse and aspirational community in my electorate of Wills.

We've had a quarter of a century, now, of a tax system that has encouraged the misallocation of investment and resources in our economy, and we've had a 2½ decade productivity problem in our economy as well. It may be that, on the other side of the aisle, it's all too hard—it's just too difficult to make those hard decisions to try and make sure that we have a better future.

But we want to encourage people to make investments, because there are good economic outcomes, not just good tax outcomes, that flow from that. That's why the government has cut taxes for workers five times and in three different ways—that's what we've done. We cut taxes in our first term. There was another tax cut in July, and another one the July after that. And this week we will introduce the legislation to cut income taxes further—including a $1,000 instant deduction, and also the working Australian tax offset of $250.

We're reforming the tax system to support 75,000 more homeowners into the housing market—that's significant. We're also investing an extra $2 billion for enabling infrastructure to support up to 65,000 more homes, taking our Homes for Australia plan to over $47 billion in investments over our time in government. We're also helping to secure social housing for more than 4,000 eligible young people at risk of homelessness, with a $59.4 million package for states and territories.

Now, it may be the case that those opposite are unaware of history. But they risk repeating their history, and making the same mistakes that they've made in the past, if they don't support these tax reforms—if they once again vote against tax cuts and against aspiration.

The aspiration to homeownership is at the heart of the budget that we delivered recently. House prices have risen over 400 per cent over the last two decades or so. They've gone from four times to eight times incomes over the past 20 years. And ownership for young people is down by seven per cent. These are all facts that they can't hide from. And our reforms, frankly, will be helping to level the playing field for first home buyers and to ensure investment flows to where it's most productive, including new housing supply.

Unfortunately, in the information landscape in which we all operate, there's been a lot of misinformation about the recently announced changes to the capital gains tax discount. Let's just have a bit of clarity and the facts.

Under the Howard government, a 50 per cent capital gains tax discount was applied to the sale of all assets that had been held for more than 12 months. It basically cut that tax in half, given that discount. That system distorted the market by encouraging people to invest in established houses, not units or shares. On average, the 50 per cent discount tends to overcompensate investors in housing for inflation and to undercompensate investors in units, especially in the regions, and in shares.

The return to indexation will mean, in future, that only real capital gains are subject to tax, supporting investment in assets like shares and medium- and high-density housing. The announcement that was made in the budget was to replace the 50 per cent CGT discount with inflation-adjusted indexation from 1 July next year, to restore the taxation of real gains, as well as a minimum tax on realised gains. It's all about fixing the tax treatment of capital gains so that it operates as originally intended, helping to ensure investment flows where it's most productive.

The return to indexation will mean in future that only real capital gains are subject to tax, supporting investment in assets like shares and medium- and high-density housing. The announcement that was made at the budget was to replace the 50 per cent CGT discount with inflation-adjusted indexation from 1 July next year to restore the taxation of real gains, as well as a minimum tax on realised gains. It's all about fixing the tax treatment of capital gains so that it operates as originally intended—helping to ensure investment flows where it's most productive. Returning to indexation will mean in the future only real capital gains are subject to tax, supporting investment in assets like medium-density housing, thus ensuring everyone pays a fair share when they make a capital gain. Income support recipients, including pensioners, will be exempt and there will be a grandfathering of gains made before 1 July. As we go through this process before the implementation, there is a lot of consultation going on with business to make sure we get all of this right.

There's been a lot of discussion as well about the negative gearing changes that we're debating. Our negative gearing changes put homeowners first and will help more Australians get a foothold in the housing market. Going forward, we are limiting negative gearing for residential property so it can only be used for new builds. You can still negatively gear. You can do it on a new property, and it stimulates new home builds. We knew that something had to change. Too many people, too many young people, have been locked out from owning property by the fact of the distortions in the systems for the last several decades. But we're making these changes in a very responsible way.

What's disappointing is partly the misinformation that has flooded the information landscape, conflated with rather, I think, deceptive messaging around and a misunderstanding of what's happening to confuse people and to scare people. We heard the previous speaker talk about scare campaigns. Well, this has become almost a kind of characteristic of our current information landscape—that it's almost expected—but that's not good enough. This might not reach many people, but at least we can actually debate in this place what we're doing and why we're doing it. Hopefully, people can see and hear that.

Australians who are currently negatively gearing will not see any change to their arrangements. That's just a fact. They'll continue to be able to negatively gear. Nothing changes for properties purchased before the budget. This includes contracts entered into. And if you want a negative gear going forward under the new system, you can. You absolutely can. We ask that you contribute to the national goal of building more homes by negatively gearing on new builds. That's a fact. People who've been online recently would have seen all these AI generated images of the PM as a silent partner, taking 47 per cent of profits from a small business or start-up. I'm sure this has been spread around everywhere by bots and others who want to create mischief and further misinformation. Well, these posts are referring to 47 per cent marginal tax rate that has existed for more than a decade. It doesn't change in this budget at all. You've got all of these memes going around and all the rest of the social media campaigns by the proponents. One of the main proponents of the social media campaign actually explained the issue with the memes by saying, 'Unfortunately, the more nuance you have, the quicker someone will scroll past and not really care about what you're saying.' That's the motivation for putting information out to misinform the Australian people? It's remarkable. So let's not scroll past right now. I've got a small audience here, maybe a few more people that might watch this if I put it up on social media. Let's not scroll past.

