Leon Rebello (McPherson, Liberal National Party) | Link to this | Hansard source

Labor are telling investors, 'If you want to retain the benefit of negative gearing, go and buy new properties,' and at the same time state governments across the country are encouraging first home buyers into those same new properties through stamp duty concessions and first home buyer grants. So investors and first home buyers are being pushed into the same segment of the market at the same time. They will compete against each other for the same limited supply, which means that prices will be bid up, builders will face more pressure, and young Australians will again be told to run faster on a treadmill that Labor has made steeper.

Many of these state based schemes are operated by Labor governments. So how can the Prime Minister not understand that his federal tax changes will collide directly with state based concessions and grants? Either they do not understand the market they're regulating, or they understand it and are proceeding anyway. Neither explanation should give Australians any comfort.

This government is creating a generation of permanent renters. Labor should have learned this lesson before because, in the 1980s under Treasurer Paul Keating, Labor tried to quarantine negative gearing, and it was reversed. Why? It was because the pressure on rental markets became impossible to ignore. History has already issued this warning. The Treasurer should have listened to it, but this treasurer does not learn from history. He tries to rewrite it. There's also a deep hypocrisy at the heart of this debate, because 20 out of the 22 members of the Prime Minister's own frontbench and the Prime Minister have used negative gearing to secure their own futures. They operated lawfully under the rules of the time. They made choices that many Australians have made to invest, to take on risk and to try to build financial security.

Now, we don't criticise them for that. But this legislation protects the right of the Prime Minister and his cabinet to continue to negatively gear their properties into their future. So Australians are entitled to ask these questions: Why is it good enough for Labor ministers to use these rules to continue to build their wealth for themselves but apparently too generous for future generations? Why is it acceptable for those opposite to climb the ladder and then pull it up behind them? Those are the real questions here.

The second major problem is capital gains tax. Schedule 1 makes sweeping changes to the CGT regime. It replaces the 50 per cent CGT discount with cost base indexation and introduces a 30 per cent minimum tax on capital gains for many Australians, including founders, small-business owners and investors. At the top marginal rate, this means the tax man can claim nearly half of the gain. The government did not take the risk. The government did not work the weekends. They did not sign the lease, put the family home on the line, hire the first employee, go without holidays, miss birthdays or lie awake at night wondering whether the business would survive. But, when it finally works, Labor is turning up with its hand out. That is what this bill says to the self-starters of Australia. You risk it, we'll take it.

A well-known local brewery in my electorate wrote to me this week, saying:

I can't sit and watch this pass without putting something on the record, so I've put pen to paper.

The sale of a business is not a windfall—it is a long, illiquid reinvestment program that finally crystallises at sale. Privately-held capital-intensive businesses are, by definition, the ones with physical footprints in Australia. They occupy industrial land. They employ tradespeople, machine operators, drivers, warehouse staff, and apprentices. They buy inputs from Australian agriculture. They contribute to the productive capacity of regional and outer-metropolitan economies. They create value differently from purely digital or services businesses.

These businesses already face globally uncompetitive energy, labour, freight, and compliance costs. Margins are thin, returns are slow, and capital is patient by necessity. Policy settings that further reduce the after-tax return on productive reinvestment risk discouraging the long-term capital commitment these businesses require.

In practice, many successful capital-intensive businesses are likely to exceed the small business CGT concession thresholds early in their growth journey as physical infrastructure and equipment are accumulated.

The 50% CGT discount has been, for this category, the only recognition mechanism actually available. Its removal would materially reduce the only recognition the tax system currently provides for the long-duration, illiquid, reinvestment-heavy nature of these businesses.

But, as always with this treasurer, the devil is in the detail. The Treasurer wants the parliament to pass the laws first and then trust him to sort out the details, including carve-outs later. That's not good enough, because Australians have learned the hard way that when Labor says, 'Trust us,' they should check their wallet. This is a government that's been consistent with only one thing—being elastic with the truth. It said one thing before the election, and it's doing the opposite after. The Treasurer can dress it up in whatever language he likes, but Australians can see what's happening here. Labor has spent too much, taxed too much and borrowed too much, and now it wants the people who work, save and invest to foot the bill. This is not the Australia my parents believed in when they taught me that if you want something you work for it, if you drop something you pick it up and if you're blessed with opportunity you make the most of it. That is the Australia I love, and that is the Australia that those on this side of the chamber love—an Australia where effort is rewarded, an Australia where government lifts people up, not locks them in.

I say this directly to the Prime Minister. I love this country. I love it for what it has given my family, and I love it for the promise it has carried for generations. I love it because here, more than almost anywhere else on Earth, people have been able to make something of themselves through effort, through sacrifice and through belief. But that promise is not automatic. That promise must be protected. That promise must be renewed, and it must be defended against governments that think that prosperity is something to be managed, divided and taxed rather than created, earned and shared. What has made Australia great is not envy. It's not resentment, and it's not the politics of dragging one person down and calling it fairness for another. What has made Australia great is a culture of reward for work and reward for effort. It's the belief that tomorrow can be better than today if we work for it. It's the belief that a person should be able to start with little, build something, own something and leave something better for their children. Our tax system should reflect that.

This bill moves us in the opposite direction, and the coalition will not support that. We won't support that because the people that we represent—the individuals, the small businesses, the mums and dads, the investors, the families, the first home buyers and the renters—expect better of us, and they expect better of this government. The coalition supports tax relief, and we have said that consistently. We support simpler tax returns, and we support working Australians keeping more of what they earn, but we won't be bullied into supporting Labor's toxic taxes.

The day after the budget was delivered, the coalition vowed to axe Labor's toxic taxes and vote them down, and that's exactly what we will do. If these bills become law under this Labor government, a coalition government will repeal Labor's toxic taxes, because Australians deserve better than a government that breaks promises and that punishes aspiration and then calls it fairness. They deserve a government that backs them. That is the clear message and the consistent message that I receive from people across my electorate when I engage with them back home on the southern Gold Coast. Australians deserve a government that backs them. They deserve an Australia where the ladder of opportunity is not pulled up but strengthened for the next generation. That is exactly what those on this side of the House will fight for. That is exactly what we will do. We will repeal these taxes. That is exactly what we on this side of the parliament have committed to do. We oppose Labor's toxic taxes, and we resent this government for putting them through and dressing them up as something that, quite frankly, they are not.

Ash Ambihaipahar (Barton, Australian Labor Party) | Link to this | Hansard source

I rise today in support of these tax reforms and in support of something that Australians have been crying out for many years for: a tax system that is fairer and simpler and that better reflects the reality of modern life. When Australians talk to me, they talk about trying to save for a first home. They talk about juggling the rising costs. They talk about wanting to get ahead with hard work, and they talk about wanting a system that rewards effort. At its core, that is what this package is about. It's about making our economy work for more Australians. It is about ensuring that aspiration is rewarded. It is about helping young Australians believe that homeownership is still within their reach, and it's about ensuring that our tax system encourages productive investment rather than simply rewarding those who are best able to navigate a complicated set of rules.

Deputy Speaker Boyce, I represent many hardworking families, and I'm sure yourself and a lot of people in this House do as well. Some are nurses finishing night shift at St George Hospital in my local area. Some are teachers helping educate the next generation at Undercliffe Public School to McCallum Hill Public School to all the way to Carlton South Public School. There are tradies that are waking up very early. There are small-business owners wondering whether they can afford to hire more waitstaff at their local cafe, and many are young people who are doing everything they can right now but still feel like the dream of owning a home keeps moving further and further away.

Let me tell you about someone I will call Sarah. Sarah's 29 years old. She works full time. She pays her taxes. She contributes a lot to the community. Every fortnight, she puts money aside for a home deposit. But every time she gets closer to her saving goals, house prices seem to jump again. She watches properties being purchased by investors who already own multiple homes. She wonders whether she will ever have a place of her own. Australians, like Sarah, are not looking for a handout. They are looking for a fair shot. That is exactly why these reforms matter. For too long, our tax system has contained distortions that have encouraged investment to flow into established housing rather than into increasing housing supply, and, for too long, tax settings have contributed to a situation where many younger Australians feel locked out of the market. Since 1999, house prices have risen over 400 per cent—more than twice as fast as the average income. These reforms begin to address that challenge. By pegging negative gearing for future purchases to new builds, we are simply sending a signal that, if investors want a tax concession, we want that investment to help create new housing supply—more homes, more construction and more opportunities for Australians looking to buy their first home.

Importantly, these changes are grandfathered. Australians who already own investment properties will not be affected. The rules people relied upon when making decisions remain in place. But, going forward, investment incentives will be better aligned with Australia's housing needs. That is sensible reform. It is a balanced reform and it is a reform designed to help an estimated 75,000 more Australians become homeowners over the next decade.

There's another important reform before us today, and that is capital gains tax. Now, I know those three words are unlikely to set social media alight unless you're the opposition, who like to cook up a bit of a scare tactic. But no-one's rushing home to discuss CGT over dinner. But the principle behind these reforms is actually very straightforward. People should pay tax on genuine gains. Imagine someone buys an asset and holds it for many years; part of that increase in value may simply reflect inflation. Under these reforms, investors will be taxed more accurately, for their real gains rather than inflationary gains. This is about restoring fairness and economic efficiency. It is also about reducing distortions and it's about encouraging investment to flow towards more productive use, because, when investment decisions are driven by tax loopholes rather than economic merit, the whole economy becomes less productive, and, when productivity suffers, living standards suffer. That is why these reforms matter not only for today's taxpayers but also for future generations.

There's another group that deserves recognition in this debate, and that is workers—the people who get up every day, go to work and keep our economy moving. The working Australians tax offset recognises a simple truth: for most Australians, income comes from work. It comes from effort. It comes from showing up. It comes from contributing. And workers deserve to keep more of what they earn. The new working Australians tax offset will provide tax relief to more than 13 million Australians. That means more money in household budgets—more money for groceries, more money for school expenses, more money for family holidays, more money to save and more capacity to get ahead.

For younger Australians especially, this matters enormously. Many millennials and gen Z face challenges that previous generations never experienced to the same extent—higher housing costs, higher rents, greater financial uncertainty. The cost of building a life has increased, and these reforms recognise that reality. They provide practical support while strengthening incentives to participate in the workforce.

Perhaps one of the most popular reforms in this package may be also one of the simplest, and that's the $1,000 instant tax deduction. I suspect many Australians know exactly what it feels like at tax time—the frantic search through drawers, the mysterious shoebox full of receipts, the desperate attempt to remember whether a particular purchase happened in that financial period or the previous one, the endless scanning of emails and the detective work wrapped around that that is required to reconstruct a year's worth of expenses. It's hardly anyone's favourite annual tradition. I can certainly say that for myself. But millions of Australians currently spend hours gathering documents to claim relatively modest work related expenses. Many pay accountants, many spend significant time navigating the system and others simply give up and miss out altogether. This reform changes that. A worker with modest work related expenses will be able to claim $1,000 of instant deduction without needing to track every small purchase. It means less paperwork, less stress, less complexity and more time spent doing things they actually enjoy. The Australian Taxation Office estimates this measure alone will save Australians hundreds of millions of dollars in compliance costs every year. Think about that. It's not because we are changing tax rates but because we are reducing unnecessary bureaucracy. Sometimes the best reform is not adding something new. Sometimes it's just making life simpler.

These reforms are also important because they demonstrate that economic responsibility and fairness can go hand in hand. This is often a false choice presented in public debate. Some say we must choose between helping households and maintaining financial responsibility. Others suggest reform is simply too difficult. But good governments do not avoid difficult decisions. Good governments confront them. The Albanese government is undertaking these reforms while also strengthening Medicare, helping with cost-of-living pressures, investing in housing, supporting businesses and maintaining responsible budget management. That matters, because tax reform should never be viewed in isolation. Tax reform is about the kind of country we want to build. Do we want a system that rewards effort? Do we want a system that encourages productive investment? Do we want a system that supports homeownership? I believe that Australians, unless they're the opposition—those who are laughing across the chamber—would answer yes to all of those questions. That is precisely why these reforms deserve support.

Every generation inherits challenges. The question is whether we choose to tackle them or not. Housing affordability is one of those challenges. Productivity is one of those challenges. Intergenerational fairness is one of those challenges. We could leave those problems for someone else. We could leave them for future governments. We could leave them for future taxpayers. But that would not be leadership, because leadership means making decisions today that improve opportunities tomorrow. Leadership is about making hard decisions, not just taking the most popular approach. That is what this package seeks to do. It supports workers, it supports aspiring homeowners, it supports productive investment, it supports businesses and it supports a stronger economy.

Zoe McKenzie (Flinders, Liberal Party, Shadow Cabinet Secretary) | Link to this | Hansard source

It was early March 1983 that I remember having my very first political reflection. I was sitting on the floor at home, half listening to the chatter on the television as my mum intently watched the 1983 election results rolling in. I was 10 and in grade 6, much like the kids up there with the Parliamentary Education Office watching us today. That night, Bob Hawke was elected Prime Minister. My mum loved Hawkie. A lifetime Liberal voter, she loved his larrikin style, his call-it-as-he-thinks bluntness, his carousing, his former drinking, his brilliance and his wit. She'd read Blanche's book about him the year before. So I couldn't really understand why Mum looked so worried that night, and I asked if she was okay. She looked at me nervously and said, 'Yeah, I'm okay, but this will make it harder for me to send you to school.'

I panicked a bit. You see, my school wasn't just a good school; it was my second parent. It was the place that didn't forget to pick me up, the place that always turned up to the school fair and made it to all the sporting carnivals. I would have loved it if mum could have been at the fair, if Mum could have come to the sporting carnival. I would have loved it if she'd been able to remember to pick me up, like, just once—ever. But Mum was usually somewhere else, working her guts out—not to be rich but to be purposeful and to make sure she could keep sending me to a good school. Mum had purpose and Mum had grit. And when, as a surly teenager a few years later, I complained about my indecision about what to do in life, I said, 'But Mum, what job can you really say has objective worth, purpose beyond the self, and leaves a lasting benefit for others?' Mum quietly replied, 'I save lives'—Mum, one; Zoe, zero.

But that 1983 election night taught me all I needed to know about the relationship between hard work, sacrifice, deferred gratification—and taxation. At that time, Mum was paying the top marginal tax rate of 60c in the dollar. To be fair, Prime Minister Keating went on to drop that rate to 49c in 1985. But, in what you might now recognise as a Peter-for-Paul move, he introduced the capital gains tax at the same time. At the time, the Labor government thought about making that new capital gains tax retrospective, but when it was finally implemented, after much public outcry, it was on a prospective basis.

