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

I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

I move that this Bill be now read a second time.

This Bill is the next step in our government's delivery of the most ambitious tax reform package for a quarter of a century.

It's all about helping more people to buy their own home, cutting income taxes for workers again and again, and better aligning the treatment of labour and asset income.

It's a package focused on delivering a better tax system for business by encouraging investment and innovation and delivering a simpler and more sustainable system as well.

The Bill being introduced today delivers the next important part of our plan.

It backs Australian businesses and it helps them to succeed.

Our plan is good for workers, good for first home buyers and good for the millions of businesses that make such an important contribution to our economy.

It introduces two-year loss carry-back to help encourage sensible risk taking and smooth out difficult periods, and makes the $20,000 instant asset write-off permanent to encourage investment and slash compliance costs.

These measures go hand in hand with the steps announced last week, which are all about providing more clarity and confidence to investors, more support for small businesses and more incentives for innovation.

We will extend the eligibility of the 50 per cent active asset capital gains tax reduction to more businesses by increasing the turnover threshold from $2 million to $10 million.

This means all 2.7 million active small businesses and 98 per cent of all active businesses will be eligible for generous CGT concessions.

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 start-up businesses.

Altogether, we are proposing over $3.8 billion in new measures that lower taxes for businesses, supporting new and growing businesses at critical stages in their life.

The reforms in this Bill support resilience, investment and sensible risk taking by Australian firms.

Schedule 1 to the Bill amends the Income Tax Assessment Act 1997 to introduce loss carry-back for companies with annual global income of less than $1 billion from 1 July 2026.

It enables eligible companies to carry back a tax loss and offset it against tax paid up to two years earlier, generating a refundable tax offset.

Schedule 1 applies to revenue losses only and is subject to a company's franking account balance, ensuring refunds are appropriately limited to prior tax paid.

OECD research shows that loss carry back is an effective policy to improve the neutrality of the tax system and increase the resilience of companies to adverse shocks.

By allowing losses to be recognised against earlier profits, loss carry back will be particularly valuable for established businesses that have been profitable in recent years but experience a temporary downturn.

It will also support otherwise profitable small companies that incur a tax loss because they have invested in new assets, including those that are eligible for the permanently extended instant asset write-off.

This is all about improving cash flow and helping firms remain resilient through periods of adjustment or broader economic shocks.

Loss carry back is expected to benefit up to 85,000 companies each year, mostly small businesses, with the largest impacts in construction, manufacturing, professional and scientific services, finance and insurance, and wholesale trade.

The Government is making the instant asset write-off permanent to give small businesses the certainty they need and deserve.

This is all about backing small businesses, cutting compliance costs and helping them invest with confidence.

Schedule 2 to the Bill amends the Income Tax Assessment Act 1997 and the Income Tax (Transitional Provisions) Act 1997 to permanently extend the $20,000 instant asset write-off from 1 July 2026.

Up to 4.1 million businesses with aggregated annual turnover of less than $10 million will be able to immediately deduct eligible assets costing less than $20,000 from 1 July 2026.

The $20,000 threshold will continue to apply on a per asset basis, so small businesses can instantly write-off multiple assets.

Assets costing $20,000 or more can be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.

The lock-out rules, which prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt-out, will continue to be suspended until 30 June 2027 so that small businesses can take advantage of the measure.

The permanent $20,000 instant asset write-off is estimated to reduce ongoing compliance costs for small business by around $32 million per year.

It's part of our plan in the Budget to cut red tape and compliance costs by $10.2 billion a year.

Schedule 3 to the Bill provides an income tax exemption for income derived in respect of employment with the PNG Chiefs Limited, the new PNG-based National Rugby League franchise.

This exemption seeks to ensure that income tax exemptions legislated by the Papua New Guinea Government for players and staff of the PNG Chiefs Limited will operate as intended.

Schedule 3 is connected to the Government's broader strategy to listen and act on the priorities of our alliance partner and closest neighbour—Papua New Guinea—and support rugby league in the Pacific.

The establishment of a PNG team in the NRL is an important symbol of the deep partnership between Australia and PNG. This partnership is underpinned by shared strategic trust and commitment to delivering peace, prosperity and opportunity for the people of Papua New Guinea and Australia.

Introducing these arrangements as part of this Bill will provide certainty and support the effective administration of the tax arrangements PNG has put in place.

Finally, Schedule 4 to the Bill builds on the legislation to reform negative gearing and capital gains tax passed in June.

The amendments in Schedule 4 ensure a property owned on Budget night will retain access to negative gearing in certain circumstances.

