Michaelia Cash (WA, Liberal Party, Leader of the Opposition in the Senate) | Link to this | Hansard source

And, at a time when Australia should be encouraging people to build wealth and create jobs, what is this government doing? They are deliberately making it harder. And that is why the bills—the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026—that will pass through this Senate tomorrow in the dirty deal done with the Australian Greens are dangerous, because they don't simply affect today's investors; they affect tomorrow's investors. They affect today's workers; they affect tomorrow's workers. They affect every young Australian hoping to build a better future, hoping to get ahead.

The Albanese government will tell you: 'Well, hey, hold on. This is all about fairness.' Well, guess what? There is nothing fair about making it harder to build wealth in our great country. There is nothing fair about making it harder for our young people in particular to invest. There is nothing fair about making it harder to start a business. There is nothing fair about locking younger Australians out of the opportunities that previous generations enjoyed. This is a prime minister that happily enjoyed the benefits of negative gearing, and I say, 'Good on him!' because that is exactly what it was there for—for people to actually be able to invest in themselves for their retirement. But how dare the Prime Minister of Australia now look, in particular, that next generation of investors in the eyes and say, 'For everything that I had success with, I am going to deny that to you,' because that is what this prime minister is doing.

Labor talk endlessly about intergenerational equity, yet their toxic taxes do precisely the opposite. They are going to make it harder for young Australians in particular to buy a home. They are going to make it harder for younger Australians to invest. They are going to make it harder for all Australians to start a business. They are going to make it harder for younger Australians to build financial security. That, sadly, is the reality. The Australian people know it, and that's why there is white-hot anger across the community. It doesn't matter who you are or where you're from; there is white-hot anger across the community in relation to the dirty deal that Albanese Labor has done with the Australian Greens. The government, of course, will say: 'Well, hey, hold on. There are a whole lot of carve-outs and exemptions.' But let's be clear about what those carve-outs are. They are an admission that Mr Albanese knows he got it wrong and has had to back-pedal at a million miles an hour.

If these taxes are such wonderful policy, as Mr Albanese and Mr Chalmers announced on budget night, why are they scrambling to create exemptions? Why are they now desperately trying to say, 'This person's not affected here,' and, 'Perhaps that person's not affected there'? Why are they trying to negotiate carve-outs behind closed doors? I say this to the Australian people. Senator Wong made it clear in the Senate today in question time when she said 'the terms of the agreement with the Australian Greens'. I'd like to see the terms of the dirty deal that was done with the Australian Greens. What else is there that hasn't yet been announced? Why has Mr Albanese been negotiating these amendments behind closed doors? We all know why. It's because they know in their heart of hearts that these taxes will do damage. Yet, sadly, they will go through tomorrow.

Let's talk about their innovative-business exemption. That is possibly the most extraordinary part of the package. Labor now wants Canberra bureaucrats deciding which businesses in Australia are innovative and which businesses are not. Think about that. A public servant sitting here in the Canberra bubble is apparently going to determine which entrepreneurs get favourable treatment and which entrepreneurs do not, which founders qualify, which founders miss out, which businesses are innovative enough and which businesses are not. You've got to be kidding me. What could possibly go wrong?

Innovation does not come from government departments. Innovation does not come from bureaucratic checklists. Innovation does not come from politicians picking winners. This is where innovation comes from: it comes from Australians willing to take risks, it comes from Australians willing to back themselves, it comes from small businesses who are prepared to try something new, it comes from founders solving problems and it comes from aspiration. The whole point of innovation is that nobody knows what success looks like before it happens. But, sadly, Labor think that they can write a definition of innovation in Canberra, and somehow that will determine who is going to get support.

The Australian people have seen through what the government is doing. Australians know that, every time Labor and the Greens get together, taxpayers end up paying the price. Sadly, this is what's going to be the result of this dirty deal that has gone through. It's very, very sad. There will be higher taxes, less opportunity, less aspiration, less investment and less growth. Shame on the Australian Labor Party.

We will take a mandate to the next election to get rid of Labor's toxic taxes. Why? Because we stand for a fairer, freer and better Australia. These bills represent an assault on aspiration, a tax on ambition, a tax on investment and a tax on Australia's future. That is why the coalition will oppose them. We will fight this in the parliament, and we will take our case directly to the Australian people.