That change was sufficiently hard-hitting to smash Mum's weekend passion and her second job running a small nursery in the Dandenong Hills, where she would spend all weekend, her hands in the dirt, growing daffodils in the luscious red ground and huge orchids in a nearby glasshouse. She would cuddle the flowers on Sundays and sell them to flower shops on Mondays before she started her hospital rounds visiting all her patients. But CGT crushed Mum's second job and the dream that gave her so much joy, because, for Mum, plants and flowers, soil and growth made up for the patients with lung cancer she couldn't always save.

So on budget night this year I sat here and remembered 1983 and what it might mean for the thousands—indeed the hundreds of thousands, if not millions—of Australians who were learning what this budget was going to do to their hope, their aspiration, their passion, their planning, their sacrifice, their deferred gratification, their pride and their sense of purpose.

In handing down his budget on 12 May, the Treasurer engaged in his usual barrage of 'Liberal light' language: responsible economic management, aspiration and opportunity. He's always talking about a resilient economy. It doesn't feel very resilient today. Even today, in question time, my colleagues will remember that he actually said that private sector investment in our economy is booming. He actually said that. But, behind the smooth-talking treasurer, the truth was there for all Australians to see and, now, feel: when Labor runs out of money, they come after yours. And come after yours, by golly, they are—$77 billion worth of pursuit from your hard work and, most egregiously, from the pockets of the people of the Mornington Peninsula who I represent here.

The Mornington Peninsula is made up of a lot of people just like my mum. They work their backsides off. They might build a business. We've got more than 16,000 small businesses in Flinders. They save for their retirement. They might invest in a single investment property, and, by golly, they take responsibility for their own health care. Their reward from this Labor 'true believer' budget is more tax, a whole lot more tax—$77 billion more worth of tax.

This budget hits Flinders harder than most electorates in Australia because of who we are. We are small-business owners. We are tradies. We are self-funded retirees. We are among the millions of Australians who have spent decades working, saving and planning for their future and who are determined not to be a burden on the public purse. This budget punishes all of them.

Let's start with Labor's changes to capital gains tax. Labor can call it reform, but Australians know it for exactly what it is: an impost on aspiration. It is a tax impost that will hit hard in my electorate. Australians who hold an asset for more than 12 months currently receive a 50 per cent capital gains tax discount—a change to the original version of the CGT of Paul Keating, the Treasurer's idol. The discount of 50 per cent was introduced by John Howard and Peter Costello in 1999. Today, Labor wants to fundamentally change that.

The consequences for my electorate will be particularly severe. According to data and analysis by the ATO, Treasury and the ABS, Flinders ranks 12th out of all 150 electorates for the value of the capital gains tax discount currently received by residents. The average CGT discount benefit per taxpayer in Flinders is $3,148. Collectively, residents of my electorate receive almost $305 million in CGT discount benefits every year.

Flinders is also an older electorate, with a median age of 48 years compared with 38 years across Victoria—a full decade's difference—meaning my constituents are closer to the age at which they will retire and hand their businesses over to the next generation of owners. At this stage, their succession plans and their retirement plans are real, and my constituents are counting on them. This budget throws all that planning and sacrifice into the wind.

Flinders also has a lower occupancy of premises. At the last census, 30 per cent of our dwellings were recorded as unoccupied—nearly three times the Victorian average. Many of these are holiday homes and have been held by families for generations. Many will have accumulated substantial capital gains over time. Some will even have been acquired before Labor's introduction of CGT in 1985. Under Labor's changes, when those properties are eventually sold, families will face dramatically larger tax bills than they were expecting, not because they suddenly became cashed up overnight but because Labor has decided that decades of saving and sacrifice deserve to be taxed more heavily.

Then there are our tradies and our small businesses. Flinders has significantly more tradespeople and owner-operators than any other Victorian electorate. Nearly 18 per cent of workers in Flinders are technicians and trades workers, compared with just 12.6 per cent across Victoria. My people are plumbers, electricians and builders. They get up before sunrise, they work hard through the week and, often on the weekends, they work on their own homes, renovations or extensions. Labor's changes mean many of those Australians could pay twice as much tax when they eventually sell their businesses that they have worked their entire lives to create. This isn't fairness. It is a penalty for success, and it sends a very dangerous message: work hard, save hard, invest wisely, build something of value, and Labor will now snatch a bigger slice when you're done.

The economic consequences extend far beyond individual taxpayers. I recently spent some time with David Livingstone watching the Somerville Eagles play at their run-down pavilion. David is the chairperson of the Somerville Business Group, but he is also a former CPA who has spent more than 30 years helping local businesses navigate Australia's ever more complex tax system. David told me what he has seen amongst our small-business community in Somerville—that our small business owners in Somie routinely work 60 to 80 hours a week with no overtime, no penalty rates, sometimes no holidays, no long-service leave and none of the protections that many employees take for granted. He said that many owners mortgage their own homes, take significant commercial risks and, of course, create jobs for others. David asked a simple question:

Where is the reward after many years of hard work if it is going to be taxed at the same level as wages income?

Another constituent, Leo from Mornington, told me:

Let me add my concern also as a self funded retiree … who have a small parcel of shares purchased under an employee share scheme when I was still working.

I like to sell some shares each year to help with life's unexpected expenses, and so long as the sale value is less than twice the minimum taxable amount, I don't have to pay any tax.

I have several work colleagues with much larger parcels of shares that were part of their salary packages, and like me they expected to be able to supplement their self funded pensions tax free for many years to come. All of a sudden those plans will cost 30% off the sale.

As well as the cruel and petty removal of the private health discount for over 65's, the blanket 30% CGT tax on low income retiree share trades, is a double whack at our cost of living.

Within this budget there is another measure that will hit Flinders harder than almost any electorate in Australia. Labor has decided to abolish the additional private health insurance rebate available to older Australians. Again, in my electorate of Flinders nearly one in three residents are aged over 65. That's almost double the national average. There are more than 33,500 private health insurance holders aged over 65 in my electorate; that's the third-highest figure of any electorate. Some will pay up to $640 more every year just to maintain the cover they already have. My constituents are in shock. Their private health insurance gives them a sense of safety as well as comfort. They will have choice and not be a burden on the state. A few minutes ago, Jan Heraty wrote on my Facebook feed:

We have had private health insurance since we arrived in Australia in 1968. Our monthly premiums are now $235.01 each. That is a lot to pay out of our pension, but we cannot afford to be without it, as our health is not the best. We will have to wait and see what our premiums will be, and then decide if we have to go back on the public system.

There are 1.4 million Australians right now having exactly this conversation. Private health insurance has supported more than 41,000 hospitalisations for older Australians in Flinders. Every one of those hospitalisations treated through the private system is one fewer patient taking up a space in the public system. Yet Labor's response is to make private health insurance more expensive and to increase pressure on public hospitals that are already struggling—like the Rosebud Hospital, which state Labor has ignored for years. The people affected are not wealthy elites. They are Australians who have worked, saved, paid taxes and planned responsibly—people who have done exactly what governments have encouraged them to do for decades.

What makes this budget particularly frustrating is that these measures are entirely unnecessary. Australians were promised no new taxes. The coalition has made its position very clear. We support tax relief for working Australians, we support the working Australians tax offset and we support genuine cost-of-living relief. But we do not support Labor's tax hikes on capital gains, negative gearing, housing trusts and small businesses. We do not support the abolition of the additional rebate offered to seniors over 65 who have taken out private health insurance. We have moved amendments to remove Labor's capital gains tax and negative gearing changes entirely while allowing tax relief measures to proceed. In other words, Australians can and should have the tax cuts without the tax hikes. Labor simply refuses to allow it.

The coalition has also proposed a better long-term solution: a tax-back guarantee, a simple principle that says that Australians should not pay higher taxes simply because inflation pushes them into higher tax brackets.

Under our proposal, income tax thresholds would be indexed to inflation. Bracket creep would no longer silently increase tax burdens year after year, and Australians would receive automatic tax relief at the cost of living rises. For a typical worker, that means tax cuts of around $250 in the first year, $500 in the second year, $750 in the third year and around $1,000 in the fourth year. That is genuine tax reform, and, unlike Labor's approach, it doesn't require punishing investors, retirees, small businesses and future generations.

Ultimately, this budget reveals something deeper about Labor's philosophy. Labor sees investment as a revenue source. The coalition sees investment as the engine of economic growth. Labor sees aspiration as something to tax. The coalition sees aspiration as something to encourage. And nowhere is the contrast more obvious than in Flinders, an electorate built by small-business owners, tradies and retirees who have saved and planned. It was built by Australians who believe that hard work should be rewarded, not punished. The people of Flinders understand a simple truth: you cannot tax your way to prosperity. You cannot build economic growth by discouraging investment. This budget asks Australians to believe otherwise, but the people of Flinders know that government should stand behind Australians who work hard and plan ahead, not treat them as a convenient source of additional revenue.

And for those reasons, I oppose these measures. I oppose Labor's capital gains tax increases. I oppose Labor's attack on older Australians' private health insurance. And I support the coalition's alternative: lower taxes, stronger incentives to invest, genuine cost-of-living relief and a fair go for Aussies trying to get ahead.

Sharon Claydon (Newcastle, Australian Labor Party) | Link to this | Hansard source

I rise to speak in very strong support for the original bill that is before this House, the Treasury Laws Amendment (Tax Reform No. 1) Bill of 2026. Whilst not surprised, I'm really disappointed to learn that the opposition members will oppose these measures. But, then again, there's probably not a single, solid reform piece of work that's required a lot of heavy lifting in this country that the opposition hasn't opposed, whether it was Medicare, superannuation, establishing free TAFE in more recent years, a national Maritime Strategic Fleet or minimum wage increases. These are all significant reforms undertaken by Labor governments, who are always prepared to stand up and do the heavy lifting, when those opposite want to go, 'Stop; the status quo is good enough,' we say, 'There's always room for improvement.'

When the people in Australia hear the words 'tax reform', it's probably fair to say that they're not generally thinking about the intricacies of legislation or technical settings here. They want something much simpler. They ask themselves: 'Will this make life fairer? Will this help people who work hard? Will it give Australians a better chance to get ahead?' And that's what this bill is all about. It's about tax cuts for working Australians, it's about making tax time simpler, and it's about helping more people buy their first home. And it's about making our tax system fairer so that work income is treated the same as asset income and the Australian dream of homeownership is not just being pushed further and further out to reach.

The first thing this bill does is cut taxes for workers and introduce a new working Australians tax offset of up to $250 a year. Unlike a tax deduction, which lowers your taxable income, an offset directly reduces the amount of tax you owe. If you're eligible, you will receive the full $250 value to either reduce your tax bill or increase your tax refund. It applies to Australians who earn income through their jobs or as sole traders. According to Treasury, about 97 per cent of working Australians will receive the full $250 tax offset, and that means more money back for people who earn wages, salaries and income from their work. It is for Australians who earn their income through work, whether they are nurses, teachers, firies, retail workers, the aged-care workers or small-business owners. That is on top of the tax cuts Labor has already delivered. Taken together, our tax cuts mean the average working Australian will receive around $2,800 back in their pocket. Trust me—the Australian people are going to welcome that.

This bill also introduces a $1,000 instant tax deduction for workers—no receipts required. It's a recognition of genuine work expenses that many people put their hands in their own pockets to fill right now. If you need more than $1,000 you are going to need to provide receipts and proof, but we recognise that this $1,000 instant tax deduction for workers will be a great relief and free up a lot of resources within the ATO.

At the moment, many workers have to keep receipts for their uniforms, for equipment they buy, for countless small work-related expenses. It's a real headache for a lot of workers. They don't bother claiming for things that they are perfectly entitled to claim for, either because they haven't kept the receipt or because they don't want to spend their time trying to work all that out at tax time. We know that, and this bill makes that a whole lot simpler.

From the 2026-27 financial year, eligible workers will be able to claim an instant deduction of up to $1,000 for work related expenses without having to go through the receipt-by-receipt process. As I said, it doesn't mean that people who have more than $1,000 in expenses lose out. They can still claim more than $1,000 if they have the records to support it. I think most Australian people will think that is a genuinely good reform measure. It doesn't stop people from claiming other tax deductions, of course, like donations to charitable organisations, union fees, professional association fees, income protection insurance or superannuation contributions. It's a practical reform that makes tax time simpler for working Australians, and that's a good thing.

Then there's housing. This is the part of the bill that many people in my community care deeply about, because housing is not an abstract policy debate. It's about security. It's about stability. For many women, it's about safety. It's about whether Australians believe that if they work hard, and save hard, they can buy a home of their own. For generations, Australians believed that that dream was achievable, and today too many people feel it is slipping away.

Young people should not be told that the only way to get into the housing market is to have wealthy parents. People in their 30s and 40s should not feel like they have failed because the market has moved faster than wages ever could. First home buyers should not be turning up to auction after auction—those terrible stories you hear all the time—only to be outbid by investors who have a sneaky little silent partner with them at those auctions called every single Australian taxpayer. They have tax advantages that those first home buyers do not have.

That is the reality that too many Australians are facing, and for too long those housing settings have favoured investors purchasing existing homes over first home buyers trying desperately to enter the market. For too long, governments have looked at the problem and decided reform was too hard. Not this government. The reality is, too many Australians are doing everything right and still find homeownership completely out of their reach.

This bill starts to address that. It reforms negative gearing so that, from 1 July 2027, negative gearing for new residential property investment is focused on new builds. If tax concessions are going to support property investment, they should help add to the housing supply in this nation. They should help build more homes. They should not simply encourage investors to compete with first home buyers for the same established homes that already exist.

Existing investors are protected. Properties already held before budget night are not affected in the same way. Going forward, the system will be better targeted. That is fair. It is fair to existing investors who made decisions under the current rules. It's fair to the first home buyers who deserve a better chance.

This bill also reforms the capital gains tax. It replaces the 50 per cent capital gains tax discount with a system that indexes the cost base for inflation, so tax applies to real gains and not inflation. And that's an important principle. People should not be taxed on inflation. But, at the same time, our tax system should not give a better deal to wealth from assets than it gives to income earned from work.