They ensure an individual can retain this treatment for an ownership interest in a property where:

They also ensure new builds will retain access to negative gearing and concessional capital gains tax treatment in the same circumstances.

These are sensible changes and ones I hope this entire chamber can get behind.

But they are changes that took an ambitious Labor government to introduce, and an ambitious Labor government to make permanent.

It was Labor that first introduced the instant asset write-off in 2011.

And it was Labor that introduced loss carry back at that time as well.

Disappointingly, these important measures to support business were unwound when the Coalition came to office.

It took those opposite years to realise what a mistake they made and bring these measures back, but even then, only temporarily.

Now, we're making both of these tax measures permanent—because Labor backs Australian businesses and is invested in helping them grow and get ahead.

That's what these measures are all about.

That's what our $3.8 billion in business tax relief is all about.

It's what our plan to create a more productive economy, to cut $10.2 billion of red tape, to grow GDP by $13 billion by working with the states, and to encourage innovation and risk-taking is all about.

We are proud of this Bill and we are proud of our ambitious tax reform package.

And that is why I commend the Bill to the Chamber.

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

What an absolutely extraordinary capitulation by the Albanese government. After all the denials that we have heard from those opposite, after all of the excuses and after all of the arrogance, they are now voting to repeal the widows tax, which they said did not exist. Anthony Albanese has finally been dragged kicking and screaming to the position the coalition has been arguing for from the very, very beginning, before, in fact, this legislation was even rammed through the parliament by the Australian Labor Party with—don't you worry—the tail wagging the dog, the Australian Greens, who were salivating as it went through. We were telling the government, 'Get rid of Labor's widows tax.'

The Prime Minister was specifically told, prior to the legislation being rushed through, that this toxic tax package would impose a tax on widows, would impose a tax on divorcees and, shamefully, would impose a tax on those fleeing a violent relationship. But do you know what the Prime Minister of Australia did? Do you know what the Minister for Women did? Do you know what every single person in the Albanese government did? They voted to impose this tax. They legislated a tax on widows, they legislated a tax on divorcees and, shamefully, as I said, they legislated a tax on those fleeing a violent relationship. The Prime Minister of Australia legislated a tax change that punishes Australians at one of the most difficult periods of their lives. That's what he did—he taxed them. Worse, what did Prime Minister do as this legislation was rushed through and real life examples came forward and he and his government were finally exposed? What did the women on the front bench of Labor do when this tax was finally exposed and when they were questioned on this tax and the impact it was having in particular on women in Australia? Did they say, 'We got it wrong; we need to fix it'? Did they admit they made a mistake? No. They are on the Hansard record time and time again denying that there was a problem. When they worked out it was actually true and they should have listened to the coalition when they raised these concerns, they tried to minimise the problem. When real life examples came forward of the impact of Labor's tax on them at this most difficult time in their lives, do you know what they then tried to do? They tried to explain the problem away.

I think they were hoping that Australians would just not see through a tax on widows. Seriously, what a disgrace! What type of government is it that stands up and says, 'We champion women in Australia,' then knowingly votes for a tax on widows? What is worse—because again, history records this. The coalition introduced a bill and said to Labor: 'We will actually get rid of the tax you have imposed on widows. This is your opportunity to work with us to fix what you have done.' Do you know what Labor did? They voted against us. Let that sink in. On 29 June of this year, the coalition moved amendments to remove Labor's widows tax. Labor could have said then: 'We made a mistake. Taxing widows is wrong.' But, instead of fixing their mistake then and there and ensuring that particularly women in Australia were not subject to this distress at one of the most horrific times in their lives, Labor said no.

Worse are the Australian Greens. They almost sicken me when they stand up and say that they're champions of women. What a joke! They were salivating as the widows tax passed the parliament. So I'd say to the Australian people don't listen to the rewriting of history that those opposite will try and do today, because it is there in black and white on the Hansard record. Anthony Albanese, the Prime Minister of Australia, and every single Labor person in this place, including the Labor senators on the frontbench, were told that you were legislating a widows tax. You looked Australians in the eye and you said that you didn't care.

You rushed this legislation through the parliament knowing the impact that it would have on some of the most vulnerable people in this country. You then denied there was a problem, and, worse, you sought to minimise it. Then, when presented with an opportunity done in good faith by the coalition to abolish this toxic, shameful tax, you didn't take it up. You didn't vote for it, and now here we are today. Why? Because the Leader of the Opposition, Angus Taylor, wasn't going to let you get away with that. He wasn't going to let you get away with knowingly legislating a tax on some of the most vulnerable people in this country, and, on behalf of Australians, he stood up to the Prime Minister. He called the Prime Minister out, and he told him he was wrong.

