Claire Chandler (Tasmania, Liberal Party, Shadow Minister for the Public Service) | Hansard source

I rise to speak on both the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. For the sake of this speech, I will refer to those two bills as the tax reform bills. In this bundle of bills, schedule 1 introduces changes to the capital gains tax regime; schedule 2 introduces changes to the negative gearing regime; schedule 3 introduces the working Australians tax offset or the WATO, schedule 4 introduces the $1,000 standard deduction for work-related expenses. I recognise that I have already made a contribution in the debate on these bills here this afternoon. It was so nice that I think I'll do it twice. In simple words, just to reiterate, let's be very clear: these bills are not a simple reform package. This is not a simplification exercise. It is not a reduction in the tax burden. In fact, it is a tax increase, and, for that reason, the coalition cannot support these bills in their current form.

The coalition opposes schedule 1 and schedule 2 in relation to both the capital gains tax and negative gearing regime changes. We support schedule 3 in relation to the WATO and schedule 4 in relation to the $1,000 standard deduction because the coalition always supports lower taxes. We are calling on the government to immediately pass laws to end bracket creep and to implement a tax-back guarantee by indexing the personal income tax brackets to inflation, starting with the first two tax brackets in 2028-29 and the remaining tax brackets from 2031-32. We also note that this policy would deliver lower income taxes permanently to all Australians and would ensure that income taxes cannot rise without the passage of new laws.

But sadly, the 'tax reform bills' that this government has brought on here today do nothing to actually deliver lower income taxes in perpetuity to Australians. Let me explain why. First, I'd like to deal with the most basic point in relation to these bills. This package raises more revenue. It has been confirmed through a Senate inquiry process that schedule 1 and schedule 2 will deliver a net tax increase, and that means something very simple. It means that the government is collecting more money and that Australians have less money in their back pockets. I think we need to be very honest about this. Let's not pretend that these tax bills are just tinkering around the edges or just tidying up existing arrangements that are in place. These bills mean higher taxes, and the only reason that the government are doing this is because they have a spending problem that they can't get under control.

The second point I want to make is that these bills don't fix the underlying problems in our tax system. We already rely heavily on income tax in this country. That has been acknowledged for many years, including in evidence to the committee inquiry that we heard last week. If you were a government that was serious about tax reform, you would look at how to reduce pressure on income tax and how to make the system more balanced for Australians. But that is not what the government are doing here. What they are doing instead is leaving the overall structure largely as it is and layering new taxes and rules on top of that, frankly, like I say, in a desperate cash grab from hardworking Australians because they can't get their government spending problem under control.

The third point I want to make is important. These bills will make the tax system more complicated. They will not make it less complicated, and I think that's something that people outside of this place genuinely care about. What the Labor government is introducing here is not straightforward. We heard extensive evidence before the Senate committee inquiry to that extent. We have a new indexation system for capital gains. We have a 30 per cent minimum tax rate. We have different treatment depending on when gains are made. We have grandfathering rules. We have a whole range of details that are still to come through legislative instruments. Indeed, we had changes to this legislation foreshadowed by the government only in the last few days. The Senate committee inquiry made clear that taxpayers are going to be dealing with two systems running side-by-side during the transition. Now, what does that mean in real life for Australians out there? It means spending more time trying to figure out exactly what these changes mean—goodness me, I wish that this chamber had more time to figure out exactly what these changes mean—it means more reliance on accountants, it means more room for mistakes and it means more costs.

We asked Treasury during the committee inquiry whether they had assessed the compliance cost of the changes in these tax bills, and they said it was about $80 million. But, when we asked the experts—the accountants, the financial advisers and the financial planners—how much they thought Australian businesses and individuals would be lumped with as a result of these tax changes, the experts at the committee, the people actually at the coalface figuring out how these changes are going to impact their clients, estimated the cost to be almost 10 times that. It puzzles me that the government has brought forward a piece of legislation where there is such a huge disparity between what they say the impact on Australians and the compliance cost are going to be and what the industry that will have the job of implementing these changes is actually saying. That's not simplifying the system; that's making it harder. If we're spending $800 million trying to figure out exactly what these changes mean for small businesses and for individuals with investments, that's not simplification.

Fourthly, I want to talk about the impact that these changes will have on investment, because that is what really matters. In the weeks following the budget, the shadow treasurer, Tim Wilson, and I spent a lot of time speaking with small businesses, working alongside them and trying to figure out exactly what these changes mean. As I said, through the committee inquiry process and indeed through Senate estimates, it's all a bit as clear as mud at the moment. What small businesses are saying right now is that they want to be able to take risks, to start businesses, to grow their existing businesses and to be in a position to invest in new opportunities. To be able to do all of that, they're just asking for some fairness and some certainty around what the rules are. You cannot say that Australian businesses have had certainty around the environment that they are operating in when this government went to an election just over 12 months ago promising no changes to capital gains tax and here we are 12 months down the track debating those exact changes in this chamber.