This is about getting the balance right. It's about recognising that income earned through work matters. It's about ensuring that our tax system does not continue to reward settings that are locking too many Australians out of homeownership.

While some commentators have criticised this reform, I know that it is not the view of everyone in my community. I know that because constituents are reaching out to me directly to tell me what these changes could mean for them. One constituent wrote to me just this weekend. He said he is 34, lives in Hamilton, has a great job and has significant savings, but property investors continue to outbid him at auctions. He said this budget is the first he has seen that seriously offers him a chance to ever own his own home. And that is what this reform is about; it's about people who are doing the right thing and simply want a fair chance.

Another constituent wrote to me to say they never thought they would see a government finally address the impact of negative gearing on access to homeownership for younger generations and for older Australians who had not yet purchased a property. They wrote:

I am so excited and proud to be Australian.

Yes, reform is hard.

Yes, there will be scare campaigns.

Yes, there will be people who defend the current system because the current system works very well for them.

But leadership is not about protecting every part of the status quo.

Leadership is about seeing what is wrong and having the courage to fix it.

One constituent put it well when they wrote to me after the budget:

Some months ago, there was widespread appreciation of the need to address generational inequity. That conviction is still there, I'm sure. If not now, when can you make a start on reform?

'If not now, when?' Well, I agree, and this government is totally in agreeance with you, and we say: the time to act is now. We act in a serious, responsible and practical way to address these gross inequities.

I know there are many folk wishing to speak to this bill tonight—and I can understand why, because this bill is part of a much bigger budget story that is great news in terms of tackling some of those very, very stubborn issues in Australia where reform is desperately required. It's what Labor governments are elected to do. We're there to make life fairer, to back working people, and to make sure aspiration and opportunity belong to every Australian, not just those who already have wealth behind them.

This bill cuts taxes for workers. It simplifies tax time. It helps first home buyers. It makes our tax system fairer. And it takes an important step towards restoring the Australian dream of homeownership and providing a fair go. I commend the bill, unamended, to the House.

Darren Chester (Gippsland, National Party, Shadow Minister for Veterans’ Affairs) | Link to this | Hansard source

I must say at the outset, Australians just want their country back. When you go out and talk to people in our communities, they are angry; they are frustrated. They've been left behind by a prime minister who promised to govern for all Australians, and left behind by a prime minister who said, infamously: 'My word is my bond.' That is what the Prime Minister told the Australian people.

In this bill, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, we see exactly what this Prime Minister's promises are worth, because, after four years of the Albanese government, Australians are worse off, and our country is heading in the wrong direction. The most recent Mood of the Nation study found that 66 per cent of Australians believe the country is heading in the wrong direction. And that has all been on Prime Minister Albanese's watch.

Who could blame people for not feeling confident about the future of our nation when they see a bill like this before the House today? They've experienced a declining standard of living. Australians have seen 15 interest rate rises under this government. The average mortgage holder is now paying more than $25,000 extra in interest payments since the Albanese government came to power in 2022. They may have turned on the TV on budget night hoping for just a little bit of good news, hoping that maybe this federal budget would help them out, and what they found out is that they had been misled and deceived completely by this prime minister in the lead-up to the 2025 election.

Call me old-fashioned, because, in the seven elections I've contested, what's occurred is that the Labor Party puts forward policies, the Liberals and Nationals put forward, policies, the Greens put forward policies, and then the Australian people vote on it. They get to make a decision. That's called old-fashioned democracy. But what this prime minister has done with this bill, with this deception, with this absolute deceit to the Australian people, has thrown democracy out the window, and the only plan they have for the Australian people is higher taxes.

What I've got to say will come as a shock to the members opposite who have been in here today in 90-second statements and who also spoke on this bill. They've got up and they've said just how good the budget is and how good these changes are going to be. If it's so good for Australians, why wouldn't you want Australians to vote for it? Member for Dobell, if it were so good, why didn't you go to the election and say, 'This is my plan: increase capital gains tax and destroy the negative gearing system. Vote for me'? Why not take it to the Australian people? But, no, they didn't do that. They didn't do that at all. They whispered amongst themselves about 'when we get elected, we'll do something else' and 'when we get elected, let's see what we can get through the parliament' and 'don't tell those mugs out in the public called the Australian people' and 'don't possibly let them vote on our policies'. That is exactly what they've done. They've snuck into government on a foundation of deceit, deception and trickery, so much so that this is an illegitimate government. This government is based on a fundamental deceit and misleading of the Australian people because they did not have the guts or the strength of their convictions to say: 'These are our policies. We want to declare war on aspiration, and you should vote for us.' If they were so confident about these policies, then the member for Dobell and every other member in this place would have campaigned on these policies, but not one of them did. The Prime Minister told us in his own press conference: 'I've answered that question more than 50 times. There will be no changes to negative gearing, no changes to capital gains tax.' Old honest member for Grayndler said, 'I won't change those things,' and what's he done? Walked in here with the Treasurer and committed the greatest deception that I've seen in my 18 years in this place, because, at every other election that I've been to, the members opposite have had the guts to put their policies before the Australian people. Remember, in 2019, the changes we're debating now were the policy positions of the former member for Maribyrnong, Bill Shorten. These were his policies. The member for McMahon very helpfully said, 'If you don't like our policies, don't vote for us.' There you go. The Australian people, given the choice on these policies, on this legislation, voted against them in 2019, but yet we're here today confirming Labor's great deceit. This is a government which is elected on broken promises and on trickery.

The Prime Minister, in his own words, in his own words, acknowledged the absolute folly of his position after the federal election in May last year. The Prime Minister said:

We have a mandate for what we took to the Australian people. That is our mandate.

Think about that. That is a direct quote from the Prime Minister in May last year. The Prime Minister, in his own words, admitted that he doesn't have a mandate for this broken promise and the higher taxes he announced in the federal budget.

I'm glad to see the member for Spence is here, because I'm sure the member for Spence is going to stand up and say: 'Actually, I campaigned strongly on this. I campaigned on these capital gains tax reforms. I campaigned on this negative gearing. I campaigned on this attack on trust, because I'm an honest member for Spence.' That's what the member for Spence is going to say. He's going to say, 'I campaigned on all these things, and I'm very proud of my decision to do so.' I'll wait to hear him say that, because he'll be the first member opposite that did campaign on it. But I don't think he'll say that, member for Nicholls. If this prime minister sets a standard where he can't just be honest with the Australian people, why would we expect his caucus to be honest? This is a prime minister who has set the standard saying, 'We have a mandate for what we took to the Australian people. That is our mandate,' and he has no mandate for the changes before the House today.

The Prime Minister also told Australians:

My word is my bond. … I believe that when you go to an election and you make commitments, you should stick to them.

Wow. That sounds a lot like democracy. That sounds a lot like what I talked about a couple of minutes ago. In all the elections I've contested, members of Labor, Liberals, Nationals and Greens put forward their policies, and the Australian people voted. The Prime Minister said:

My word is my bond. … I believe that when you go to an election and you make commitments, you should stick to them.

He also said:

I will lead a government that keeps its promises.

Why would any single Australian in the lead-up to the next election believe a single word this prime minister or this treasurer says when they say, 'We rule out death taxes,' or, 'We rule out some other tax'? They've broken their promises so fundamentally with the Australian people that the biggest deficit in Australia is not in the budget; it's the deficit of trust between the Prime Minister, the Treasurer and the Australian people. Why would anyone believe a word these people say when they've fundamentally broken the contract between the people of Australia and their elected representatives? If you can't believe a candidate—in this case, the leader of the country—who said, 'I've told you 50 times. I won't be changing that,' and if you can't believe a commitment as blatant as that, what can you believe from the Australian Labor Party? What single promise at the next election can you believe from the Australian Labor Party?

The political trickery in this bill is very well understood. There are a couple of elements in this bill that the coalition would be very happy to vote for, but, by forcing the parliament to consider the bill in its entirety, we cannot condemn Australians to this deceit and deception. This is just more political trickery by a Labor Party to try and force unrelated issues together to try and somehow wedge the coalition into a position. They think they're going to make some political hay in the future, because, with this prime minister, it's always about the political tricks, about the deceit, about the tactics in this place and nothing about the Australian people, where there is a fundamental breach of trust being committed, which this prime minister will never live down.

On this side of the House—and it was pointed out during the budget-in-reply speech by the opposition leader—We have a better plan, a better way to restore aspiration to the Australian people. The opposition leader, in his budget-in-reply speech, explained how the coalition would help everyday Australians deal with the insidious impact of inflation and bracket creep. We want to restore aspiration and force Canberra to live within its means, rather than raid the pockets of hard-working Australians through bracket creep. Bracket creep is a hidden tax which increases when inflation increases. Wage growth just pushes your income into a higher tax bracket, and you're no better off at the end of the day anyway. Even though your real purchasing power hasn't changed, a larger portion of your money actually goes to the government, and Canberra celebrates. It means that the government takes more tax every year from everyday Australians without needing to change the laws.

The coalition, if elected at the next election, will introduce a new tax-back guarantee, and this will index tax thresholds to inflation so Australians keep more of what they earn. It will deliver relief of around $250 in the first year and more than $1,000 per year by year four. It means no more yearly inflation tax rises. This is real tax reform. We're going to take the novel approach of having a policy position, taking it to the Australian people, giving them a vote and letting them decide what they think is in the best interest of the Australian nation, rather than the approach adopted by the member for Grayndler and the Treasurer of deceit, deception and trickery to try to win government.

The position taken by the coalition has been well received by the Business Council chief executive, Bran Black. He said:

Indexing tax brackets is good reform and will help ensure workers are not paying higher tax rates simply because of inflation and wage growth.

Respected economist Saul Eslake said that the indexation of tax brackets and resulting automatic tax reductions stopped government's using the cash to sweeten voters at election time. He said:

It makes governments honest and stops them being able to offer tax reductions before the next election.

That goes to the core of the bill before the chamber today. What a novel idea making governments honest is!

The Labor Party has demonstrated since the election and, most recently, through the budget and the bill before the chamber today that its only plan for regional Australia is to tax them more. The overwhelming majority of those opposite have never actually run a small business, and it shows in this policy before the chamber. I acknowledge, member for Nicholls, that they may not have visited too many family owned enterprises, but they've certainly done a picket line out the front of quite a lot of them themselves. They've picketed lots of small businesses, but have they actually run a small business? No, not many of them at all have any direct experience when it comes to small business, and it's demonstrated by the measures in the budget.

What Australians are telling me is that they're actually sick of business as usual in Canberra, and they're sick of Labor's broken promises. It's tough out there right now for farmers, for our small-business people and for Australian families. What does the Prime Minister do as Australians are feeling the pinch of cost-of-living pressures and a reduced standard of living? Well, the Prime Minister decides he will make it more difficult for Australians to build their own wealth, get ahead and maybe transfer their business or farm to the next generation. The capital gains tax changes in this legislation, presented to the parliament without any mandate by those opposite, make it more costly and complicated for older farmers seeking to manage their succession planning with their children. We on this side of the House want to see more farming families. We want to see more family owned farms and properties on the land, providing the food and fibre our nation needs. But these changes inevitably will lead to more corporate farms, and our farmers are justifiably worried about the changes to the capital gains tax arrangements.

The minister was asked about this in question time, and she clearly doesn't understand her own government's changes, which represent a broken promise to all Australian farmers. The Victorian Farmers Federation has publicly warned that more than 50 per cent of farmers will not receive a CGT concession and will pay massively higher tax bills when transferring farm ownership to their children. Their fear is that some farmers will have to sell off some of their land just to pay the capital gains tax bill created by this government. We have the National Farmers' Federation raising similar concerns, and we don't have any answer from the minister about whether the 85,000 Australian farmers will be worse off under the government's broken promise on capital gains tax. The minister just constantly dodges the question. We want to know if there has been any modelling. If the Department of Agriculture, Fisheries and Forestry wasn't consulted, how does the government even know what the impact will be?

Our farmers are world class for a good reason. They're world class at managing risk. They can manage the risk of seasonal conditions. They can manage the risk of commodity prices. More recently, they've had to manage the risk of fuel and fertiliser price increases. But how does any farming family manage the risk of a lying Labor Party? How is it possible to manage that risk? The coalition will oppose these bills, and the coalition will fight for small-business owners, for our farming families and for everyday Australians who are trying to get ahead through their own hard work and through preparing for their own retirement. What we will never do is go to an election based on a fundamental deceit and trickery, like this prime minister has done. Australia is worth fighting for, and we are up for the challenge. If you believe in these policies, take them to election and give the Australian people a chance to vote.

Jerome Laxale (Bennelong, Australian Labor Party) | Link to this | Hansard source

I rise today to speak on a budget that takes aim at one of the greatest economic and social challenges of our generation. I want to stand here in this place and say without hesitation that I want as many people as possible in Bennelong to have a chance at buying their first home, because that should be the baseline promise of a great Australian life. The Australian dream was built on this deal. If you work hard, if you save your money and if you contribute to your community, then a home of your own should be within reach. It's what I was able to achieve, what my parents were able to achieve and what their parents before them as well achieved.

But, ever since John Howard and Peter Costello set our economy on a different path, that deal has been shattered for too many young people in Bennelong and across the country. An entire generation of Australians have been competing in a system that has been rigged against them. Whether they're looking for a home to own or just trying to find an affordable place to rent, young people in particular—this generation that has missed out—know that the system simply isn't working. Not only have successive state and federal governments not built enough homes for the past 40 years but the entire system has been rigged against young people since that mistake was made in 1999.

We see the consequences of that every single day. We see it in skyrocketing rents. We see it in the heartbreaking rise in homelessness. We see it in the plummeting rates of homeownership. And we see it in the eyes of families in my electorate of Bennelong who are doing everything right but are still finding themselves locked out. It's all there in the numbers. In 1999 the average cost of a first home in this country was between 5.5 and 5.7 times the average salary. That was achievable. It required effort, but it was within the realm of reality. Fast-forward to today. The national median house value has skyrocketed to a staggering 15.1 times the average full-time salary. Even a typical small unit, the traditional entry point for a young couple, now costs about 8.1 times that salary.

Bringing it closer to home, in Bennelong—in Ryde, which is right in the middle of my electorate—in 1999 the median price of a detached house was $115,000. Today the median house price stands at an unbelievable $2.43 million. How can we look the next generation in the eye and tell them, 'Just save harder,' when the goalposts haven't just been moved but have been launched into another stratosphere? My community had told me time and time again that the status quo isn't working and that this Labor government needed to do something to change it. That's why, at this budget, we've taken the difficult but necessary decision to fix the Howard and Costello mistake of 1999. We're here to fix that error and to address the deep structural inequality in how different forms of income are taxed so that every working Australian can benefit.