As I said, you now have a capitulation and not one that the Prime Minister wanted to do. Let's make this very clear. The Labor Party have been dragged kicking and screaming to this position today, and they're going to stand up and tell you: 'We were consulting. We had to understand the impact of our tax. We knew that we would have to bring in amendment legislation to actually fix up some of the messes we created.' That's not good enough, because guess what? There was little to no consultation on what they are proud to say is a major reform to the taxation system in this country. So spare us your words when you stand up here today to say that you had to consult to get it right. You knew there was a problem. We told you there was a problem. We said we'd work with you to fix your problem. We even introduced a bill to do just that, and you laughed in the faces of Australians, particularly the widows, and you basically told them you didn't care.

But sadly, as Australians have come to know, that's the nature of the character of this prime minister. It's been on display now in relation to the podcast he did, in relation to the disgusting, crude comments he made about the female prime minister of Japan. It's on display with the Labor women standing up and saying, 'We'll defend our prime minister's crude and disgusting comments every step of the way.' It's amplified with Labor women voting knowingly to tax widows in this country and then standing up and saying, 'Don't look here, because really we actually champion the causes of women, except when it comes to knowingly legislating a tax on widows.'

You're capitulating today, and I have to say I welcome the capitulation. Welcome aboard, Prime Minister. It took you long enough, but the coalition has been clear. This tax should never have existed. Once its consequences became clear to the Prime Minister of Australia, you should have actually eaten a little bit of humble pie, and you should have come forward immediately and brought in the legislation to actually change it. But that is the pattern of behaviour Australians now see—deny, deflect, delay. And then, when none of that works, you get dragged kicking and screaming to what a solution is, but only when it's proposed by the coalition.

Imagine the impact of this tax on people—people who have saved hard their whole lives. They've paid their taxes. They've saved. They may have bought an investment property, not because they're rich. They're just average Australians. They bought the investment property to provide some security in retirement. They have done exactly what governments tell them to do—work hard, save, and try and provide for yourselves in your retirement. And then tragedy happens. One partner dies. The surviving husband or wife is grieving. Their life has been turned upside down. And, because ownership of that property changes, the widows tax, knowingly legislated by the Prime Minister and all of the Labor women, potentially now changes the tax treatment of that asset. That's why it's known as the widows tax. That is the problem that Labor knowingly legislated.

So Labor can't stand here today and now say, 'There was never really a problem,' because if there's no widows tax, as you kept on telling us, what exactly are you now repealing today? If there's nothing wrong with your legislation, why are you changing it? The coalition is supposedly playing politics. Why have the Treasurer and the Prime Minister now adopted the coalition's position? That's because the answer is obvious. Labor got caught. They rushed through their massive tax changes with little to no consultation. They clearly had no clue about the actual real-life impact on the ground of some of the most vulnerable people in Australia. Even when the impact was raised directly with them, they basically looked Australians in the eye and said: 'We actually don't care. We're going to legislate anyway.' And that is exactly what they did. They rushed through a massive tax change. They didn't understand the consequences, but worse still—and this is where it's so shameful—they didn't listen when those consequences were identified. They rushed them through instead.

This is what happens when a prime minister attacks aspiration. This is what happens when a prime minister attacks Australians just trying to build financial security. This is what happens when a prime minister knowingly misleads Australians—he gaslights them—over 50 times prior to an election. At that press conference a journalist said, 'Will you rule out changes to negative gearing and capital gains?' and the Prime Minister—it's there for all to see—snaps at the journalist and, in his own words, says, 'For the 50th time.' Well, for the 50th time, Prime Minister, it's not good enough. It's not good enough that you gaslighted Australians. It's not good enough that you say, 'Well, actually, now that we've consulted.' Now that you've had real-life Australians that have been impacted by your changes at the most vulnerable time in their lives come forward, suddenly you've woken up. You made a mistake. That is just not good enough.

The coalition's position has been very simple from the beginning. This was hurting Australians. You needed to axe it. The legislation had unfair consequences. You should never have passed it. You knew it had unfair consequences and you refused to fix it. So I have to say I welcome the capitulation by the Prime Minister today. It doesn't go nearly far enough, quite frankly. Our commitment to the Australian people—we'll take this all the way to the election, and if we're elected, we'll implement it—is that we are going to axe all of Labor's toxic taxes because we believe in aspiration. We believe in the Australian people. We believe in you getting out there and doing what you can every day to actually have a fair go and perhaps build some wealth to plan properly for your retirement.

