Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

My question is to the Treasurer. Many young Australians are angry at the government for extending CGT changes beyond investment properties. After paying for high rents or while just managing with a mortgage and paying taxes on their incomes, many are starting new businesses on the side or investing in shares to build a buffer, and they now feel blindsided. What modelling has the government done on extending CGT changes beyond investment properties, and will you release it?

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I thank the honourable member for her question. First of all, when it comes to young people, this is a budget for young people. It's a budget that recognises that, for too long in this country, young people have been locked out of the housing market, as the housing minister just explained to the House, and we're taking some difficult decisions to address that. For too long now, too many young people have seen this aspiration of homeownership as something that belongs to somebody else, and we want to fix that. We're here to make a difference in that regard.

We're also helping to make sure that the tax system is fairer for workers—predominantly, overwhelmingly for young people. Young people, overwhelmingly, earn income from working. Eighty-four per cent of young people earn 90 per cent or more of their taxable income from work. Here are a couple of new numbers—the honourable member asked me about modelling. Young people will be the biggest beneficiaries of the working Australians tax offset, and two-thirds of the recipients of our new tax cuts will be millennials and Gen Z, in 2027-28. Another new number comes from our thousand-dollar instant deduction: 2.3 million people under 35 will benefit, which is about 40 per cent of beneficiaries, as well as the 75,000 extra households that we will turn from rental households into homeowner households. So this is genuinely a budget for young people.

I'm asked about making sure that, by replacing one sense of unfairness in the system, one distortion in the system, we don't replace it with another. In dealing with this mistake that was made in 1999, which turbocharged house prices and decoupled incomes from house prices, we wanted to make sure that we didn't replace that mistake with another one. So this is about reducing distortions in the market.

Our changes mean that some people will pay less tax. The current discount undercompensates some investors for inflation and overcompensates others. On average, over the past 20 years, the indexation approach would have been broadly neutral or even a bit more generous for shareholders. The proportion of Australians who own shares has declined by almost 20 per cent since Howard and Costello made that mistake in 1999. This is why UBS said:

From a 'big picture' point of view, equities would become a relatively more competitive investment proposition …

NAB said:

By the principles of optimal tax policy, this change should deliver an efficient, fair and robust regime once fully implemented.

Westpac said, 'The tax system did overly encourage leveraged investment in property over investing in other things, whether that was the stock market or a business or something else that produced income.' That's why we're making these difficult changes. We know that they are contentious, but they are to benefit young people in the housing market and when it comes to income tax cuts, and that's the purpose of what we are trying to do.