Those opposite, and plenty in the media, will say we aren't doing enough on supply. But, again, the facts speak for themselves. This budget builds on what has already been the most ambitious housing agenda since World War II. Our Homes for Australia plan is now more than $47 billion, and we're incredibly proud of our achievements so far and the progress that is being made. The Housing Australia Future Fund is delivering more than 200 affordable and social units in Bennelong. The five per cent first home deposit guarantee is unlocking more than 1,000 people in my electorate to buy their first home. Our Build to Rent reforms will see more than a thousand Build to Rent units coming into Bennelong alone, let alone across the country. And of course there is our agreement with the states and territories to build more homes through the National Housing Accord.

This budget goes further. We are putting an extra $2 billion into enabling infrastructure through the Local Infrastructure Fund, because you can't build homes without the basics. You need the footpath, the pipes and the power. This $2 billion will unlock up to 65,000 new homes across the country, and we're cutting red tape to get it done. To access this fund, states and territories must take decisive action to speed up planning approvals.

We're also looking after those at the very sharpest end of this crisis, not ignoring them anymore. We're investing $59.4 million for states and territories to secure social housing for more than 4,000 eligible young people at risk of homelessness. And I commend the Special Envoy for Social Housing and Homelessness, the member for Macnamara, for all his work in this field.

But while building supply is vital and while supply, supply, supply has been at the forefront of our housing agenda, it had become abundantly clear to me and to members of my community that more was required in order to level the playing field. We had to look at the tax distortions that had been actively shutting people out from owning their first home. For decades, our tax system has rewarded investors for simply swapping existing properties back and forth, driving up prices without adding a single room to our housing stock. This policy mistake, made by John Howard and Peter Costello, was designed to get more people to invest in the share market. Instead, it left existing housing stock as the most lucrative of investments, distorting the market and shutting out a generation from homeownership.

To address this, we are limiting negative gearing for residential property investments to new builds only. This is something even the former treasurer of this country, Joe Hockey, supports, except that he said that on his way out. He said that in his valedictory. This is a government that recognises that this policy position needs to change, and we've got the guts to change it. Negative gearing will remain fully available for newly built homes, for certain government supported housing programs and for existing investors under strict grandfathering rules. If you want to invest in property, we want you to channel your investments into creating new supply because that's good for you and it's also good for the country. Encouraging the construction of new homes is an important policy position we need to get to.

The second lever of change is, of course, changes to the capital gains tax. When the modern CGT discount was introduced by the Howard government in 1999, it completely distorted the market. By offering this blunt blanket 50 per cent discount on nominal capital gains, it made speculating on property far more financially attractive than investing in other, productive assets. It created an intersection between the housing market and the tax system that slammed the door shut on a generation of young Australians. Our goal here in these reforms is to neutralise these distortions and, importantly, not introduce new ones but bring a fairer, more neutral treatment for capital gains.

First, we're introducing a new capital gains discount model based on indexation. Instead of that blunt 50 per cent discount on nominal gains, an asset's original cost base will be adjusted upward for inflation using CPI. This is important because it means that you will only pay CGT on your real gains, not your nominal gains. In high-inflation environments, like the one we're in right now, this calculation may actually leave many investors with a lower capital gains taxable amount than before. In fact, if the asset growth is less than twice the rate of inflation, then the taxable amount is most likely to be less than under the current system.

Secondly, we're implementing a 30 per cent capital gains minimum tax rate. This baseline rate will apply to net capital gains after inflation is factored in. But, crucially, we've protected vulnerable Australians. There are explicit exemptions for income support recipients, age pensioners and super funds. This important change is about levelling the playing field between those who earn their income primarily via wage and those who earn it via other legitimate means. It is a really important reform that has long been talked about.

Of course, there are smooth transitional arrangements, as any good government would do. For assets that are already owned, the 50 per cent discount will still apply for growth accrued up to 1 July 2027. From then on, any capital growth, if there is any, will apply under the new system. To keep our focus squarely on supply, investors in eligible new builds will also retain the choice of having that 50 per cent capital gains discount on nominal gains or the new model.

We know that there are many factors driving up prices in the Australian housing market, but we also know that the status quo cannot remain. This is what just shocks me about the response from the opposition, where they've openly said they're going to vote down this important bill, which includes tax cuts and helping people to get into their first home. We know that the status quo isn't working. It's not working for productivity. It's not working to get more people into homes. It's not working for working Australians, who bear the burden of the tax take of the Commonwealth. These reforms will give 75,000 first home buyers their entry into owning their own home and will help reverse a decade of decline in homeownership rates. Other reforms will balance the burden currently on the back of Australian wage earners across the country.

This budget is about two things. It's about coming to terms with the errors of the past. It's about listening to young Australians and working with them to set up an Australia with a fairer future. It takes political courage to fix the structural errors of the past. While others sit here to defend a broken status quo, my electorate has told me again and again that the status quo is broken and that things need to change. To me, this budget represents a positive line in the sand. This is the change our economy needs, the change our budget needs. We're doing this at the right time for the right reasons, and I commend this bill to the House.

Jamie Chaffey (Parkes, National Party, Shadow Assistant Minister for Agriculture) | Link to this | Hansard source

I'd like to reflect for a minute or two on what makes us proud to be Australians. We're all here in this place, proud to be Australians—or we wouldn't be here—representing families, business owners, investors, the elderly and the generation who will themselves sit here in these seats one day. So what is it that we are here protecting and supporting? What is it that we are here to look at and that says 'this is what being Australian is all about'? Let's look at some of our favourite films, our favourite days, our favourite cultural moments and our favourite traditions. I'm thinking of Gallipoli, Breaker Morant, Australia Day, Anzac Day, Phar Lap, St Mary MacKillop and even Don Bradman. They show us that Australians admire bravery. We admire and strive towards hard work, mateship and integrity. We admire honesty.

It is those values that are under attack here today in this House. First and foremost is honesty and integrity. We have learnt not to listen when the Prime Minister announces he has made things clear. He made things clear ahead of the election when he declared that there would be no new taxes. He made things clear just long enough to be elected, and then suddenly there emerged a whole new kind of clarity. We cannot trust the government that has been elected. A promise made to get through the door is not worth anything if it's not kept.

Having ditched our Australian values of honesty and integrity, this government has moved on to take a kick at other national values. Let's talk about hard work. There's a letter in my office from an 83-year-old woman from Dubbo. Nearly half a century ago this woman and her husband bought a property near Brewarrina. Their three children came home on the school bus to work in the shearing shed and to lend a hand on the farm. The five of them worked hard, and, as most of us know, there's very little time for luxury when you work on the land. The couple, who are now elderly, live in Dubbo, but the dad still works on the farm that his worked for 48 years. This hard work is now being paid back with uncertainty and with the prospect of tax gouging under changes to the capital gains tax regime as part of this bill.

Farmers who have stepped into the boots of their parents and worked the entirety of their lives on the land have been taxed every step of the way, and it's not as easy to make a quid on the land as you'd think. Farmers in my electorate of Parkes and across the country have been left wondering what this means for them. The National Farmers' Federation have raised alarm that these reforms, unintentionally or otherwise, will have a deep impact on farms and on farmers. I'll quote from the National Farmers' Federation president Hamish McIntyre. He said:

The Government cannot afford to get this wrong. If these settings are not fit for purpose, we risk decreased investment, delayed succession, increased debt burdens and in some cases, forced sales of farmland to meet the increased tax liability.

These farms are often the result of generations of savings. They are the legacy left for children and for grandchildren, and they are ultimately the family business. But, under these reforms, together with the sneaky new death tax and the raid on family trust, keeping these businesses in the family has become even harder.

Included in this is the broken promise that assets bought before 1985 would never attract capital gains tax. I have had constituents who have written to me to say that these changes will not help the young people to buy their own homes. They will instead entrench intergenerational inequity by denying to those who don't already own a home the mechanics enjoyed by older generations to do so.

One constituent has told me that, while he has lived his entire life in Australia, these toxic new taxes are now forcing the family to think about leaving the country. How bad is it that an Australian family is considering leaving the country to escape the huge burden of new taxes? A Moree accountant has called the capital gains tax reform a 'contemptible' change that will hurt lower income Australians the most. He gives an example where the reform will add 11 per cent to the capital gains tax paid on the sale of a house that makes an inflation adjusted gain of just $100,000. Already we are seeing the result of these reforms before they've even arrived. Auction clearance rates and volumes are down, and rents are up—so much for helping younger generations!

Tristan from Forbes in my electorate of Parkes is a young man who is trying to live his dream with his agricultural contracting business. Tristan came to question time last month and was infuriated by what he heard from those on that side of the House. In Tristan's own words, these tax reforms do 'more damage than good, especially for those of us who are young and taking risks to run a business and try and get ahead. I'd like to read the rest of what Tristan had to say as a young Australian who these tax hikes are meant to benefit. He said:

I am losing faith in the system in a big way. I don't see the Prime Minister or any other Ministers out there with me working 20 to 23 hours a day in peak season helping, but they rob us blind of our work and money.

I am a farming contractor. I bought machinery to generate a turnover to build an asset portfolio to get into land ownership. Negative gearing was a great way to get there and build up a portfolio. Unless you come from family money or inheritance—which I have no doubt they are trying to go after as well—you can't really get into it.

They have no support for young people or understanding. They are robbing many young people like me trying to get into farming, and they don't care. I feel support for the younger generation is at an all-time low.

Well, if our young Australians feel this way and we are attacking the savings of our older generations also, then what is this tax grab all about? Should this younger generation manage to battle their way through the forest of hurdles and the cost-of-living increases and taxes to find an affordable home, they will be prevented from investing later on themselves due to the very same capital gains reform that we're here looking at today. They too, our newer hardworking generation, are being hit at every turn.

Financial Services Council analysis shows the reform 'could materially increase taxes on Australians investing outside superannuation, including younger Australians, families, part-time workers and Australians approaching retirement'. Its modelling shows that, under these reforms, a 25-year-old Australian on a median income investing $10,000 in shares would pay more tax. A median-income young family investing $40,000 in a balanced managed fund would also pay more tax. A 35-year-old professional on an above-median income investing $60,000 in high-growth managed funds would pay more tax, and a 46-year-old operations manager on an above-median income investing $110,000 to build financial security and safety would also pay more tax. The modelling also showed that people on low incomes would also pay more tax on even modest investments. People who have dreams—another great Australian tradition—and want to fund their own business now need to think twice. The risk is now 47 per cent higher and the end benefits are less.

I support schedule 3, the working Australians tax offset, and schedule 4, the $1,000 standard deduction for work related expenses. I do not support the changes to the capital gains tax regime or the changes to the negative gearing regime. How workable is a scheme that only rewards new builds? Where is the incentive to continue to cherish and maintain our beautiful older homes?

Carina Garland (Chisholm, Australian Labor Party) | Link to this | Hansard source

I'm sorry to interrupt. I wanted to draw the House's attention. There was a unparliamentary remark made by the member for Nicholls. It would assist the House if you withdrew.

Sam Birrell (Nicholls, National Party, Shadow Assistant Minister for Regional Health) | Link to this | Hansard source

To assist the House, I withdraw.

Carina Garland (Chisholm, Australian Labor Party) | Link to this | Hansard source

Thank you.

Jamie Chaffey (Parkes, National Party, Shadow Assistant Minister for Agriculture) | Link to this | Hansard source

In its usual type of attack on the Australian people, by stealth, the Labor government has wrapped these two small sweeteners in with what is otherwise a rotten bundle. There is another worm at its core: the power allocated to the minister of the day—a popular theme within this Labor government. This bill notes: 'The minister may, by legislative instrument, determine a method for apportioning capital gains and losses between realisation events and earlier deemed CGT events'. The bill also states:

The Minister may, by legislative instrument, determine one or more kinds of *CGT assets to be covered by subsection (2).

To what extent do we want the minister to be doing the sums on our families' personal assets? Here, again, is legislation by stealth from the Labor government.

Once again, I refer to the values we treasure as Australians: honesty and integrity. It is lost here in this legislation and the promise that came before: bravery and hard work. Where is the incentive to take the brave leap to start a new business? Where is the reward of decades of hard work and mateship? This is not the work of a mate. This is not the work of a leader. Australians cannot rest easy at the end of a long day with tax reform changes such as these ones hanging over their heads. You are taxed when you make your first dollar, when you invest, when you buy your first home or maybe your second home, or when you invest for your children. You're taxed on your superannuation you have earnt, despite being taxed all the way through your life, and you're even taxed now when you die. What will be left for our children at the end of the day?

The coalition has a plan—a solid way forward, a tax-back guarantee. From the 2028-29 financial year, a coalition government will index the bottom two income tax thresholds to inflation, protecting around 85 per cent of income earners and delivering relief of around $250 in the first year. This will grow to be more than $1,000 a year by year 4, and, from 2031-32, the top two thresholds will also be indexed, protecting all taxpayers. This can be done if you stop the cycle of inflation at its source.

These taxes were an attack by stealth at a time when Australians can least afford it. We had values once that were supported by a government of this country. It is time once again that our legislation supports what it means to be an Australian.

Matt Burnell (Spence, Australian Labor Party) | Link to this | Hansard source

Tax reform is rarely simple and it is rarely easy. Every change to the tax system creates debate because taxation sits at the centre of so many decisions Australians make: where they invest, whether they buy a home or start a business, and how much of their hard-earned income they keep. Yet, one thing has been increasingly clear over recent decades: the status quo is not working as it should.

Too many young Australians are locked out of homeownership. Too many workers feel like they are carrying a growing burden while watching wealth accumulate elsewhere. Too many Australians look at the tax system and wonder whether it still reflects the economy we live in today. That is why the reforms in the 2026-27 budget matter. They're not an isolated measure designed to fix a single problem. Together, they represent the most significant package of tax reforms undertaken in more than a quarter of a century—a package designed to make the economy work for more Australians rather than the fortunate few.

At its heart, this legislation is built around a simple proposition: Who should our tax system work for? Should it continue rewarding distortions that have built up over decades, or should it support workers, encourage productive investment and help young Australians build a secure future? This government has made its choice. It is a reform agenda built around fairness, aspiration and effort. Most importantly, it acknowledges that economic policy should serve the many Australians who get up every morning, go to work, pay their taxes and simply want the chance to get ahead.