Sadly, that's not Anthony Albanese's record. Anthony Albanese's record as the Prime Minister of Australia and Labor's record—they'll stand up shortly to try and defend their actions—is that they legislated a widows tax. That's on you and the Australian Greens. That's on you. You legislated a widows tax. You knowingly legislated pain on the Australian people. A widow should never have to worry that Canberra is waiting with a tax consequence when their husband dies or when their wife dies. Yes, we welcome the humiliating capitulation by Anthony Albanese today after all the denials, all the excuses, all the arrogance, and after knowingly taxing the most vulnerable Australians at the most terrible time of their life. Even if today the vote will go through, that's something you will need to live with.

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

The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 represents the next stage of the government's ambitious tax reform agenda. Rather than rewrite history, as Senator Cash has just said we were doing, I would like to take the opportunity in this debate to focus on some of the other important schedules that this bill covers that were neglected in the contribution that we just heard from Senator Cash, which was laden with hyperbole which focused solely on schedule 4.

As part of the government's 2026-27 budget tax reform package, this bill does contain three other measures designed to support investment, strengthen business and resilience, and advance important national priorities. The bill includes schedule 1, which introduces a two-year loss carry-back tax offset; schedule 2, which makes the $20,000 instant asset write-off permanent for eligible small businesses; schedule 3, which provides an income tax exemption for players and staff associated with the PNG Chiefs; and, as you just heard some discussion about, schedule 4, which ensures that certain properties that are owned on budget night will retain access to negative gearing in some circumstances.

Taken together, these measures help deliver a better tax system for business, encourage investment and innovation, and support a simpler and more sustainable tax system. These reforms, as we know, sit within a broader agenda focused on helping more people buy their own home, cutting income taxes for workers again and better aligning the tax treatment of labour and asset income. These reforms are part of a broader effort of our government to reshape Australia's tax system for the future. We want a tax system that makes it easier for Australians to get ahead, not one that locks younger generations out of homeownership or discourages productive investment. That means that we need to create a fairer balance between the taxation of labour and assets, reducing unnecessary complexity and ensuring that the system supports growth, productivity and opportunity. This bill takes another important step in that direction.

The first schedule introduces a two-year loss carry-back tax offset. This measure is about helping businesses manage uncertainty, navigate difficult periods and recover more quickly from setbacks, and it is a practical reform that responds to the real-world needs of Australian businesses. Businesses do not always operate in straight lines, as we know. Industries experience disruption. Companies invest and take risks and sometimes face periods where losses arise before growth and profitability return. The loss carry-back measure recognises that reality. At its core it's about improving cash flow and helping businesses remain resilient through periods of adjustment or broader economic shocks.

By allowing eligible companies to carry losses back against previous taxable profits, businesses can access support when they need it most. Importantly, this measure is expected to benefit more than 85,000 companies annually. It encourages businesses to be able to take those sensible risks while providing a practical mechanism to help businesses remain viable during challenging periods. Businesses that can weather difficult conditions are more likely to keep investing, retain workers and continue contributing to their local communities. And there is strong support for this reform. Business groups, including the Australian Chamber of Commerce and Industry, the Business Council of Australia and the Housing Industry Association have recognised the role it can play in improving cash flow, strengthening resilience and supporting business investment.

The second schedule makes the $20,000 instant asset write-off permanent. This is a really significant reform. Up to 4.1 million businesses with aggregated turnover of less than $10 million per annum will be able to immediately deduct eligible assets costing less than $20,000 from 1 July 2026. This bill provides a permanent framework that gives businesses confidence when making investment decisions. The $20,000 threshold will continue to apply on a per asset basis, meaning eligible businesses can instantly write off multiple assets. For assets costing $20,000 or more, businesses will still be able to access the small-business simplified depreciation pool, depreciating those assets at 15 per cent in the first income year and 30 per cent in each income year after that. The bill also continues the suspension of the lockout rules until 30 June 2027. These rules currently prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out. Their ongoing suspension ensures businesses can continue to access the arrangements that best meets their needs.

We are making it less complex for small businesses to do what they do best and just get on with it. The instant asset write-off forms part of the government's broader commitment to reduce red tape and compliance costs by $10.2 billion annually. It is estimated to reduce ongoing compliance costs for small businesses by around $32 million every single year. At the moment, the instant asset write-off threshold is just $1,000. This government increased that threshold to $20,000, and we are making it permanent. That means greater certainty, less paperwork and stronger incentives for businesses to invest in productive assets.

Again, stakeholders have strongly backed this reform. The Business Council of Australia stated:

Making the instant asset write-off permanent and delivering loss carry back are useful steps for small- and medium-sized businesses and will help businesses invest, grow and create jobs.

CPA Australia described the measure as:

… a critical step toward giving small businesses the certainty that they have long been calling for.