What we have heard through the inquiry is that this bill creates real trade-offs for businesses. It introduces higher effective taxation on capital in some cases, less symmetry between gains and losses, and new uncertainty about how the rules are going to apply. Even the witnesses who supported part of these reforms acknowledged these risks. This isn't a simple story. There are consequences here to these changes that the government has introduced. Some we understand and some I strongly suspect we don't, because the government hasn't afforded us the requisite time nor made officials available who can answer the requisite questions to understand exactly what those impacts are for people who want to invest in our country.

I've alluded to the fifth point I want to make. It is that the process does matter. The process around this legislation has been atrocious. We had a very short Senate committee inquiry. We had two hearings and hundreds of submissions, not all of which Treasury officials, as they admitted during the hearings, have been able to read. They couldn't even tell us how many they had looked at. It wasn't definitively, 'We've been able to read 100 submissions,' or, 'We've read 200 submissions.' They couldn't tell us how many submissions the department had looked at.

We know from the evidence that we heard from witnesses in the Senate inquiry that concerns have been raised across the board about the consultation that the government did or, frankly, didn't go through, about the detail in the legislation and about gaps and drafting errors in the legislation. Yet here we are in this place with one sitting week left to the financial year ending, and we are being asked to pass significant changes when there is still so much uncertainty around exactly what this suite of tax changes will look like. Like I said, over the weekend the government flagged, I assume, amendments to the scheme already that will come before this place. That's before you even consider the fact that there will be further legislation to enable these changes that we will have to consider later down the track.

Policy on the run is policy underdone, and I think we have seen that here. We heard, in the lead-up to the budget, that the Treasurer and the Prime Minister were talking about these changes that would be coming in the budget, and then it got to 12 May. The budget was handed down, and we were all sitting there, in budget lock-up, trying to figure out exactly what these changes meant. Now, we have legislation that is apparently to give effect to these changes, but we have government officials that can't answer basic questions around the changes, around the impact they will have and around the revenue they will bring in for the government. We have experts and business stakeholders within the community raising serious concerns about this legislation. It has just been so completely rushed, and I think that that is incredibly unfair on Australians and on our economy, and I think it is unfair on people in this chamber to expect us to consider this legislation fulsomely when we haven't been given the opportunity to do so.

This is a real missed opportunity for the government. As I said in my initial comments, there was more that could have been done here. If the government were truly genuine about reforming taxation in this country, particularly reforming income taxation in this country, there are some things that they could have done better. They could have brought forward a reform that simplifies the taxation system, that strengthens the economy and that actually leaves people better off, but this package simply does not meet that standard, for the reasons that I have outlined. It is complicated. It is costly. We don't know the full extent of it, and, frankly, it's not going to leave Australians better off. By the government's own admission, 35,000 fewer houses will be built under these tax reforms. That is written in their own budget papers. I said the Treasurer and the Prime Minister spent all this time before the budget foreshadowing what was going to be in it and foreshadowing that it was going to reset intergenerational inequity and that it was going to make it easier for young Australians to buy a house, but their own budget papers prove that 35,000 fewer houses will be built.

What could the government have done? I will be moving a second reading amendment to this legislation which will call on the government to immediately pass laws to end bracket creep and implement a tax-back guarantee by indexing personal income tax brackets to inflation, starting with the first two brackets in 2028-29 and for the remaining tax brackets from 2031-32. I note that this policy, which is a coalition policy, will deliver lower income taxes permanently to all Australians and ensure that income taxes cannot rise without the passage of new laws. This is a genuine reform and a clear alternative to what this government has proposed here today, and, for the clarity of the chamber, I move:

Omit all words after "That", substitute "the Senate:

(a) calls on the Government to immediately pass laws to end bracket creep and implement a Tax Back Guarantee, by indexing the personal income tax brackets to inflation starting with the first two tax brackets in 2028-29, and the remaining tax brackets from 2031-32; and

(b) notes this will deliver lower income taxes, permanently, to all Australians and ensure that income taxes cannot rise without the passage of new laws".

This amendment will give effect to this change.

As I've said, these tax reform bills are barely tax reform. To suggest that these changes alone are going to fix housing affordability in this country is frankly false, and it is not one that is supported by the evidence that is in the budget or that has been provided to the Senate committee. This is not a simplification exercise. This is not a reduction in the overall tax burden. It is a tax increase. For these reasons, as I have said, the opposition simply cannot support schedule 1 and schedule 2 of the Treasury Laws Amendment (Tax Reform No. 1) Bill, and we will not be supporting the Income Tax Rates Amendment (Tax Reform No. 1) Bill. Australians expect better than this. They expect reform that makes the system simpler not harder, that grows the economy, that doesn't add uncertainty and that leaves them better off not worse off. This bill does none of these things.