Tax reform, by its very nature, concerns rates, revenue and fiscal sustainability. But, at its core, at its heart, tax reform is about values. Underlying every debate about rates, about thresholds and about revenue are deeper questions: Do Australia's economic rules reflect the aspirations and reward the hard work of Australian taxpayers and of everyday working people? Do they reflect who we want to be as a nation?

A fit-for-purpose tax system does more than just raise revenue. It influences where capital flows, it decides how innovation is rewarded and it translates hard work into opportunity—not just opportunity for those individuals but opportunity for our country. Most importantly, it helps determine whether Australians believe that, if they work hard and play by the rules and contribute to their communities, they have a fair chance to get ahead. This is Labor's approach to tax reform.

The Albanese Labor government's agenda focuses on rewarding work, supporting that aspiration and better aligning the income earned through work with income earned in other ways. If you're a nurse working shift work, caring for our sickest Australians; if you're a boilermaker, working a double, clocking in and out; or, if you work in aged care, looking after our growing older population, you shouldn't have to pay more taxes than people holding wealth in other ways. Labor's reforms are pro-worker because Australians who earn their income through their own effort should know that that hard work is valued and that hard work is rewarded.

The reforms are pro-aspiration because homeownership should not become an impossible dream for the next generation. Young people in this country have never had a dream to pay off someone else's mortgage. Young Australians have a dream to own their very own home, something that helps them plan for their future. Labor is supporting tens of thousands of people to enter the property market, to own their own home and to build security for themselves and for their families.

And, yes, the Albanese Labor government's tax reform will create a fairer balance between the way income from work is taxed and the way income from other sources is treated. Let's have a closer look at that point. There are now more than one million trusts in Australia. There are, of course, sound reasons and legitimate reasons for individuals and businesses to use those trusts, including succession planning, asset protection and the management of family affairs. However, the rapid growth in the use of discretionary trusts over recent decades—by the way, the number has more than doubled in the past 20 years—raises critical questions about the sustainability and, indeed, the fairness of the current system.

The benefits of the discretionary trusts are not evenly distributed. The majority of income generated through trusts flows to households in the highest income bracket, and around 90 per cent of private trust wealth is held by the wealthiest 10 per cent of households, those with net assets exceeding approximately $2.3 million. A key feature of discretionary trusts is their flexibility which can provide opportunities to organise tax affairs in ways that are not available to most wage and salary earners, in ways that simply aren't on the table for everyday Australians. Treasury analysis indicates that families using discretionary trusts paid an average effective tax rate around four percentage points lower than families with similar incomes who did not use a trust.

Reviews of Australia's tax system over the past 50 years have also identified these inequities. This includes the 1975 Asprey report, the 2008 Henry review and the coalition's 2015 tax discussion paper. All of them said exactly the same thing: we have to do something about this. They highlighted the failure of that fundamental principle of fairness, that income should be treated consistently regardless of how it is earned or how it is held. The Treasury Laws Amendment (Tax Reform No. 3) Bill 2026 will deliver a fairer tax system. These changes will affect only a small portion of taxpayers. More than 95 per cent of individual taxpayers and over 90 per cent of small businesses will not be impacted in any given year. It's also important to note that these changes will not apply to a range of trust arrangements that serve important social, charitable and public purposes. This includes fixed trusts, charitable trusts, special disability trusts and superannuation funds along with primary production income and certain categories of income received by—(Quorum formed) vulnerable minors. The exemptions also extend to deceased estates and discretionary testamentary trusts. In addition, distributions made by trusts to registered charities and deductible gift recipients will remain outside the scope of these changes.

The government has undertaken extensive consultation throughout the development of these reforms, seeking stakeholder feedback on the practical operation of the trust reforms and the exposure drafts. These consultation processes have helped to refine the legislation and ensure the reforms are implemented in a considered and effective manner. As a result, there are options to minimise, and in many cases avoid altogether, restructuring costs for small businesses and other taxpayers who use discretionary trusts.

Discretionary trusts will be exempt from the minimum tax if they make fixed distributions to nominated beneficiaries. This provides an alternative to accessing rollover relief and offers greater flexibility in responding to the reforms. For those who choose not to restructure, trusts will continue to be available for legitimate purposes such as asset protection, succession planning and business operations. The reforms do not remove or restrict the use of trusts. Instead, they will reduce disparities in tax outcomes by ensuring that income distributed through trusts is taxed more consistently with income earned directly by workers and families through wages and salaries.

The remaining schedules of bill No. 3 represent the next stage of Labor's housing affordability reforms and focus on the changes to capital gains tax and negative gearing announced in the budget earlier this year. The objective is very clear: to create a housing market that works better for first home buyers while maintaining incentives for investment that expands the nation's housing stock. In short, we want to make sure that we get more supply in the system after four decades of undersupply and get everyday Australians into their very first homes.

These reforms strike a balanced approach by preserving the gains that existing investors have already accrued while directing future investment more strongly towards increasing new housing supply. By improving access to homeownership and easing some of the barriers facing prospective buyers, these measures are expected to assist around 75,000 Australians—additional first home buyers entering the market over the coming decade—and this will help reverse the long-term decline in homeownership rates and restore the prospect of owning a home for a new generation of Australians.

This bill builds on the foundational capital gains tax reforms passed by the parliament, and it addresses a number of more complex and technical issues to ensure the changes operate as intended across a diverse range of taxpayers, investment structures and trust arrangements. Comprehensive consultation with stakeholders was carried out, as with the other schedules of this legislation, but the legislation contains safeguards to prevent the loss-ordering rules introduced in the first stage of the reform from having unintended consequences for superannuation funds and other superannuation entities that invest through trust structures.

The bill also provides clarifying detail regarding the definition of a new residential dwelling, by identifying the categories of housing that will remain exempt from the new limits on negative gearing. Consistent with Labor's fundamental drive to encourage additional housing supply, investors in eligible new housing will continue to have access to negative gearing provisions and the 50 per cent capital gains discount. These measures provide clarity for investors while directing incentives towards housing that increases the overall stock of homes in this country.

Eligible new housing includes residential properties that make a genuine contribution to supply, such as more homes built on previously vacant land and redevelopment projects where existing dwellings are replaced with an increased number of new residences. The legislation also recognises that some forms of housing serve important social and community purposes and, as a result, a range of housing types will remain exempt from negative gearing restrictions. This includes special disability accommodation, affordable housing projects, public housing, retirement living communities, residential aged-care facilities and build-to-rent developments.

The focus of this bill is to drive innovation, to unlock new investment and to help build a more dynamic and resilient Australian economy, and this means more support for businesses and start-ups, investing in more research and ensuring that our Australian tax system is sustainable. The Albanese Labor government has already rolled out $3.8 billion in tax relief for businesses, and this bolsters those supports. It includes the innovation business capital gains tax concession, which will support investment in innovative start-ups. That's on top of the $20,000 instant asset write-off. It's on top of the loss carry-back, and, in my local electorate where, if you jumped up, hopped in a hot air balloon, dropped the sandbags and floated over the south side, the strongest glow would come from the small businesses in Sunnybank, retail, hospitality, manufacturing—this bill supports small business, as does this government. This bill is about building a system that rewards effort, supports aspiration and drives investment for all Australians.