Across Australia, people are working harder than ever, and I see that every day in my community in the north. Yet many feel that the rewards of economic growth have become increasingly difficult to access. Young Australians are spending longer saving for a deposit, families are feeling pressure from rising costs, and businesses are looking for greater certainty to invest and expand. At the same time, unnecessary complexity continues to make our tax system harder to navigate than it needs to be.

This budget responds directly to those challenges. More than 13 million workers will receive tax relief, businesses and startups will benefit from measures worth $3.5 billion, and compliance costs across the economy will fall by approximately $540 million every year, whilst more homes will be delivered for more Australians. These are not isolated changes operating in different directions. Together they form a coherent package designed to make the tax system simpler, fairer and more effective.

What makes these tax reforms particularly important is that they build upon the government's broader record of responsible economic management. Australians rightly expect governments to confront difficult challenges rather than leave them for someone else to solve. Responsible management of the nation's finances remains essential if we are to build a stronger and more sustainable economy. Continued investment in health care, education and the services that communities rely upon every day is a fundamental obligation of government. Revenue raised through reforms is being returned to workers and businesses, while supporting stronger budget sustainability over time. Future generations should not inherit structural problems simply because governments lack the courage to address them. Too often in politics, there is an incentive to postpone difficult decisions. A challenge emerges, everyone agrees it exists, everyone acknowledges it's becoming worse, yet meaningful action is delayed because the problem appears politically difficult. That is not the approach being taken here. This legislation accepts our responsibility to act now rather than leaving these issues for younger Australians to solve later.

Housing affordability provides perhaps the clearest example. For many Australians, homeownership remains the single most important pathway to financial security. It has long been part of the Australian dream. A stable home creates opportunities for families, provides security in retirement and allows people to build wealth and participate fully in the economy. Yet, for too many younger Australians, that dream has become increasingly difficult to achieve. The current tax settings have contributed to outcomes that favour speculation in the existing housing stock over the creation of new supply. As prices have risen faster than wages, many first home buyers have found themselves locked out of the market altogether.

That is why schedules 1 and 2 of this legislation are so important. The reforms to negative gearing and capital gains tax are designed to improve housing affordability, while ensuring investment continues to play an important role in the economy. Beginning from 1 July 2027, negative gearing arrangements for residential property purchased after budget night will be limited to new builds. Why is this? It's straightforward: Australia needs more homes. More supply is essential if we are serious about improving affordability. Directing investment towards new construction helps increase the number of properties available to Australians, while supporting jobs throughout the construction sector.

Importantly, existing arrangements are being grandfathered. Australians who currently own investment properties or utilise negative gearing will not—I repeat, will not—be forced to change their existing arrangements. Certainty remains in place for current investors. Future investment, however, will be encouraged towards building additional housing stock. The goal is not to penalise people who have made decisions under existing rules; the goal is to ensure that future tax incentives support outcomes that strengthen housing supply and improve affordability.

Modelling indicates that these reforms will help around 75,000 additional Australians become homeowners over the next decade. For thousands of young families, that represents the difference between continuing to rent and finally purchasing a home of their own. Alongside these changes sits an equally important reform to capital gains tax. For gains accrued after 1 July 2027, the current 50 per cent discount will be replaced with cost-based indexation alongside a 30 per cent minimum tax.

While discussions around capital gains tax can quickly become technical, the principle behind the reform is remarkably simple: investors should pay tax on real gains and they should not be taxed on inflation. Returning to indexation restores that principle. The current arrangements created distortions that influence investment decisions and encourage capital to flow towards particular assets for tax reasons rather than economic reasons. Correcting those distortions helps ensure that investment flows towards opportunities that generate genuine economic value, which creates a positive environment for innovation and long-term economic growth.

Another important feature of the reforms is the broad application across asset classes. A piecemeal approach would simply create new distortions elsewhere. Investors should make decisions based on economic fundamentals rather than artificial advantages embedded within the tax system. Maintaining consistency across assets supports a more balanced and efficient market. Some investors will pay less tax under these arrangements. Others may pay more. Our objective is not to increase or decrease tax for its own sake. Our objective is to ensure that inflation is treated appropriately and investment decisions reflect genuine returns.

Property investors who purchase new builds will continue to have flexibility when they eventually sell their asset. They will be able to choose between the existing 50 per cent discount and the new indexation arrangements with the minimum tax. That flexibility recognises the role new housing supply plays within the broader economy.

Small businesses also remain protected under these reforms, as existing small business capital gains tax concessions continue unchanged. For many eligible businesses, those concessions can significantly reduce or eliminate capital gains tax obligations when assets are sold. Entrepreneurship remains vital to Australia's economic future. That is why the government is also continuing consultation regarding the application of these reforms to startups and businesses with low or zero cost bases.

Good policy requires consultation, and complex economic issues deserve careful consideration. Legislating major reform in stages is not unusual. Many of Australia's most significant economic reforms have been implemented through multiple legislative tranches. This budget establishes the core framework while allowing detailed consultation to continue where appropriate.

When viewed collectively, the reforms contained within this legislation reveal a broader vision for Australia's economy. Workers should keep more of what they earn. Investment should be directed towards productive outcomes. Housing policy should help more Australians achieve homeownership. Businesses should face less red tape. The tax system should be easier to understand. Future generations should inherit stronger foundations than those we inherited ourselves. Those objectives are not radical. They are sensible. They are practical. Most importantly, they reflect the values held by millions of Australians.

The budget before the House strengthens opportunity while maintaining responsibility. It supports aspiration without abandoning fairness. It promotes investment while reducing distortions. It delivers relief today while building a more sustainable future. For those reasons, I support the budget.

Sam Birrell (Nicholls, National Party, Shadow Assistant Minister for Regional Health) | Link to this | Hansard source

These tax changes are proving pretty unpopular out there in voter land, and the reason for that is multifaceted. Basically, it's the premise on which they were introduced, the personal impact that they're having on people, the inability of some ministers to explain how it's going to affect people and the fact that it's just a massive tax grab of $77 billion over the next 10 years. I'll talk a bit more about that later.

I'm hearing all these impassioned defences of these tax changes—capital gains tax and negative gearing; why we have to have it—and I'm just thinking, member for Dawson: I didn't hear any of this before the election.

Andrew Willcox (Dawson, Liberal National Party, Shadow Assistant Minister for Manufacturing and Sovereign Capability) | Link to this | Hansard source

No.

Sam Birrell (Nicholls, National Party, Shadow Assistant Minister for Regional Health) | Link to this | Hansard source

None of this at all. And as the member for Gippsland said when he came in here before—he's seen seven elections; seen only two—he said that the convention in Australian politics is that the candidates, the parties, the people who are aspiring to be the government or to be a representative in the House of Representatives go out to the people and say, 'This is what I will do if I'm elected and this is what I won't do if I'm elected.' As we very well know, the Prime Minister said, 'For the 50th time, it's off the table,' in relation to negative gearing and capital gains tax. So people voted the way they voted, and they said: 'Oh, well, I might vote Labor. I was considering voting for someone else, but the Prime Minister has taken negative gearing and capital gains tax off the table, so I might vote Labor .' And many millions of people probably did that.

So, less than a year later, to bring into this place changes that are the exact thing he said he wouldn't do, along with the Treasurer, breaks the trust with the Australian people. All of those opposite, particularly the Prime Minister and the Treasurer, will have a big problem the next time they go to an election, because they'll put policies forward and people will say, 'Okay, but you said last time that this was going to be your policy and you changed it.' And you'll hear a bit about what we plan to do. Not only is it real tax reform that will lead to people paying less tax but also we are having the courage and the decency to put it before the Australian people before the next election.

There's been a lot of debate in this place about what sorts of words we can use to describe the deception by the Labor Party, the Prime Minister and the Treasurer, and there are certain words we can't use. But I've consulted with some younger voters as to what we can explain this as: a 'fact-adjacent operation' was one of the things I heard, and 'colouring outside factual lines'. I was also informed that election promises like these 'age like milk': eventually they sour.

But I like to use the word 'furphy', which is named after a wonderful family in my electorate of Nicholls that has always made tanks. They made water tanks for World War I diggers. When the World War I diggers hung around getting a drink it was like water cooler conversation. There were a lot of tall tales told around the Furphy water tank, and that's how a tall tale became known as a furphy. So I call this a furphy, because this is one of the tallest of tales that was told by the Prime Minister and the Treasurer before the election. And I can tell you, the Furphy family in Shepparton have honesty, courage and decency, but that's not what we saw from the Labor Party before the election.

In relation to the tax changes themselves, we oppose changes to the capital gains tax regime and we oppose changes to the negative gearing regime. But we do support schedules 3 and 4, which deliver the Working Australians Tax Offset, because we believe in lower taxes. We also support the $1,000 standard deduction for work related expenses. That streamlines things. It makes it easier for people to fill out their tax returns and to get what they should be getting back from their tax. But these things are put together in a bill with schedules that we cannot support. That's been described, appropriately, as 'wedge-onomics', because they want to claim we voted against the elements that we support. They won't split the bill so we can pass the good and reject the bad—and this from a prime minister who said he wasn't going to be the type of politician or the type of prime minister who wedges people. Well, the wedge is on.

The capital gains tax changes are very confusing for people, and they may—and probably will—tax and cruel aspiration. This will affect people who want to have a go and set up, invest in and build a business, such as a dairy herd—which involves very difficult work; you have to go around at 3 am and pull calves out of cows. I spoke to a pharmacist who has a fantastic pharmacy in Hobart. His capital gain is going to rise pretty quickly because of his innovative ideas, his investment and the work that he's putting into it. But, on the figures, he's probably going to be slugged a lot more capital gains tax than he otherwise would have been when he goes to sell that business. So the next person who thinks, 'Well, I'm going to have a go and combine my blood, sweat and tears, my labour, my capital and my appetite for risk,' Member for Dawson, might go and do that somewhere else. The finance minister from New Zealand is already saying: 'Come across the ditch. Come over here. We want you.' We don't want those people to leave Australia. We want them to set businesses up here.

In relation to negative gearing, I hear the arguments. It's how a lot of people have created wealth over the years, including, probably, most of the Labor frontbench—and good on them. We're told that the changes need to be brought in so that young people can get into the housing market, but the budget papers say that this could lead to a reduction in supply. The budget papers say there would be 35,000 fewer homes. The budget papers say that rents are going to go up. The budget papers say that people could be taxed on their capital gains, which often come from a share portfolio that they've put together to try and save the deposit for the new home.

I understand the intent, and we all want to see more young people getting into the housing market, but the way you do that is to get more supply. And how do you get more supply? You make it easier for people who want to build housing developments and build houses. So our plan is to provide $5 billion to the councils, the developers or whoever it may be to build the services—the sewerage, the electricity, the roads, the drainage and all of those things that are the roadblock between a housing development going ahead and a housing development not going ahead. To be honest, sometimes the time it takes for a couple of paddocks to be zoned residential or until someone can actually pour a slab is way too long, and it's often the costs that cause it to be too long.

I just cannot listen, in all seriousness, to the Treasurer and the Prime Minister and other people in the government who say, 'We are the party of tax cuts,' because this budget and these tax arrangements mean that $77 billion more tax will be collected over the next 10 years. That's huge. Some of them bell the cat a bit, because they say, 'Oh, your arrangements would cost the budget $280 billion.' I heard that today. I heard someone say, 'Oh, your changes to reduce bracket creep will cost'—I just emphasise that word 'cost'—'the budget $280 billion.' Now, that money doesn't disappear; it just stops being in the coffers of the government and goes back into the pockets of the hardworking Australian taxpayer.

We've got a better plan, and I'm very proud to be associated with an opposition that has put forward a solution to one of the big problems in tax and tax policy in Australia, which is bracket creep. Bracket creep is where, as inflation rises, people go to their boss and say, 'Inflation is rising; I need a pay rise,' they get a pay rise, the pay rise pushes them into the next tax bracket and they end up paying more tax, but really they're not that much better off, because of inflation. It's been described as the thief in the night, and governments, particularly governments with high inflation like this one, rely on it to top up their reckless spending. But it's money that's getting taken away from people. To index tax brackets to inflation is real tax reform, and it will put real money back into the pockets of hardworking Australian people. Regarding the falsity of what I hear from some of the members of the government about intergenerational equity, intergenerational equity is making sure that the tax system is set up so that people pay less tax into the future and that they're not left with a government who has spent so badly that there is a huge deficit when they do become taxpayers. That's the big problem.

The bad budget is a hard sell, and these tax changes are a hard sell, but they are, as we're finding, very difficult for some of the ministers to explain. The Minister for Housing couldn't tell us what the arrangements are if someone wants to build a granny flat on a new property. There are all sorts of issues when it comes to trusts—testamentary trusts, discretionary trusts and charitable trusts. What's affected? What's not? We're not getting clear answers. I think that is because it's confusing and it's because the work hasn't been done to really outline what the impacts, including the unintended consequences, of this will be.

I'm amazed that more people in the government are not lining up to defend this budget. I could be wrong, and I'll stand corrected if more people come in, but before I came in here I went into the whip's office, and only 26 of the 94 Labor members are scheduled to speak on this bill, Member for Dawson. You would think that if they think this is so great they would be charging through the doors to come in and talk about how great these changes are and try and explain why they said one thing before the elections, when they were running around during last year's election campaign, and now we're doing something completely different. Maybe they don't want to be associated with that kind of deception, Member for Dawson. I'm not sure, but I suppose I can't really blame them.

But, on recap, we have taxes, lots of taxes. These new laws are just a big tax grab—taxes on small businesses, farm businesses, startups and entrepreneurs, which are the engine room of the Australian economy. The CG taxes hit shares and businesses far beyond property, and the trust tax catches ordinary small businesses and farmers, not just wealthy investors. The budget locks in $50 billion of high taxes that no-one voted for. That's the point. No-one got a chance to say, 'I like this idea. I'm going to vote for you,' or, 'I don't like this idea. I'm going to vote for someone else.' That is the compact that exists in Australian democracy. We've broken a record. There's a record. This is the highest-taxing government in Australian history. No government has collected more tax from the Australian people than this does.

Julian Hill (Bruce, Australian Labor Party, Assistant Minister for Citizenship, Customs and Multicultural Affairs) | Link to this | Hansard source

It's almost like the economy's grown!