Richard Colbeck (Tasmania, Liberal Party) | Link to this | Hansard source

I rise to make my contribution to the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. I have to say that the period since the budget has been one of complete shambles for this government as they have scrambled to manage the fallout from the terrible reaction to their budget and then, of course, tried to design, on the run and at the direction of the Greens, a solution to some of the problems that they created by breaching faith with the Australian people. For me, this is one of the saddest things about where we find ourselves at this point in time during the debate, because, as members of parliament, one of the things that is most important to us is the value of our word. When we go out and talk to the Australian people and say, 'This is what we intend to do if we are elected,' then that is the promise, that is the contract that we as members of parliament have with the Australian people when we put our platform on the table and ask for their vote. That is the deal. When we breach that contract in such an egregious way as this government has done with this budget it undermines this whole profession, this whole vocation that we participate in as members of parliament. It not only diminishes us all but, as we have seen from the public reaction, it has had a significant impact on the capacity of the Australian community to believe whatever it is that the government might say.

The government promised before the election that there would be no changes to capital gains tax. They promised before the election that there would be no changes to negative gearing. In the budget they broke that promise, and their rationale—'we changed our mind'. What an extraordinary breach of faith, and on what basis? Given that breach of faith, breach of contract with the Australian people, what confidence can the Australian people have in anything this government say in the future, even anything they say in defence of their current policy position? We know, because we see it every day, that it's all about the politics. It's not about actually resolving the issues that the Australian people need fixing; it's about the ideology and the politics. We see it time and time again, where the political deal is the thing that is most important, and the impact on the Australian people is something completely secondary. I'd hate to see this government trying to work through a game of join the dots, because, when you look at the impact that the changes that they've made to these tax measures in the budget are going to have along with a whole range of other things that they've done through other legislative change, and you actually put all of the pieces together and start connecting the dots, you see why we're getting the outcomes that we are in the Australian economy.

Members on the other side come into this place, parrot the talking points and talk about the aspiration to build 1.2 million homes over the coming five years. People can't live in an aspiration. The fact is this government are building 170,000 houses a year, which is way behind their aspiration, and, worse, it's 30,000 houses a year fewer than were being built when the coalition was in government. They talk about this huge amount of money, this huge investment that they're making in housing around the country. Only the Labor Party could spend $47 billion on housing and build fewer houses. I mean, seriously, $47 billion a year or more on housing and they are building 30,000 houses a year fewer than were being built when the coalition was last in government. Worse, their own budget papers say there will be 35,000 houses fewer over the forward estimates than the already paltry 170,000 a year they're building at the moment, and that's because of all of the policies that they've put into place, their loss of control of inflation, their massive government spending which is fuelling inflation and their unwillingness or their incapacity to acknowledge that that's what they're doing. Yet they come in here and they parrot the talking points so many times it's as though they themselves believe them. It doesn't matter how many times you repeat something that's not true; it doesn't make it true.

This budget will not make it easier for young Australians to get into housing. In fact, the punitive measures in this budget will make it harder for young Australians to save for their housing deposit, so it will make it harder for them to get into housing. The increased tax on the investment measures where young people are now investing—if they're just putting money in the bank and relying on interest, their money is going backwards against the market, so what are they doing? They're using investment mechanisms like ETFs and the stock market, and what has the government done as part of this process? They've increased the tax on those returns and made it harder for young Australians to save that first deposit for their new home, and because the country is building 30,000 fewer homes a year under the economic settings of this government there's less stock in the market; therefore, it's harder to buy a home.

The government needs to connect the dots, but more importantly it needs to be honest and upfront with the Australian people, which is what it has failed to do and is why the Australian people are increasingly not believing what this government says. You can't believe them when they promise that they're not going to increase capital gains tax. You couldn't believe them when they said they weren't going to increase negative gearing—just like you couldn't believe them at the 2022 election, when they said they wouldn't change the tax on superannuation, and then they went and did it. And when they stitched up their dirty deal with the Greens this week they changed the taxation on superannuation again when they promised they wouldn't do it, so they've broken that promise twice. They broke the promise after the 2022 election; they broke the promise again after the 2025 election. And now what are they doing? They're attacking the capacity of self-managed super funds to invest in housing because that's what the Greens want.

What an absurd situation. You have the Greens dictating economic policy to the Labor Party. I never thought I'd see that happen, but that shows that the government is only about the politics of the deal rather than the impact on the Australian people, and it's the Australian people that are going to pay for this. These budget measures are slated to raise an extra $77 billion, yet the talking points tell us they're reducing tax and giving everyone a tax cut. No, they're not. They're taking an extra $77 billion out of the Australian economy by taxing people's investments. That's what they're doing, because Labor think they know how to spend your money better than you do. That's the fundamental deal, and I've seen that so many times over my time in politics at a state and a federal level. The Labor Party thinks they know how to spend and invest your money better than you do, so they need to take more of it.

