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

by leave—In respect of the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, I move opposition amendments (1) to (4) on sheet 3882 together:

(1) Clause 2, page 2 (table items 2 to 4), omit the table items.

(2) Clause 2, page 2 (table item 5), omit the table item.

(3) Schedule 1, page 3 (line 1) to page 47 (line 24), to be opposed.

(4) Schedule 2, page 48 (line 1) to page 53 (line 11), to be opposed.

These amendments go to a simple principle: that Australian families and businesses should be better off, not worse off, because of tax reform. The opposition believes in a lower, simpler and more certain taxation system. We want to deliver lower income taxes permanently and ensure governments cannot increase taxes without proper scrutiny and the passage of new legislation. What is before us today, as I have said many times now in this chamber, does not meet that test; in fact, it comes nowhere near it.

I want to be clear once more: what this government is proposing is not genuine tax reform. This is a bad deal stitched up together between the government and the Greens. But, deal or no deal, the coalition remains unconvinced that the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 leaves Australians better off. For that reason, we cannot support schedules 1 and 2 of this bill, which contain the provisions in relation to changes to capital gains tax and the provisions in relation to changes to negative gearing, and we will not support the associated Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026.

This debate is very simple. Capital investment by everyday Australians is made using income that has already been taxed. Capital gains tax is not some separate tax in isolation; it is, in effect, another layer of income tax. Under these changes, Australians will pay tax when they earn their income, and then again if they take the risk to invest and build something more. They work hard and they take risks, and yet under these changes they will be left with less. That is not fair and it isn't right. In fact, the day that these bills pass will be the day that Australia will become the country with the No. 1 highest capital gains tax in the world. That simply does not make sense.

The Senate is being asked to legislate what is, in reality, an income tax increase—an increase that was not put to the Australian people at the last election and an increase that the government repeatedly assured voters, time and again, that it had no intention of pursuing. Remember the Prime Minister's words:

My word is my bond.

The last six weeks in this place and outside this place, as these laws have been debated amongst the community, and the business community in particular, have demonstrated just how inaccurate the Prime Minister's assessment was when he said that his word was his bond. Clearly, that was not true.

This is a proposal that is so complex that, through the sham Senate inquiry process that we held for these bills, even accounting and advisory professionals advised that they cannot clearly explain these changes to their own clients. That's a pretty galling situation for professionals to be in, and, as I've said previously, they didn't get any help or guidance from Treasury officials who came to the Senate inquiry clearly unable to answer basic questions about how this legislation would operate.

This legislation is a regime that leaves key definitions unresolved and significant matters to be determined later through delegated legislation. Again, this is far from a perfect situation for Australian taxpayers. Taxpayers deserve certainty when it comes to the system they are operating within. What we will be doing today when these bills inevitably pass this chamber, because the government has done a deal with the Greens to facilitate that, is setting in motion changes to the taxation system that are not yet fully understood or fully defined.

This is a system that is expected to impose hundreds of millions of dollars in compliance costs each and every year. In a situation where Treasury can't answer basic questions about how the legislation is going to operate, when we have financial professionals saying that they don't know how to advise their clients on how the changes are going to operate, I fear that those estimations of the compliance costs will end up being woefully under what they actually end up being, because we don't know the full extent of what we are being asked to agree to today. These changes will cause real and avoidable harm to the housing market, to investment in resources, to small- and medium-sized businesses, to innovation, to the integrity of the taxation system itself, as I've said, and even to the charitable sector. Despite all this, this government, backed by the Greens, has been pressing on with this plan.

I've lost count of how many different off-ramps we've tried to provide the government. Indeed, Senator Pocock and I just tried to provide an off-ramp in referring the problematic schedules in relation to CGT changes and negative gearing changes off to a further Senate inquiry. Those Australians listening along at home today can be very sure that this government knows that there are issues with this legislation. They would have been listening along to the Treasury officials that appeared at our Senate inquiry. They know that there are basic questions that cannot be answered. Indeed, I suspect when we get into the Q&A section of the Committee of the Whole consideration today, it will again become abundantly clear that there are questions yet to be answered from this government in relation to this legislation, yet they are pressing forward. You can't make decisions if you don't have all the requisite information in front of you, and I think it is really problematic that that is what we are being asked to do here today.