Sam Birrell (Nicholls, National Party, Shadow Assistant Minister for Regional Health) | Link to this | Hansard source

I'll take that interjection, because it's flatlining. It's flatlining on today's figures, Member for Bruce. I don't know if you checked those, Member for Bruce. Some of the hardest working Australians are going to be caught up by this tax grab—entrepreneurs, the people with ingenuity, the sweat equity, those generational businesses, the farmers that are trying for succession. No-one voted for these toxic taxes, and I'm not going to vote for them now. I support the WATO, the working Australians tax offset. I support the $1,000 automatic deduction. But I cannot support the changes to the capital gains tax and the negative gearing arrangements because of the way that they were brought in—stealthily—and the impact that they will have on real Australians.

Zaneta Mascarenhas (Swan, Australian Labor Party) | Link to this | Hansard source

As the member for Swan, the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 is probably one of the bills that I will speak to most proudly. That is because I came here because I want to make Australia a fairer place for future generations. If this were the only bill that I contributed to in the country, I would be a very happy woman, because this is about making the system fairer for future generations. That's as a local of my community of Swan; it's also as a mother. I have two children, Felicity and Lincoln, five and eight. I let them know that the reason why I'm away for 20 weeks of the year is that I want to build a fairer Australia for them. This is what this change is about. We are changing the system and we are doing that because—guess what? The system has been broken, and, if the coalition think that the system has been working, they have had their heads buried under the sand. The ability to own a home should not be a privilege for some. That's a right that should belong to every single Australian. For too long, that has not been the reality for the people that I represent in Swan and not for Australians right across the country.

This bill introduces tax reforms that rebalance the system, reforms that back the workers, the first home buyers and the generation coming up. This bill is the start of the most significant tax reform this country has seen in 25 years. It does three things: it puts money in the back pockets of every Australian worker, it opens the door wider for first home buyers and it stops the tax system rewarding asset income over wages. We are the government that believes that Australians should earn more and keep more of what they earn, as opposed to the coalition, who will vote against tax cuts this week. We do not believe that a worker should pay more tax than an investor. Income earned through hard work should not be taxed more heavily than income earned by holding an asset. That's not fairness. It's not productive either. That is the system that this bill begins to set right.

It's no secret that tax concessions in this country go to the highest earners. Meanwhile, working Australians, who keep this country going, have been doing the heavy lifting. This bill changes that. Most Australians go to work every day, contribute to the economy and pay their taxes. That's why I welcome the new $250 working Australian tax offset, which will benefit more Australians. This government is also introducing a $100,000 instant tax deduction for workers, which will benefit around 6.2 million Australians. This is the fifth time this government has cut income taxes. It's responsible. It's targeted. It's fair. And I would like Australians to know that those opposite have, time and time again, opposed this government's tax cuts—tax cuts that give money back to the people, back to everyday working Australians.

As the Prime Minister said earlier today, we are the party of homeownership. For too long, this country has accepted a housing market that is broken, a market that works against ordinary Australians and works against a productive economy. The Howard government's changes to capital gains tax in 1999, coupled with negative gearing, turned housing into the single most lucrative investment in this country, and the effect on the housing market and on generations of Australians has been catastrophic. House prices have run away from wages, and homeownership has slipped further out of reach for younger generations. This bill changes that.

As I stand here today, I'm proud to say that I'm a part of a government that is challenging the status quo and making changes for a fairer society. This government expects that these changes will bring 75,000 more Australians into homeownership over the next decade, turning around a decade in which homeownership has been going backwards. We're not waiting for tax changes to take effect before helping first home buyers. Through Labor's five per cent deposit scheme, 1,965 first home buyers in the electorate of Swan have already bought their own home. That's the difference between a government that occupies space and a government that actually acts.

Many of the people that I talk to bring up housing as the first issue on their mind. Often, it's not for themselves. It's because of someone in their life they love, usually a child or a grandchild who simply cannot see a way through to homeownership. I hit the streets last week when I was back in my electorate, and I spoke to a young man who was grateful for the 20 per cent HECS cut. Then, he also said he was absolutely behind making housing more affordable for his generation. I spoke with an older gentleman, Garry, who told me that he loved the changes and wanted them to go further. And then I also spoke with Shane North, who called the office to say that he was absolutely behind these changes. He explained that he worked hard and had bought his own house and that he doesn't have children but that he wants the system to be fairer for the next generation.

These are important changes, and I am, absolutely, very proud to represent them. This bill rebalances the system that has been tilted for far too long. It says that the dream of homeownership should not depend on whether your parents already own property. This is reform whose time has come. The ability to own a home should not be a privilege for the few; it's a right that should belong to everyday Australians. A worker should keep more of what they earn. A first home buyer should have a fair shot at the keys to their own front door. This generation that is coming up behind us should inherit a system that backs them, not one that's stacked against them. This bill makes it real. It helps the worker. It helps the first home buyer. It helps the next generation.

This is also about making sure that we make tangible differences in our community. I remember speaking to the school principal at my kids' school, maybe two years ago, and she explained that there were 20 families that had had to leave the school because of how crazy the housing crisis was. I also have a friend who, when she went through a divorce, said that the most important thing that she wanted to do was to make sure that she didn't take her kids out of the school catchment area, because of how disruptive that was.

What we're trying to do is to fix the system to make it fairer for first home buyers. We're doing that because it's the right thing to do, and it will put less pressure—but that's not the only thing that we're doing. We're also working on housing supply. For these reasons, I commend this bill to the House.

Andrew Wilkie (Clark, Independent) | Link to this | Hansard source

Our country is slowly flipping from a country of homeowners to a country of renters, and that's a terribly sad thing to observe and to live through. You know, you've only got to go back two or maybe three decades, and the normal course of events was that a normal sort of person, a regular Joe—he or she—would get a job, work hard, save up a house deposit and could afford to buy a modest cottage for the family to grow up in. Then they might upgrade it and sell, to move up to something grander, a decade or a couple of decades later, when they could afford it.

I don't want to go back to the white picket fence of John Howard, but I do want to go back to a day when a regular person had it within their capacity to own their own home. But, at some point during the last two or three decades, especially in the last half a dozen years or so, housing stopped being a fundamental human right in this country and became an investment product: in some ways, no better or worse than a parcel of shares or whatever someone might invest in—maybe cryptocurrency, these days. So no longer was a home a fundamental human right and something that regular people could aspire to and achieve; it became an investment product, for those who could afford to, to try and make a buck from.

I don't criticise the people who have made a buck, and I've traded a few houses myself over the years. What I am criticising, though, is the succession of governments, over decades, that quite deliberately put in place the policy settings to turn homes into investments and to take away that fundamental human right. One, of course, was negative gearing. In fact, it wasn't just the introduction of negative gearing; I think the thing that made negative gearing worse was the change that allowed property owners to deduct property costs against their gross income, including their personal salary. That change, from when you could only deduct against the costs of the property, was, I think, a very significant and a very detrimental change in turning property from a human right into an investment.

Then there's capital gains tax. Of course you should pay some sort of capital gains tax when you have a substantial capital gain. The decision to halve the capital gains tax after 12 months might have been well intentioned, but I'm hard pressed to find one decent economist, one good economist, in this country who thinks that the halving of the capital gains tax—that so-called discount—was a good idea.

You can see where I'm going with this, Deputy Speaker. I obviously support—in fact, I applaud—the government for deciding to do something about the tax arrangements regarding residential property. I will support the bill, and I will do it with honesty, because I went to the last election campaigning for tax reform of residential property. So I feel quite pure about this. I don't feel that I'm letting my community down by supporting this bill

But it does bring me to the criticism of the government by the opposition and others that they went to the election promising not to do this. Well, do you know what? To some degree I'll associate myself with the opposition's criticism here, because this is one of the biggest tax reforms that I can think of—certainly in my adult lifetime—and it would be proper process for something this big to have been taken to the election. So, although I will support it and I won't feel guilty about doing that, because I campaigned on such a reform, I would say to the government: you should have taken it to the election. I'd say to the opposition: when you have big reforms in the future, take it to the election, because, whether it be Tony Abbott reneging on his promises before and after the 2013 election or the current government reneging on its promises before last year's election, all it does is feed that cynicism about the political class in the community. It's no wonder emerging parties are enjoying record popularity, because the old political class is letting the community down and the community want to ventilate that dissatisfaction and that displeasure. So it feeds into that.

I will go back to a positive, though, for a moment. By the way, if you think I'm a bit all over the place, it's because I think this bill is a bit all over the place. It's got some really good aspects and it's got some really lamentable aspects. I do think that the idea of trying to achieve some sort of equivalency between the tax on income earned from investments and the tax on a similar amount of income earned from wages is a good idea as a matter of principle, and it is achieved to some degree insofar as, in this bill, the minimum capital gains tax will be 30 per cent instead of the old 25 per cent. I would say, though, that that increase of five per cent, particularly when it's offset against the effects of inflation, means that people who are paying capital gains tax after 12 months probably won't actually be paying that much different an amount. They might even be paying a little bit less with this reform. I think the scare campaign around this minimum 30 per cent capital gains tax is quite dishonest. It's coming from people who are accusing the government of dishonesty, but the scare campaign is equally dishonest.

But, of course, the devil is always in the detail. When I look at this minimum 30 per cent, I think, 'Well, what happens to someone who is living off the income of capital gains and is getting less than about $200,000 in capital gain from that investment?' If that were just taxed as normal income, they would be paying markedly less than 30 per cent tax. In other words—and this will be even more pronounced when we debate the next bill, which goes to the detail of trusts—the problem with setting a minimum of 30 per cent is that anyone who's getting income from investments or a disbursement from a trust of less than about, I think, $192,000 or $195,000 will actually be paying more tax than they were before. I think that's very unfair.

In fact, I'll quickly jump to that point of trusts. They say that an age pensioner will be exempt from the 30 per cent tax on a disbursement from a trust in retirement. Well, they'll only be exempt, of course, if they're receiving at least $1 of income support payment from Services Australia through the age pension. But, of course, you don't get any age pension for a couple if your income is more than about $100,000, in rough figures. So what happens to a couple who are living off their investments and getting somewhere between $100,000 and $200,000 income? They will be paying 30 per cent tax on the disbursement from the trust, or—looping back to simply a capital gain—they'll be paying at least 30 per cent tax on the income from that capital gain. That is actually markedly more than if they were simply paying, for example, personal income tax.

So the settings on this aren't right, and one of the reasons the settings aren't right is that it was never socialised. There was never a public consultation. There was never an exposure draft. There was never, or never will be, a detailed parliamentary inquiry into these changes. There will never be the opportunity for the government to adjust the exposure draft and get it 'just right'. You don't just suddenly drop this sort of change on us and say, 'There you go,' and then, when you come under media pressure or political pressure, say, 'Oh, don't worry about the lack of detail'—or the settings between $100,000 and $200,000 I described. 'Don't you worry about that' sounds like Joh Bjelke-Petersen! 'As sure as night follows day, we will consult after this becomes law, and we will change it in your favour.' Well, excuse me. No wonder people are sceptical that that will be done right, particularly with these reforms increasing pressure on the minister to make adjustments and bring down subregulations or whatever. No, we should do this properly. We should have proper process.

The proper process, by the way, starts with making an election promise and then, once you're elected, saying: 'Okay, we're going to go through this. We're going to have an effective consultation process with the community, with industry groups and with other peak bodies. We're going to talk to everyone, from people in the bush on their properties right through to the captains of industry in the major capital cities, and we're going to come up with a reform that works and is fair.' Then they might have created that exposure draft and circulated that and asked, 'What do you think?' There might have been more consultations. They might have carefully drafted a bill, and then we would have come to the parliament knowing exactly what we were voting for.

I've been talking to quite a few backbenchers this week from the government, the opposition and the crossbench. I've been asking questions of them, and they've been asking questions of me, and I'll tell you what—I've lost count of the number of times my colleagues have said, 'Oh, I don't know about that,' or, 'I'm not sure about that; I don't know what that means.' We pulled out the bill today in my office, and we tried to make sense of one particular point of detail. There were three of us, and I think our six eyeballs all glazed over trying to make sense of it. It's not the way to do big reform.

I did mention the subsequent bill, on trusts. I've been to a series of elections campaigning for tax reform for at least residential property, so I will honour my promise to my community and support this bill, but I'll warn the government that I'm not going to extend the same support as it stands to the next bill, which will go into the detail of trusts. That is such a complex area. You just can't have a 'one size fits all' approach. It just doesn't work. It basically comes from a place of demonising anyone who's got a trust as—I can't be unparliamentary, but you know where I'm going with this, Deputy Speaker Boyce—a rich person who's just dodging tax, and that's not the case. I had a family trust when I had a small business in a previous life. It was the most effective structure for me in order to run my company. I wasn't dodging tax. Heavens, with the little business my wife and I had, we were lucky to take home $80,000 a year. Nothing was being dodged. It was just a sensible structure for our little business.

What jumps out at me as the most ridiculous aspect of the trust proposals is that we would put a 30 per cent tax on the disbursements from testamentary trusts. That's an appalling proposition by the government. I probably don't need to go into any detail here and detain the House. We've heard so many examples in the last week or so about all of the good and sensible reasons people need to have such trusts protecting their estate, particularly if their beneficiary might be a child with disability, a child with a gambling addiction or a child who they are concerned might fall into a relationship with a scoundrel who ends up fleecing them. There are countless reasons why testamentary trusts are a sensible and good idea to protect your family.

I'm in a blended family myself. Clare and I love each other, and I don't doubt that we will always do the right thing by each other. But, heavens, there are a lot of blended families where one partner or the other must be wondering, 'If I drop off the perch, what happens in 10 or 20 years time when my surviving spouse meets that scoundrel who fleeces her or him?' That's an example of where I think the next bill will run into a real brick wall. It might be amended adequately that I can support it. But, as I stand here now, I certainly won't, and I look forward to joining the debate about that.

In closing, can I just say: I welcome changes to make housing more affordable. Hobart is a beautiful little town, but I've never seen homeless like it. I've met people holding down steady, reasonably well-paying jobs living in their car. This is just bizarre. We're one of the richest countries in the world—I think we're the 14th-biggest economy in the world—but we've allowed our housing arrangements to devolve to the point where we have all these homeless people. People are couch surfing. I was on the Gold Coast not that not that long ago, helping my daughter get into some accommodation; she's at uni. She and her friend are paying $800 a week for a modest two-bedroom apartment with two bathrooms in a reasonable location. It shouldn't be this way. So I do support this bill, and I will support future reform to make housing available and affordable.

