Lisa Darmanin (Victoria, Australian Labor Party) | Hansard source

In summary, what this bill does deliver is a new round of tax cuts, helping homeownership and supporting investment and innovation through the most significant tax reform in a quarter of a century. More broadly, let me be clear on what we're really talking about here today. What we're talking about is the kind of country that we want to be. Tax, capital gains and negative gearing might sound technical, but what we are really talking about is housing and whether people have a fair shot at owning their own home. A home is not simply an asset on the balance sheet; a home is security and stability. It's the place where children do their homework around the kitchen table. It is where families build a future. It is where communities are formed and lifelong friendships made. It is where people put down roots.

For previous generations of Australians, owning a home was not an impossible dream; it was an achievable milestone. People worked hard, saved and expected that one day they would be able to buy a place of their own. Labor believes that access to secure and affordable housing must always be one of our nation's fundamental goals. A safe and secure place to live and call home is not a big ask. How have we gotten to a place in Australia where housing has shifted from being a place to call home to being a vehicle for wealth accumulation?

Well, 26 years ago, the Howard government introduced the capital gains tax 50 per cent discount, which, when combined with negative gearing, turned the housing market from a place to buy a home to live in to a market for speculators to use to build wealth. Those settings fundamentally changed the incentives within our housing market. They shaped incentives which increasingly favoured investment in existing housing over homeownership itself for a quarter of a century. The result is that today we face a housing system that too often rewards speculation over aspiration.

I want to thank everyone who submitted and gave evidence to the Senate inquiry into this legislation, which I chaired last week. I completely disagree with and reject any assertion that the process was a sham. I think that those opposite are seeking to characterise the process in that way simply because they do not support the reforms contained within the recommendations.

What did we hear in the inquiry last week? We heard that, in the 26 years before the introduction of a capital gains tax discount, dwelling prices grew broadly in line with household incomes, and, in the 26 years since, average dwelling prices have increased at more than twice the rate of household incomes. The value of residential land and dwellings increased by more than 700 per cent between June 1999 and June 2025, while inflation increased by around 100 per cent. Over that same period, wages have simply not kept pace, meaning the cost of homeownership has become increasingly out of reach for working Australians.

The inquiry heard evidence that homeownership rates have steadily declined since 2001 across almost every age group. Most strikingly, Australians aged between 25 and 34 now have homeownership rates comparable to those experienced in the 1940s and 50s. The ACTU put it like this:

… young people have lost nearly a century of progress and are now well below a 50 per cent home ownership rate.

Let's think about what that means. It means an entire generation finding it harder than their parents and grandparents did to achieve something that was once regarded as a normal part of Australian life. It means an entire generation worse off than the one that came before them. When that happens, we should ask ourselves: is the system working as intended or is the system producing outcomes that demand reform? The evidence was overwhelming. The current arrangements are no longer working. Instead, by contributing to housing affordability pressures, they are exacerbating wealth inequality and intergenerational disadvantage. They are concentrating wealth amongst those who already own assets and making it harder for young Australians to get a foothold in the housing market.

Eighty-two per cent of the benefits of the capital gains tax discount accrue to the top 10 per cent of income earners. Think of the inverse of that: 12 per cent of the benefits of the capital gains tax discount go to the other 90 per cent. When negative gearing and capital gains tax discounts are combined, the highest 10 per cent of income earners receive tax benefits measured in billions of dollars each year. These concessions aren't helping the next generation get a leg up; they are overwhelmingly concentrated amongst those who already hold substantial assets and wealth, and it's costing you, the taxpayer.

The Parliamentary Budget Office estimates that more than $38 billion in revenue has been foregone through capital gains tax concessions since 2010. Evidence before the inquiry estimated the annual revenue cost of existing concessions at more than $21 billion. That raises a fundamental question about fairness. Graeme Samuel said at our inquiry last week:

Frankly, as a PAYG taxpayer, I'm sick to death of feather bedding those vested interests that have proved to be powerful under previous governments …

What exactly are we rewarding under the current capital gains tax arrangements? Workers cannot defer their wages until it's more convenient for tax-planning purposes. Working Australians pay tax every fortnight. They cannot choose the timing, they cannot choose the structure, they cannot choose the vehicle—but those with significant assets can. That is not a tax system that treats work and wealth equally; it's a system that says workers don't take risks when they go out every day, slogging it out, but gambling on an investment is a risk worthy of a safety net and a generous tax break. That is why reform is necessary. A nurse should not face a higher effective tax rate than someone whose income is primarily derived from appreciating assets. A teacher or a garbage collector should not be carrying a greater share of the nation's tax burden than someone benefiting from highly concessional treatment of capital gains.