We have seen an extraordinary process unfold with this legislation. Amendments have been circulating for days. Further government amendments have been introduced following last minute carve-outs announced by the Prime Minister and the Treasurer. That tells its own story. It tells us that these tax policies were rushed. It tells us that it was being negotiated on the run. In fact, it was clearly being negotiated quite quickly. I think I made comments in the media at the start of the week that I anticipated that at some point in the fortnight a dodgy deal would be reached. I had no idea that it was about to happen in the next 24 hours. This tells us that key elements of this bill have been treated as bargaining chips, whether we're talking about ministerial powers, definitions or the scope of application. The most significant amendments are not coming from scrutiny; they're not coming from consultation—we know that because of the rushed inquiry process that we've had to go to. They are coming from the government itself trying to fix its own flawed legislation in real time.

Australians deserve so much better than this. They deserve so much better than what they are getting from this government. They deserve a tax system that is stable, predictable and fair. They deserve reform that encourages investment, not punishes it. And they deserve honesty about the impacts of what is being proposed and how much it will cost to implement what is being proposed. They don't deserve a measure that was ruled out before the last election, several times, only to be introduced in this place 12 months down the track, in a rushed manner, where people have not been able to fully consider the consequences. Let us not forget: the government does not have a mandate to make the changes that they are proposing here today because they did not take these changes to an election.

The coalition's position is clear. We support sensible tax reform, we support lower taxes and we support a system that rewards effort and investment. Maybe, if that's what this government was doing, we would be able to support what they are trying to achieve here today—but it is not and we cannot. That is why I'm moving an amendment seeking to move items (3) and (4) on sheet 3882 together, just to clarify. This amendment will remove schedules 1 and 2 from the bill, the provisions relating to capital gains tax and negative gearing changes, to keep the taxation system fairer, simpler and more certain. I commend these amendments to the Senate, because, like I say, Australians deserve much better than what they're getting from this government.

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

The government will not be supporting these amendments. The amendments seek to, essentially, do as was in the discussion on the moving of the contingent notice of motion, which is to separate the schedules and not proceed with the CGT and negative gearing schedules in the bill. I really think this goes to demonstrate in a very clear way the complete lack of economic or budget credibility of those opposite. They sit here, having moved a second reading amendment just a second ago which calls upon us to consider indexing tax brackets in line with the Leader of the Opposition's budget reply, without having that costed, without having any idea how they would fund that, and then try to take out the two elements of the package which then fund the working Australians tax offset as the other component of the package. What we've done is put a package of reforms together, funded reforms, that take those decisions about CGT and negative gearing and rebalances the tax system so that those earning an income are not having to take on an unfair level or not have a heavier burden, perhaps, than those who earn income from assets, and move it onto a more equal footing. But, in order to do that, yes, we have to make some decisions about negative gearing and capital gains tax which we think are right and fair. They allow us to ensure that we're giving all of that back across the forward estimates via the working Australians tax offset, which is then coupled with the instant deduction as part of this package. Those two elements feed into the tax cuts that we've already taken through the parliament, which will come in on 1 July this year and 1 July next year.

In relation to Senator Chandler's concerns about there being further tranches of legislation, the Treasurer and I have made it clear that when you do complex, big tax reform—which is what our budget does—there will always be a series of bills associated with that. These bills set that overarching framework and provide the certainty that's needed for investors and the like about the tax arrangements that are going to operate from 1 July next year. That is no different to the way former governments have done significant tax reform. If you go back and consider the last comparable tax reform that was done under the new tax system, I'm advised that there were 30 bills over a period of time associated with that tax reform. Tax law in this country is complex, and it is appropriate that you deal with some of those in separate pieces of legislation, just as former treasurer Costello did in relation to his reforms under the new tax system. So we have been clear from budget night that that would be the case, but we were also very clear and keen to make sure that there was certainty provided through these bills as soon as possible, and the passage of these bills later today will provide that certainty.