Colin Boyce (Flynn, Liberal National Party) | Link to this | Hansard source

Some wise words, member for Clark. I thank you for your contribution.

Alice Jordan-Baird (Gorton, Australian Labor Party) | Link to this | Hansard source

There's no question Australia is the greatest country in the world. Being Australian is something truly unique. It's about having a fair go at working hard and having it pay off when you buy your own home. When we talk about a home, I'm talking about something more than just four walls and a roof. I'm talking about stability. It's knowing that, no matter what, you've got a place to build your future, to raise your family in or to retire into knowing your life won't be uprooted by decisions you can't control, like those of a landlord. It's the freedom that comes with this sense of security—the freedom to paint the walls whatever colour you like, but also the freedom to call this place your own.

I grew up in a house in the suburbs of Melbourne with my two big sisters. My parents bought our family home back in the 1980s. It was a huge deal for them to do that. It was a place they could raise their family—my family—with a cubby in the backyard and room for us to grow, a place that we always knew would be there for us, a place to come home to after a long day of school or after school sport and a place that shaped my formative years. That security of having a roof over our heads is something that I did not ever take for granted.

I feel very fortunate to have been able to buy my own home in my adult life with my husband, Chris. And I say that because the reality is that, for most Australians, the Australian dream is no longer a given. The anxiety of going to house inspection after house inspection, being outbid by mum and dad investors. It can be so heartbreaking when you fall in love with a home, imagine your own furniture in it and imagine your future there, simply to be outbid by an investor backed by the Australian taxpayer. I don't want this for young Australians. I don't want this for our next generation of Australians. It's not right and it's not a fair go.

There is no doubt that Aussie families are doing it tough right now. Families are feeling the weight of the cost of living at the bowser and at the supermarket checkout, and young people are feeling it when they go to buy their first home at auction, only to be outbid by the investors next to them. This was a mammoth budget responding to generational challenges, making the changes that Australians have for too long been crying out for. That is because we're dealing with a housing market that is broken. Young Aussies are doing the right thing. They're studying, picking up a trade, working hard and saving, but your first home still costs eight times the annual income. It takes 11 years to save for, and first home buyers face the reality that they may never pay off their mortgage. When a nurse, a teacher, a police officer or an early childhood educator is paying more tax than someone who is earning millions of dollars in buying and selling assets, when house prices have increased 400 per cent—twice as fast as wages—and when it's easier to buy your 10th home than to buy your first home, then the system is broken. Once you accept that the system is broken, then you have to do something about it, and that's what our budget is doing.

Our budget wants something simple—for young people to get a fair go at owning their own home. It's a simple ask and one we are taking on the work to deliver. Since Labor came to government in 2022, we have been working at continuing to support investment in new housing supply, because to make housing more affordable, we need to build more homes. Right now too much housing isn't getting built because the water, sewerage, roads and energy infrastructure simply aren't there. That's why we're investing $2 billion in the infrastructure we need to unlock more homes across Australia. In my electorate of Gorton, over 3,000 people have bought their first home thanks to our five per cent deposit scheme. It's changing lives, and it's doing this for families right across the country. Changes like our five per cent deposit scheme matter, but what we've recognised is it's just not enough alone. House prices are still climbing at an alarming rate, and not enough young people are getting into their first homes.

We have recognised that, if we really care about getting young people into their first homes, changes to our taxation system are needed, because, for younger Aussies, the playing field just isn't fair. Our tax changes are estimated to support an additional 75,000 homeowners over the next decade to get into their own home. Meanwhile, those opposite seem to be the only ones in Australia clinging to the status quo, where a generation of Australians are locked out of the housing market and where, without significant structural change, future generations will face the same fate.

I'm a millennial. I know these challenges. We're balancing these changes with supporting young Aussies who want to get ahead. Negative gearing will still be possible for investors because, if you're a young person in this country, we want you to get ahead. We want to support you to do that. If you want to do it through property, you still can get those generous housing concessions, but we ask one thing, that investment is directed into new housing supply. We ask you to do that through building desperately needed new homes. On this side of the House, we know that economic responsibility and tax reform can go hand in hand. We want a system that encourages productive investment, one that supports aspiring homeowners, hard-working Aussies who deserve a fair go, and one that supports our younger generations of Australians, just as their parents' and grandparents' generations were supported, because generational fairness matters. These reforms begin to address these generational challenges and help level the playing field for first-time buyers, which our younger generations of Australians desperately deserve.

Part of our budget's major changes are our tax cuts. To help with the cost of living, we're delivering more tax cuts from 1 July this year for every Australian taxpayer. We're delivering an extra $250 off working Australians' tax bills permanently, and we're delivering a $1,000 instant tax deduction without receipts. The $250 working Australians tax offset will provide a tax cut for the 13.3 million Australians who receive income from work. It will increase the effective tax-free threshold for workers by $1,785. All of this means that the average worker will benefit by up to $3,000. We're recognising that for more Aussies, especially young people, income comes from work, and our tax system should reflect that. Our tax cuts are deliberately designed to support younger Australians, with millennials and Gen Z expected to make up around two-thirds of the beneficiaries. We're backing the next generation of Aussies with practical reforms, making sure that you can keep more of what you earn and are supported in getting ahead.

These tax cuts are on top of our fuel tax cuts, where we've acted fast to bring down the price of fuel by cutting the fuel tax and securing future supply. We've acted to shield Australians from the worst of the global fuel crisis, and it's working. We now have more fuel in Australia than at the start of the global crisis.

For small businesses, we've permanently extended the $20,000 instant asset write-off from July this year. This allows small businesses with turnovers of up to $10 million to immediately deduct eligible assets costing less than $20,000 off that year's tax return. You can claim more than one asset, which helps businesses make their investment decisions with confidence. This is estimated to improve cash flow for small businesses by around $890 million over the next five years. We're also introducing loss refundability to support new startup businesses. From 2028-29, small startups in their first two years of operation will be able to get a refund for tax losses up to the value of the fringe benefits tax and withholding tax paid on employee wages. This will benefit up to 25,000 young companies each year, providing valuable cash flow support. I think there's been less focus so far on these measures, but, from speaking with local businesses and learning about their situations, I know that these are real benefits that they'll receive.

While this budget is making life easier for Australians today, we're also building a fairer future for tomorrow. We're ensuring that every Australian can access the health care they need, regardless of their postcode or bank balance, and we're making tax cuts to put more money back into the pockets of everyday Australians and tax cuts to even the playing field for first home buyers. These are all practical reforms that respond to the real pressures Australians are facing now, as well as those they will face in future generations. On this side of the House, we believe that if a system is working against Aussies and locking first home buyers out of the housing market then something needs to change, and we are willing to make those difficult decisions and deliver on those changes, because we know that every Australian deserves a fair go.

Allegra Spender (Wentworth, Independent) | Link to this | Hansard source

For a long time, I have campaigned hard for the day when this House would be debating the substantive details of tax reform instead of talking about it in the abstract. Since 2022, I've held roundtables with experts, hosted events in my electorate, attended the Treasurer's own roundtable, written two substantial policy papers, made further submissions to inquiries and made the case time and time again, publicly and in the media. After 25 years of timidity, we are finally having that debate. That in itself is an enormous leap forward from even just a few months ago. It takes real guts to put a package like this into the world, and for that I commend the government and particularly the Treasurer.

But I will be honest: I have concerns with the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 in its current form. It is not because I don't support the intent. The government has correctly diagnosed significant problems in Australia's tax system. It's not because I don't support the broad direction of the measures. I believe that, alongside greater spending restraint, we need to reduce our reliance on tax from wages, and this should be paid for by reducing tax concessions on assets. I'm concerned because there are still substantial issues with the government's CGT model which are not resolved and not necessarily understood, and because the government has not yet committed to giving all the money raised back as income tax cuts.

I know many will say that I'm allowing perfect to be the enemy of better, but I would argue that my community asked me to put reform on the table but also to make sure that the government gets the reform right. This bill is rushed. The proposed inquiry is unacceptably superficial. The government has admitted problems with the bill without fixing them. The government can't seek credit for the most significant tax reform in a generation and then push it through the House with only a week to review the detail. That is treating this parliament and the genuine issues of this bill with enormous disrespect. So I continue to urge the government to pause, rigorously test its assumptions and model, and, as uncomfortable as it is, bring the bill back to parliament when the reform is robust and it will stick.

Let me start with why I believe we need genuine reform, why this debate matters so much and why I support the direction of travel. Our tax system places the greatest burden on people at the time of greatest stress. A younger household pays, on average, twice the tax of an older household on 100 grand of income, despite being, on average, four times less wealthy and being more likely to be carrying a HECS debt, saving for a deposit, paying rent or raising dependent kids. These households are failing to build wealth at the same rate as their parents. The result is most visibly stark in housing. The combination of negative gearing and capital gains discount has tilted the balance decisively towards investors rather than first home buyers. That is not an accident. It is a consequence of deliberate tax settings, and it must change.

At the same time, our demographics are shifting in ways that make our tax system unsustainable. We used to have six workers for every Australian aged over 65. Now it is fewer than four. In a generation it will be fewer than three. Yet only 17 per cent of older Australians pay income tax today, compared with 27 per cent in the past. We are asking a shrinking pool of younger working people to fund a growing bill. With the disruption that AI will bring to entry-level employment, that reliance becomes more precarious still. Australia's tax base must be broadened. That is an inescapable conclusion. But it matters enormously that we get that broadening right.

This bill introduces four changes that attempt to address that. First, it will introduce a new method for calculating the capital gains discount based on indexing an asset's cost base to the annual rate of inflation. This will include a minimum tax rate of 30 per cent on real gains. Second, it will restrict negative gearing on housing investment for sales after budget night to only new builds. Third, it will introduce a $1,000 standard deduction. Finally, it will introduce a $250 Working Australians Tax Offset each year, starting from 2027-28.

Most of these changes I support. Restricting negative gearing to new builds is sensible, although I would urge the government to also phase out negative gearing on existing properties over seven years rather than grandfathering it indefinitely. A standard deduction is long overdue, and the WATO introduces tax relief, which I welcome, particularly relief that targets work. But the fundamental problem with this component of the package is that it leaves far too much on the table—$77 billion, in fact. I appreciate that the transition arrangements mean that revenue takes a long time to come in, but that doesn't excuse holding on for a pre-election sweetener or to prop up historically high levels of government spending.

I want to make the point that, unlike some other speakers in this debate, I strongly support the government's endeavour to broaden Australia's income tax base—not just on property assets—if it means we can reduce our reliance on income taxes from wages. Let's look at the facts. Just eight per cent of the capital gains tax discount goes to people under the age of 40. If you want to help people under the age of 40 build wealth and financial security, you can make much more of a difference by reducing their marginal tax rates than through CGT discounts. A package of this size could support a version of the coalition's plan to index tax brackets to stop bracket creep in the first place, a policy I was pushing for long before the opposition came onboard.

But we fundamentally need to reduce marginal tax rates, including the top marginal tax rate. The government has done half the reform with these measures, but with a very serious omission on the other side of the ledger. That is a decision of expediency. I'm sure there are some tax cuts coming closer to an election, but I think it is a missed opportunity to build trust within the community and, frankly, to make sure these tax changes are in a direction that Australians understand and can support.

But my primary concern with this bill and the biggest risk to the reform is the CGT package. Let me be clear. I believe that Australia's current CGT regime is overly generous and is not fit for purpose. I have made the case many times that the current discount of 50 per cent means that someone on a wage of 100K pays $26,000 in tax, versus someone who earns that income from property investment, who pays only $7,000 worth of tax. I think it is very hard to justify the extent of that difference. I particularly support ceasing the concessions on pre-CGT assets. There is no justifiable reason that they are still treated like this 40 years on. I will pay more tax under the government's arrangements, and I support that.

If done right, CGT reform can preserve strong incentives to take risks and build businesses, all while ensuring that more Australians can build wealth through lower marginal tax rates. But the methodology is important. I don't think there is a perfect CGT regime, and there is a lot of variation around the world. It must strive to carefully balance building prosperity and ensuring fairness, and I am concerned that the approach doesn't get the balance right. There are strengths in what the government is proposing. It has a strong intellectual basis—having a system that taxes real gains consistently. There are significant advantages for fairness, and those play out particularly in the housing market. But my concern about this methodology is how this system works in a world where almost all countries tax at lower and flatter rates and where capital and labour are mobile, and where no other country taxes real gains in this way except Israel, which has a top marginal tax rate of 30 per cent, versus Australia's of 47 per cent, on capital. I am also concerned that this model is hard for many people to understand and to predict, and that simplicity is genuinely a virtue in tax, where people are concerned and don't feel very confident.

Firstly, investors choosing between safer and risky investments will find that the returns on risk are considerably less attractive under this indexation model versus previous models, and also compared with most international tax regimes. That effect is compounded by a fundamental asymmetry in the model itself, which taxes real gains but only allows the deduction of nominal losses. The businesses we most want to encourage—high-risk, high-growth, capital-light, genuinely innovative businesses—are taxed at a much higher rate under this model and, in many cases, at an internationally uncompetitive rate. That is a problem in a world of high labour and capital mobility.

Now, I do believe that some of the concern about some of these risks is overstated. Most businesses will not be taxed at close to 47 per cent. There still remain significant CGT concessions for small businesses, and I believe that these should be maintained and, frankly, should grow. The government has committed to engage with the tech sector on these issues, and the feedback I've received is that that engagement by government is really genuine. But I am concerned that there will be real impacts, not on all businesses but on some—on some founders of high-growth companies who already have strong incentives and pressures to move offshore; on some workers who already struggle to give up secure jobs for uncertain outcomes; and on some investors, where the returns on risk are significantly diminished. That makes me nervous. At a time when we are struggling to build prosperity, to increase our productivity, we should be very cautious about changes that could affect productive risk taking and we should weigh the costs and benefits thoughtfully and ask if there is a better way to do it.

While I think that the government is absolutely right to reduce the gap between the taxation of labour and the taxation of capital, I do believe that there is a difference between receiving a secure wage today and building, investing in or working on a project based on the prospect of a future upside but also on the prospect of capital losses or wages unearned that cannot be offset against current or past labour income. The tax system can't fix every issue, and other policies are important, but in practice the tax system has the ability to weaken those other mechanisms.