There are four key capital gains concessions for businesses that are unchanged in the budget. We are supporting small businesses to get ahead, and it's a big focus of this budget. We're actually consulting and working with the sector on how the new rules will actually apply to start-ups. As I mentioned, there'll be a consultation process going forward on some of this. The fact is we're delivering $3.5 billion of tax relief to new businesses, which includes the $20,000 instant asset write-off becoming permanent. That's going to wipe away around $890 million in cash flow burden. We're delivering a permanent two-year loss carry-back so that small businesses can return to profitability faster and have the confidence to invest earlier and withstand volatility. We're introducing loss refundability to help startups grow in their first two years. We're expanding tax incentives for venture capital to help unlock more investment in young and expanding businesses, in startups, in transforming ideas into great businesses that can be productive in the economy.

How come there are no memes on that? How come no-one's putting that out on social media in the same way and spreading that information? Guess what? If anyone knows anything about investing in small businesses, you know that upfront is where you need that support—when an idea is just an idea, when there's the passion of the entrepreneur. So all the things I've just talked about—the $3.5 billion in tax relief and tax measures to help small businesses and startups—is actually what matters. And then we've got all this misinformation about how on the back end the discount through indexation will somehow be terrible for the investor down the end. Well, I'll tell you what—some investors and some of these businesses will actually benefit from an indexed tax discount, depending on inflation rates.

So there's a lot of misinformation in the ecosystem, but we know this: small businesses are the backbone of the Australian community and of employing people. This government will continue to support them through all this noise, through all this white noise and this smoke and mirrors, by delivering through these bills into law the support that they need to be able to be successful in small business. So we change the culture and the distortions that have occurred for decades, which have funnelled people away from investing in small businesses. As some of the people on the other side would know, there are exemptions all the way through already for businesses with a turnover of under $2 million or assets of less than $6 million, so 90-plus per cent of small businesses are not affected by any of these changes.

Some people online have also said, 'This is so unfair to young people who are trying to save a deposit by investing in the share market.' But the truth is that most young people—just take a walk down your local electorate; it's certainly the case in mine—don't make income from capital gains, buying and selling assets. They make it from working. Taxpayers aged between 18 and 34 account for—wait for it—four per cent of the total value of capital gains declared by all taxpayers. Let's say that again. Four per cent of 18- to 34-year-olds represent capital gains declared by all taxpayers. Let's quote the Betoota Advocate. That's a good one. They said it with their headline: 'Regional supermarket employee has no option but to walk away from her diversified share portfolio thanks to Labor'. It's funny, but it's true.

Young people who can't afford to own their own home should not be subsidising the underperforming investments of the asset-owning class. That's just a fact. I think it's an important one to put out there. It's unfair, and that's why we're changing it. I know it's hard, and it's been difficult for previous governments of other political persuasions to make these tough decisions, but we're doing it because it will make a difference in the future. I guarantee you that in five years time we'll look back on this and think: 'Oh my God, look at all that crazy misinformation that was flying around. These changes were so important.'

Every year, there are almost 40,000 children and young people who have nowhere to live across this country. I want to talk about the really vulnerable now. They're certainly not part of that four per cent making income through assets. They have nowhere to live—40,000 too many. Behind every statistic on youth homelessness is a young person who deserves stability, opportunity and hope. Every night, thousands of young people across Australia face uncertainty about where they will sleep, and that is simply unacceptable. We're having a debate about young people who are going to be impacted by these CGT discounts and so on; 40,000 of them haven't even got a place to sleep.

So let's talk about what really matters right now. Early intervention and community support can change the trajectory of a young person's life. That's why the Albanese Labor government is investing $60 million—$59.4 million, to be exact, in case I'm accused of misinformation—to help vulnerable young people access stable housing and avoid homelessness. That's the national youth housing incentive, which fixes a structural flaw in Australia's housing system that has discouraged providers from offering tenancies to young people and disadvantaged youth housing proposals in funding rounds. That flaw, known as the youth housing penalty, makes young people financially unviable tenants. We're changing that. It's meant in the past that generations of young people haven't been able to access social housing to escape homelessness. We're changing that. Today, around only two per cent of social housing tenants are under 25, despite young people making up almost 15 per cent of Australians experiencing homelessness.

This is smaller in the grand scheme of things in this big budget. I talked about billions of dollars supporting small business. But this investment is really important for 40,000 young people who can't find a home or find a place to sleep tonight. That's the culmination of years of work and advocacy—and I want to congratulate them—by the Home Time campaign, who've elevated the voices of young people who have experienced homelessness. That's an investment in the youth of this country. That's what matters. This whole budget is about what matters for the Australian people.

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