There are already a number of issues that the Treasurer is consulting on with regard to startups and the like. We've got some other amendments that we will move in order to deal with the amendments we've already determined, but we expect there will be issues that we will work through and bring back to this parliament in a second tranche of legislation, and it's absolutely appropriate that we do that. There will be complex interactions of tax law that will require amendment through a second tranche of legislation. We've been clear about that; it will be coming. But, essentially, the important architectural legislation is what we are debating today. So I don't think the criticism from Senator Chandler about the staging of our legislative implementation of the budget is appropriate. I disagree with it, and the fact that we have so many TLABs, Treasury law amendment bills, coming through this Senate is an example of the normal course of business when it comes to implementing legislative reform through the Treasury portfolio.

So that's the approach we will take. I think Senator McKim wants to say a few words before 11.15. We do not support the splitting of the bills. It is packaged reform, and you can't just take one side of it and not look at how you're going to fund the implementation of other elements of the package.

Nick McKim (Tasmania, Australian Greens) | Link to this | Hansard source

The Australian Greens will also not be supporting the amendments moved by Senator Chandler on behalf of the opposition. But I want to offer some general reflections on the legislation and, in particular, the splitting of the bill. Let's be very clear about this. The government has put this forward as a package, and it's very interesting to watch attempts to split various pieces out of this legislation because the interaction of negative gearing and the capital gains tax discount is significant. With regard to the way those two tax breaks operate, the Greens have been very clear that we want to see substantial reform of both of those tax breaks with far higher ambition than the government has shown in this package. But folks who don't understand how they interact in real life, in reality, are missing the obvious point: if you are going to engage in reform of either the capital gains tax arrangements or negative gearing arrangements, it should be done together at the same time simply because of how they interact.

Today is a massive missed opportunity for renters and first home buyers. Labor's gift of $33 billion of continued handouts to wealthy property speculators means that this country's housing crisis will be worse than it needs to be for longer than it should be. The real issue here is that the test for Labor is whether this legislation will fix Australia's housing crisis for people struggling to buy their first home. The clear answer is that it will not—because Labor has shown a lack of ambition and a lack of political courage. The housing crisis in Australia is now Labor's housing crisis. They've made it worse since they came to office four years ago, and they have spurned chance after chance to try to repair it and bring some real hope to people who are struggling to buy their first homes. Those people are, overwhelmingly, young Australians. They are stuck in a skyrocketing rental market where rents are soaring out of control and becoming ever more unaffordable and where they are watching house prices recede into the distance—and have been for some time.

We need to make housing more affordable for people who are struggling to buy their first home. We need to cap rents and stop out-of-control rent rises. Those are the policy levers that are available and that Labor has chosen not to pull. Young Australians are watching the drawbridge being pulled up in front of their eyes, and cheering from the battlements are the older people who have the tax advantages that have allowed them to accumulate, in some cases, massive portfolios of investment property, and, ultimately, those benefits and those tax changes will be significantly grandfathered in by this legislation. So it's no surprise that young people are not cheering.

There's a bigger issue here, and that is the way that income derived from labour, from going to work, is taxed as opposed to income that is derived from capital. I'll make the obvious point that, in order to derive income from capital, you have to be wealthy enough to buy things in the first place. For millions of Australians, the dream of share ownership or the dream of an investment property is just that. It's something they can never legitimately aspire to, because they simply don't have the wealth necessary to buy into the share market or to buy an investment property, or 10 or 20 or 50 investment properties. Why should we tax income from work so much less advantageously for people than income derived from buying and selling things? There is no good argument. Under current arrangements, if you go to work as a cleaner or in hospo or as a carpenter or a plumber or a nurse, you are paying double the tax on the same amount of money as someone who makes their profits by buying and selling investment properties. That is the system that we've got, and this legislation, while it will make some difference and is—

Slade Brockman (WA, Deputy-President) | Link to this | Hansard source

Senator McKim, could you please resume your seat. It being 11.15, the committee will report progress.

Progress reported.