Finally, there is a more practical problem. Many Australians do not understand the model. Being told that how much tax they will pay 'depends' is a difficult answer for many Australians when they are trying to plan their investments and retirement, and it is hard for them to know what this means for them. This uncertainty is bad for individuals planning their finances or business. The model has also greater uncertainty for government as to how much money will be raised.

Now, as I said, I do believe there are some advantages in the government's model and I do believe some of the issues I have raised can be overcome. But it is not yet clear to me that the advantages that the model promotes compensate for the risks that it creates, and certainly not as it is currently written.

A simpler path exists. I honestly believe that reducing the flat discount to 35 or 40 per cent, rather than the indexation approach, would narrow the gap between the taxation of labour and capital, produce a model that is comparable with other countries—at a 40 per cent discount, you'd be talking about a top capital tax rate of 28 per cent, which would be well within the bounds of most OECD countries—and raise similar, more stable revenue while still rewarding high-growth businesses and high-growth investments and not having the issues with startups that we are concerned about. That is what I believe the government should do. Failing that, I think the indexation method must deal with at least the known problems of the model and give time to explore some of the risks that are not yet fully understood or are still being explored.

That is why I'm putting forward three substantive amendments to the Treasury laws amendment bill—firstly, to remove the 30 per cent minimum rate on tax with instead income averaging over the previous 10 years of the asset or the life of the asset, whichever is lower; secondly, for to allow for real losses to be indexed the same as real gains; and, finally, to remove active businesses from the new CGT indexation regime. These amendments mitigate some of the most serious concerns that have been identified to date, but, honestly, I don't know if they are the perfect amendments. The truth is that we have not explored these bills and the changes that they create in our system enough.

There are issues that are emerging in the papers most days, but there are also counterarguments emerging. That shows that a dialogue on these bills is really necessary. I do believe that the amendments would be an improvement, but I don't believe that they would replace genuine interrogation and scrutiny, which is what these bills deserve. I cannot stress that enough. To the government: take a breath, consult broadly and address the genuine concerns raised by stakeholders.

I support the government's aim, the intentions and most of the measures, but a CGT indexation mechanism has both known and unknown flaws. Instead of being a political liability, there should be a natural process of getting this complex issue right and making sure that the reforms do address the issues that have been raised in thoughtful ways—or, at least, that the risks are properly understood by the broader population.

This budget has some extremely positive measures: the ending of negative gearing, a standard deduction, income tax relief, loss refundability and carry back, research development tax incentive reform, the permanency of the instant asset write-off and a commitment to reforming the performance test among others. I'm genuinely sympathetic to the government that these measures, many of which I have called for, have been overshadowed by the proposed CGT regime.

The piece that I would like to finish on is this: let's get this right. Tax reform really matters. This is not the only tax reform this country needs. There are many areas that need substantial reform, but, if we get this wrong, if we rush it, if we make mistakes, it will make future reforms much harder. It is time to get this right, and that is what I urge the government to do.

Gabriel Ng (Menzies, Australian Labor Party) | Link to this | Hansard source

I thank the member for Wentworth for her considered and measured contribution. I rise today to speak on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the related Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. At the heart of these bills are two key principles: that workers should not carry the undue burden of the tax system and that everyone should be rewarded for their hard work and aspiration by having the opportunity to buy their own home. These go to the very Australian value and the very Labor value of a fair go for all.

My dad migrated from Singapore to Australia in his 20s with nothing. He's worked as a licensed aircraft maintenance engineer, first for Ansett Australia and then for Virgin Australia, for over 40 years now. He's supposed to be retired, but he still takes the occasional shift. My mum was the first in her family to go to university. When we were growing up, she was a hospital worker. She'd go to her shifts in her bright blue uniform with bright blue mascara and a big perm. It was the eighties! While working, she studied a law degree, bringing me to lectures when I was a baby, and she became a lawyer. My parents worked hard and sacrificed and bought their first home in Doncaster East in the electorate that I'm now proud to represent. They built a life and gave me and my sister opportunities that they never had, and for that we are very grateful.

That story is not unique to my family. It is the story of my community of Menzies. It's the story of hardworking people in Doncaster, Box Hill, Warrandyte and Templestowe and the other suburbs that it's my honour to represent here in this place. These are communities built by people who believed that if you worked hard and played by the rules the system would give you a fair shot. But something has changed. The young people I speak to across Menzies are working just as hard as my parents did and as their parents did, yet many of them have said to me they don't believe they'll ever own their own home.

We've stood up a youth advisory committee, and we speak to people at schools. We knock on people's doors. And young people will overwhelmingly say, with a kind of resigned laugh, 'I don't think I'll ever own my own home.' Many people of my generation and of younger generations have never been able to achieve that dream. House prices have gone from four times the average income to eight times that. Homeownership among Australians aged 25 to 34 has fallen by seven percentage points. The system has made it easier for people to buy their fifth investment property than their first home. That is not the Australia of a fair go for all, and it is not the Australia that the Labor government is prepared to accept.

This budget we took on the challenge of restoring something that should never have been lost: the basic principle that if you work hard and if you aspire to own your own home, everybody can have the opportunity. That ambition should be rewarded. The next generation should have the same opportunities as the ones that came before. And that's why we're enacting the most significant tax reform in a quarter of a century. It is pro-worker, pro-aspiration and pro-investment.

These bills implement four key parts of the government's 2026-27 budget tax reforms: first, a $1,000 instant tax deduction for work related expenses, effective from this financial year; second, the working Australians tax offset, a new $250 annual tax cut for over 13 million workers from July 2027; third, reforms to capital gains tax, replacing the 50 per cent discount with cost base indexation and a 30 per cent minimum tax; and, fourth, limits on negative gearing of residential properties to new builds. Together, these reforms will reduce the tax burden for over 13 million workers, support 75,000 more Australians into homeownership over the next decade, deliver $3.5 billion in new business tax measures and cut compliance costs by $540 million a year. By 2028 the average Australian worker will be over $2,800 better off.

I'll start with the $1,000 instant tax deduction. From 1 July 2026, workers will be able to claim a $1,000 instant deduction on work related expenses without needing to keep receipts. The member for Warringah was talking about simplifying the tax system, and that does exactly that for people who are on low and middle incomes. Think about what this means for a nurse at Box Hill Hospital keeping track of uniform costs or a tradie in Warrandyte holding onto fuel receipts. There's no paperwork. From 2026-27 around 6.2 million workers are expected to benefit from this measure, with an average tax saving of $205. More than half of those workers will be women. More than three-quarters will earn under $100,000 a year. This, as I said, is simplifying the tax system. It saves time and it puts money back in the pockets of working Australians. The ATO estimates this measure will save $380 million in compliance costs every year, so it's an efficiency measure.

Schedule 3 of the bill introduces the working Australians tax offset, a $250 annual tax cut for every Australian who earns income from work, starting from the 2027-28 financial year. That's permanent structural improvement to the tax system. It will benefit 13.3 million Australians. Millennials and gen Z are expected to make up around two- thirds of the beneficiaries. The offset increases the effective tax-free threshold for workers by $1,785 to $19,985, or up to $24,985 for those also eligible for the low-income tax offset. Combined with our previous rounds of tax cuts and the instant tax deduction, the average Australian worker will be over $2,800 better off by 2028. This is a government that is consistently, year after year, putting money back into the pockets of working Australians. We've cut taxes five times in five different ways.

Schedules 1 and 2 of the reforms go to the heart of why so many Australians feel locked out. House prices have risen 400 per cent over the last two decades. Just 44 per cent of Australians aged 25 to 34 now own a home. The current settings have actively fuelled inequality. The 50 per cent capital gains tax discount introduced by Howard and Costello in 1999, together with negative gearing, dramatically incentivised investment in established housing. Combined with unconstrained negative gearing, it created a system that rewards property investors at the expense of first home buyers.

So, from 1 July 2027, negative gearing for residential properties will be limited to new builds, because we want to encourage housing supply. We know that that is a big part of the picture of housing affordability, and that is our focus. But these measures are also an important part of ensuring that people can afford to buy their first home. Losses on existing investment properties purchased after budget night will only be deductible against residential property income. Very importantly, those who already hold investment properties and have signed contracts will be fully grandfathered. We know that people have planned for their retirements with their investment properties, and that's something that we'll be honouring. Existing arrangements do not change.

From 1 July 2027, the 50 per cent capital gains tax discount will be replaced by cost base indexation so investors pay tax only on real gains above inflation, bringing the capital gains tax discount back to its original purpose. Key protections remain. Age pension and income support recipients are exempt from the minimum tax. The four existing small-business CGT concessions are fully retained. Investors in new builds can choose either the 50 per cent capital gains tax discount or the new indexation arrangements. Treasury estimates these reforms will support, as I said, 75,000 additional first home buyers.

This legislation, as I said, is built on a simple principle: a tax system should work in the interests of hardworking Australians, not just those who have already accrued wealth. Those opposite have pledged to repeal this entire package. Let me be clear about what this means. It means keeping distortions that have priced a generation out of the housing market. It means protecting a system that delivered 400 per cent growth in housing unaffordability. That's not a plan; that's a promise to protect a broken status quo. My dad came here with nothing. My mum worked hard. They didn't have intergenerational wealth, but they were able to buy their first home. That should be possible for all Australians, including the young people in my community today. This government is making sure that that remains the case, and I commend this bill to the House.

Monique Ryan (Kooyong, Independent) | Link to this | Hansard source

The Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026 form the first legislative tranche of what will likely be several to implement the government's 2026-27 budget tax reforms. This represents the most substantial attempt at tax reform in a generation. The package does four things. First, it replaces the 50 per cent capital gains tax discount for individuals, trusts and partnerships with cost based indexation and a 30 per cent minimum tax on capital gains from 1 July 2027. Second, it limits negative gearing for residential property to new builds from the same date. Third, it introduces a working Australians tax offset of up to $250 a year for workers earning labour income. Finally, it introduces a $1,000 standard deduction for work related expenses.

I commend the government for using its electoral mandate to pursue ambitious change, but generational reform requires serious scrutiny, broad consultation and careful design. When Bob Hawke set out to reform the Australian tax system, he took that to an election and he undertook broad based community consultation. The Hawke-Keating reforms—capital gains tax, fringe benefits tax and lower income tax—all endured because they were sense tested before they were locked in. John Howard spent over a year on reviews before introducing the CGT changes that this legislation will undo, and they lasted a quarter of a century. In contrast, Howard's Work Choices had no electoral mandate, it underwent only eight days of parliamentary debate, it killed his government and it was repealed within three years. The government's Economic Reform Roundtable in August 2025 was a truncated version of consultation. The youngest attendee was 43 years old. The exclusion of younger Australians from a reform agenda explicitly framed around intergenerational equity was striking. Though the reforms which emerged from that roundtable should have been taken to the 2025 federal election, they were not.

For decades, Australia's tax system has been skewed towards those who already hold wealth. The 50 per cent capital gains tax discount turbocharged investment in established residential property. It drove house prices from roughly four times the median income when it was introduced to more than eight times the median income today. Negative gearing has allowed property investors to deduct losses against wage income, pricing out first home buyers across the country. Homeownership among 25- to 35-year-olds has fallen sharply. In 2022, it was reported that it took 11 years to save a 20 per cent deposit on an average wage. In 2023, investors aged over 60 accounted for 28 per cent of property investors, up from just 12 per cent in the year 2000. Economists have raised concerns about this market distortion for years, and it's been my position since I was elected in 2022 that we need to reform our tax system to address increasing intergenerational inequity and the housing crisis.

So I support the reforms to CGT and negative gearing around housing that the government is proposing in this legislation, but the government did not flag its intention to extend CGT changes beyond housing before this year's budget. The case for reforming negative gearing and the CGT discount was made and largely accepted in the context of housing affordability, but, when the government announced on budget night that these changes would extend to all asset classes, including shares, start-up equity, venture capital and early-stage business, that caught many by surprise, not because the principle of increasing taxation across all asset classes, to approximate that of Labor, is inherently wrong—because it's not—but because there had been no consultation, no forewarning and no proper policy development process around those broader changes.

ACOSS has reported that Kooyong, the electorate that I have the honour to represent, is the electorate in this country with the second-highest total benefit from CGT discounts. It's a community that's worked hard, that has invested carefully and that has a sophisticated understanding of our economy. Yet in March this year I conducted a community survey of 931 constituents in which 73 per cent of respondents supported changes to capital gains tax arrangements and 85 per cent supported changes to negative gearing. After the budget, I conducted a second survey, which attracted 927 responses from every postcode in Kooyong. Most respondents, at 64 per cent, supported the government's changes to negative gearing. Support for capital gains tax reform was also clear, with 43 per cent supporting the proposed changes across all asset classes and a further 24 per cent supporting reform where it applied to property alone. It's clear that many in Kooyong are prepared to support reforms that might not be in their immediate financial interest, because they understand and recognise the need to improve the fairness and the sustainability of Australia's tax system.

But that support for reform does not translate to every aspect of this package, and the dominant sentiment from my community is that immediate tax reform should focus on property. Business owners, professionals, retirees and individuals in complex or vulnerable circumstances don't want these changes to extend to investment assets, business structures and family arrangements. They're most concerned about the proposed 30 per cent minimum tax on capital gains, with 48 per cent of respondents in Kooyong opposing the measure and 38 per cent supporting it. It makes sense to reduce incentives to defer capital gains realisations to low marginal tax rate years. It's fair to exempt income support recipients, but this measure disproportionately affects other groups with limited means. A young parent said to me, 'Non-property investment is one of the few remaining ways that a family can build towards a home deposit.' A renter told me, 'This feels like a blunt measure which will hurt the wrong people.'

Young investors feel that they're being denied the opportunity to build their first foothold of wealth or to secure a home deposit. Some sources suggest that more than one in three Australians aged under 35 invest, and they're more likely to take on risk by investing in cryptocurrency and exchange traded funds. For them, those investments are an easier pathway to health than to housing.

I'm pleased that small businesses will remain eligible for substantial discounts on capital gains, despite the new minimum 30 per cent rate on real gains. But I've heard from small businesses in Kooyong that thresholds for small-business CGT concessions have not kept pace with business growth and inflation. COSBOA is advocating that eligibility thresholds should increase.

Debate interrupted.