As has been said, I think, quite a number of times in this debate, when they run out of your money, they come to get more. In this budget that is to the tune of $77 billion more, and they have the nerve to come into this place and tell us that they're giving everybody a tax cut. On what planet does raising an extra $77 billion in tax by taxing people's investments equate to a reduction in tax? As we've seen with a range of other tax measures that Labor has put into place over a period of time, you don't raise taxes on something so that you can get more of it. We saw it with alcohol between 2007 and 2013. We've seen it with cigarettes; that's turned into a complete basket case, a loss of control of the tobacco market in this country and a complete and utter bonanza for organised crime. That's how blind the Labor Party are when it comes to managing tax policy in this country.

They say, and they go out and they promise to young people, that this tax package is about intergenerational equity. They say, 'This is about helping you get into a new home.' You cannot believe any of those things, because it does none of those things. All of the things that Labor's talking points say they are trying to do with this tax package—all the things they are looking to do and aspire to do—are things it does not do. It doesn't make it easier for a young Australian to get a home. It doesn't make it easier to save for a home. We know that the additional tax on young Australians' savings through these measures, through their investments, will make it more difficult for them to save that first home deposit, because it's taxing the measures that everyone else has had in the past at a higher rate than it did previously.

There's a cameo in their budget of a young person who's earning $35,000 a year through investments, who would pay $1,400 tax under the old system and ends up paying $1,600 more with the 30 per cent tax rate in the new system. That's the government's own cameo in their own budget papers, yet they have the nerve to come into this place and tell us that it's about supporting young people to get into the housing market, when they're building 30,000 fewer houses per year than what was happening before 2022. There are fewer houses in the market, and they're actually making it harder for young Australians to save the deposit for that first home that is more scarce because we're building less housing.

It's no wonder Australians are coming to the conclusion that they can't believe a thing this government tells them, when it's broken promise after broken promise after broken promise after broken promise. There was the famous $275 reduction in electricity prices that never manifested. They talked about a lower cost of living. They talked about cheaper housing prices. They promised they'd make no changes to superannuation and broke that promise. They promised they wouldn't change the capital gains tax system and broke that promise. They promised they wouldn't change negative gearing and broke that promise. Then they broke the superannuation promise again in their stinking deal with the Greens.

Why would you believe anything that the Labor Party told you? They'll trot the talking points out. That's what they do. They're very good at that, but you can't believe a word they say, because they have no respect for the Australian community. They have no respect for this parliament. They're here to do a deal, a political deal, rather than to actually get the detail of how this system is going to work, as we've seen through questions in question time and through the inquiry. They really shouldn't be trying to force this through in the way that they are—but, of course, Labor's only about the deal, not about the Australian people. (Time expired)

Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) | Link to this | Hansard source

I thank other senators for their contributions to this important debate. This is a bill for workers, first home buyers and future generations. It's the first step in delivering the most ambitious tax reform package in a quarter of a century. These reforms will make it easier for Australians to buy their first home. They will cut income taxes for over 13 million workers, again and again. The reforms will better align the tax treatment of labour and asset income. I would like to thank those senators who have contributed to this debate and the experts and stakeholders who have shared their views as well.

Schedule 1 to the bill and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026 implement significant reforms to capital gains tax arrangements. These reforms replace the 50 per cent CGT discount for individuals, trusts and partnerships with a cost based indexation and a 30 per cent minimum tax rate on capital gains accruing from 1 July 2027. The 50 per cent discount is an arbitrary adjustment for inflation, overcompensating some investors while undercompensating others. Since it was introduced, it has distorted investment decisions, particularly in favour of existing housing, and the greatest share of the benefit has flowed to those who earned the most over their lifetime. At the same time, homeownership has been pushed further and further out of reach, particularly for younger Australians. These reforms will correct the mistake made by the Howard government, ensuring investment decisions are made on the basis of economic returns, not tax advantages, which will support productivity over time. The introduction of the minimum tax also addresses distortion in the system by reducing the incentive to defer realisation of capital gains, ensuring gains are subject to a tax rate closer to the rate paid by most workers. To maintain support for new housing supply, investors who buy new builds will be able to choose either the 50 per cent CGT discount or indexation and the minimum tax when they sell the property.