A fair tax system cannot continue to favour wealth over work, and it cannot continue to ask younger Australians to shoulder a growing share of the burden while locking them out of the opportunities enjoyed by previous generations. I've heard the claims that these reforms disadvantage young Australians, but the evidence that we heard last week shows that they simply don't stack up. Personally, I'd be sceptical about who is offering up this argument and why.

Most Australians earn their income from work, not capital gains. Only around four per cent report a capital gain in any one year, while 84 per cent derive the vast majority of their income from labour. They are not the main beneficiaries of the current system, but they are bearing its costs. Our reforms have three clear objectives: first, to create a fairer balance between the taxation of income earned through work and income earned through capital gains; second, to help more Australians achieve homeownership; and, third, to improve productivity by directing investment towards more productive uses across the economy.

Turning to some of the detail of the legislation now, schedules 1 and 2 implement the government's reforms to capital gains tax and negative gearing. The current 50 per cent CGT discount will be replaced with a system of cost-base indexation. This ensures that inflation is recognised while making sure real capital gains are appropriately taxed. Alongside this, a 30 per cent minimum tax on net capital gains strengthens the integrity of the system and ensures that those gains make a fair contribution to revenue.

Negative gearing will be better targeted. It will be limited to newly constructed homes, with losses from existing properties purchased after 12 May 2026 no longer deductible against wages and salaries. Instead, those losses can be carried forward and offset against future investment income.

Importantly, the legislation maintains existing CGT concessions for small businesses. It also supports investment through a permanent $20,000 instant asset write-off for eligible small businesses and introduces a two-year loss carry-back for companies with turnover under a billion dollars.

In direct response to the deep engagement held with stakeholders across the sector, the government is also moving targeted amendments to provide certainty to investors, more support for small businesses and more incentives for innovation. These amendments include expanding the eligibility of the 50 per cent active asset reduction to more businesses by increasing the turnover threshold from $2 million to $10 million, protecting incentives for charitable giving to maintain tax incentives in relation to charitable giving, clarifying eligibility for exemptions by providing the list of income support payments that qualify for an exemption from the minimum tax on capital gains and embedding the calculation method for the working Australians tax offset in the legislation.

The government has released a consultation paper on the design of the 50 per cent CGT discount for early-stage investors, including founders and employee share scheme participants of innovative startup businesses. The innovative CGT concession will provide individuals, partnerships and trusts holding eligible shares a choice between a 50 per cent discount and indexation in the minimum tax for gains accrued from 1 July 2027.

The government will also amend ministerial discretion in relation to a couple of aspects of the bill, with legislation to be introduced later this year following consultation. Those aspects are around the definition of new builds that are eligible to choose a 50 per cent discount on gains accrued from 1 July 2027 and eligible access to negative gearing for properties purchased after 12 May 2026, consistent with the details outlined in the budget and the definition of types of housing investment exempt from the limits on negative gearing, including affordable housing. These amendments will provide further clarity and confidence to investors and more support for small businesses. Finally, schedule 3 introduces the working Australians tax offset, a $250 non-refundable offset from 2027-28, expected to benefit around 13.3 million workers, including 6.3 million women. Schedule 4 provides a simpler approach to deductions, with a new $1,000 instant deduction for work related expenses from 2026-27.

We have a lot to be proud of as members of the Albanese Labor government, but this legislation is really one of those reforms I am so very proud to be speaking strongly in support of. This is what Labor does. This legislation is at the heart of what Labor stands for. This is ambitious reform, and ambition to achieve fairness is not something to be shied away from. Labor has never been a party that believes that the status quo should be preserved simply because reform is difficult. The values that drive our party remain today and fuel our courage to achieve reform.

We believe that working people should receive a fair return for their efforts. We believe the opportunity should not depend on the wealth of your parents. We believe that every generation deserves the chance to build a secure and prosperous future, and we believe that government has a responsibility to confront problems not to simply manage them. These reforms are ambitious, and they are principled. They ensure the tax system is serving Australia's long-term interests. They ask whether concessions worth billions of dollars are delivering public benefit, and they recognise that a fair economy requires both a strong safety net and a tax system that supports opportunity rather than entrenches disadvantage. The test of a successful society is not on whether those who already have wealth can continue to accumulate it; the test is whether the next generation has the same opportunities and better than the ones before it.

Today, too many young Australians are being denied those opportunities, and these reforms are an important step towards changing that. They are about restoring fairness for workers, they are about rewarding work, they are about making housing more accessible, and they are about ensuring that Australia's tax system serves the interests of the many not just the fortunate few. I urge everybody to support the legislation.