The government will also ensure all 2.7 million active small businesses, and 98 per cent of all active businesses, will be eligible for generous CGT concessions by expanding eligibility for the 50 per cent reduction on active business assets, which applies on top of the discount for inflation, and we are consulting on the design of a 50 per cent CGT discount for early-stage investors, including founders and employee share scheme participants of innovative startup businesses, in recognition of the risk that founders and early investors take and the contribution they make to our economy. This is in addition to all other measures that lower taxes for business announced in the budget, which are being delivered in future legislation. It brings the total amount of new tax measures to support businesses and startups in the tax reform package to over $3.8 billion.

Schedule 2 to the bill will limit negative gearing for residential property investments to new builds. Properties held at announcement can still be negatively geared in future years until sold. New builds can continue to be negatively geared after 1 July 2027, ensuring the benefits of negative gearing are directed to investments that support growth in Australia's housing stock. Together, these reforms will help to level the playing field for first home buyers while maintaining support for investment in new housing supply. They will support 75,000 more homeowners into the housing market, equivalent to reversing a decade of declines in homeownership.

Schedule 3 to the bill implements a new working Australians tax offset of up to $250 for over 13 million workers. The $250 WATO will increase the effective tax-free threshold for workers by nearly $1,800 to $19,985, or to $24,985 for workers also eligible for the low-income tax offset. This represents the largest increase to the effective tax free threshold since 2012-13.

Schedule 4 to the bill implements a $1,000 instant tax deduction from the 2026-27 income year. This measure implements the government's election commitment and is an important element of our tax reform package. It will make the tax system simpler and deliver additional relief to Australian workers.

The government is cutting taxes five times in three different ways, with our next round of tax cuts from 1 July, just next week. When combined, our five tax cuts will mean an Australian worker on average earnings could receive a benefit of up to $2,816 a year from 2028.

The government is also moving targeted amendments to the bill to provide certainty on implementation detail, consistent with the original intent of our policies announced in the budget. These amendments extend eligibility for the 50 per cent active asset reduction to businesses with turnovers of up to $10 million. They will ensure deductible gifts and donations will reduce capital gains that are subject to the minimum tax; provide the list of income support payments that qualify for an exemption from the minimum tax on capital gains; embed the calculation method for the working Australian tax offset in legislation; and remove ministerial powers no longer needed to give effect to the government's policy intent or otherwise limiting the scope of these powers while the government consults on final details.

The government has also agreed to support an amendment that will be moved by the Australian Greens to ban future limited recourse borrowing arrangements for residential property by a superannuation fund. Multiple inquiries have raised concerns that these arrangements raise risks for superannuation investors, including the 2014 Murray financial system inquiry conducted for the coalition. Limiting new arrangements going forward will help to protect people's savings.

I note the committee report into these bills. I thank the committee for their inquiry and for the report, and for the recommendation that the bills be passed. With regard to the coalition's dissenting report, the government supports the passage of these bills as a package, with passage this sitting period providing certainty for investors, workers and businesses. The government has no plans to change the Charter of Budget Honesty, and the government is delivering real cost-of-living relief by cutting taxes five times, including two more tax cuts in these bills.

With regard to the additional comments of other senators, the government's view is that the proposed transitional arrangements are appropriate for these reforms. The government has separately announced that all types of testamentary trusts will be exempt from the minimum tax on discretionary trusts, provided they are established for genuine testamentary purposes. The government is making the $20,000 instant asset write-off permanent from 1 July 2026. The government has not proposed reintroducing averaging, which was removed for integrity reasons. The government is investing $47 billion to increase housing supply to get more first home buyers into homes and to build 55,000 more social and affordable homes. The government released modelling and analysis of these changes in the budget and continually monitors tax settings over time.

As always with tax policy changes of this kind, there are complex interactions and details. We will work through these in the usual way. We have indicated, for example, that complex and specific details such as the interactions with attribution managed investment trusts, tax consolidation, residency changes and other issues will be legislated through future tranches of legislation. Legislating significant reforms in tranches is a standard approach, and past reforms such as the GST and other major changes have similarly been implemented in tranches.

These reforms are delivering the real change that Australians are calling out for. Unlike our opponents, who are defending a broken status quo, we are helping workers with even more income tax cuts and helping first home buyers get into the housing market. We know that big tax changes like these are always contested and contentious, but they are the right decisions for the country. We are proud of these bills and proud of the real difference they will make for workers, for first home buyers and future generations. I commend the bills to the Senate.

Karen Grogan (SA, Australian Labor Party) | Link to this | Hansard source

Pursuant to order, the Senate stands adjourned and will meet again tomorrow at 9 am.

Senate adjourned at 19:08