PwC similarly welcomed the reform, observing 'the instant asset write-off is no longer a moving target' and that small businesses 'now have a more stable basis on which to plan investment in productive assets'. The Housing Industry Association also highlighted the benefits for builders and trades, noting that these measures will improve certainty and financial resilience across the sector. When business groups, tax professionals and industry representatives all point to the benefits of greater certainty, reduced compliance and stronger incentives to invest, it is clear that this is a reform that is worth supporting.

Now I want to turn to the third schedule. Schedule 3 provides an income tax exemption for players and staff associated with the PNG Chiefs. This measure forms part of a much broader partnership between Australia and Papua New Guinea and reflects the important role that sport can play in bringing people together. The Albanese Labor government has committed $250 million over 10 years to the Pacific Rugby League Partnership. This forms part of a broader $600 million investment that includes support for a Papua New Guinea team, now known as the PNG Chiefs, to enter the NRL competition by 2028. It also includes investments designed to strengthen rugby league participation across Papua New Guinea, Fiji, Samoa and Tonga.

This partnership is so much more than the game. It includes expanding youth engagement and violence prevention programs to reach more communities and establishing primary and high school competitions across Papua New Guinea, Tonga, Samoa and Fiji. It includes programs to promote girls' participation in rugby league, and it includes building men's and women's national competitions across a range of age groups while continuing to support Pacific Championships matches and identifying opportunities for NRL and NRLW matches to be played throughout the region. All of this—the partnership and initiatives—helps build pathways in education, in leadership and in employment, strengthen communities and create great opportunities. It also strengthens relationships between Australia and our Pacific neighbours.

Sport, as we know, has a unique ability to connect people in a way that few other things can. While the direct beneficiaries of the tax exemption are the players and the staff of the PNG chiefs, the broader benefits extend far beyond the team. This measure is one part of a wide partnership designed to strengthen regional relationships and support long-term community development. Papua New Guinea is making a substantial contribution to this partnership.

To ensure that Australia does not inadvertently undermine that contribution through the operation of domestic tax law, this bill provides a targeted exemption for PNG Chiefs players and staff. The exemption helps support the success of the team, which in turn contributes to the success of the broader partnership and grassroots development programs connected to it. The Prime Minister of Papua New Guinea, the honourable James Marape, has been a champion of this project. In a country with more than 800 different language groups and cultures, he has recognised the power of sport as a common language capable of bringing people together and building national pride around one team and one nation. That vision and pride shines through this partnership.

Let's go to schedule 4. The amendments in schedule 4, as I said earlier, ensure a property owned on budget night will retain access to negative gearing in certain circumstances. They ensure that an individual can retain this treatment for an ownership interest in a property where the property was acquired from a spouse through an inheritance or relationship breakdown or where someone inherits part or all of a property in which they already had an ownership share. They also ensure new builds will retain access to negative gearing and concessional capital gains tax treatment in the same circumstances. The government released drafts of these amendments for consultation on 4 August, reflecting our intention to consult on the more complex aspects of these reforms. Our intention had been to progress this legislation as a priority following the consultation process.

Finally, I would like to acknowledge the work of the Senate Economics Legislation Committee in its examination of this bill. As chair of the committee, I'd like to thank all of the individuals and organisations who contributed to the inquiry, whether through written submissions or by appearing before the committee to provide evidence. Their contributions assisted the committee in its consideration of these important reforms.

The second tranche of the government's budget tax reform is a set of practical measures that will help businesses invest, grow and remain resilient. But, as we know, it's part of something bigger. The governments' agenda recognises that our tax settings should work for people, support investment and productivity and help more Australians achieve the security that comes from owning a home. We are making it easier for Australians to buy a home. We are delivering tax cuts for workers. We are creating a fairer balance between the taxation of Labor and assets. We are building a tax system that supports productive investment rather than complexity and loopholes. I commend this bill to the Senate.

Sean Bell (NSW, Pauline Hanson's One Nation Party) | Link to this | Hansard source

Why are we here today? We're here today, again, to fix a mistake from this hapless Albanese Labor government. We're here today to fix their widow tax that they legislated after everyone told them not to. We all said: 'Your legislation is flawed, and in your rush to implement a big tax grab on the Australian people you're making a terrible mistake.' We warned you over and over again; you did it anyway. You rushed the legislation through, and now we're having to clean up the mess. People are dealing with the consequences.

I was listening to Senator Darmanin's speech—through you, Acting Deputy President—and I was very interested as to when they would get to the part where they would address the mistake, the widow tax. I believe we got to that when Senator Darmanin said that changes are being implemented to correct an issue where people lose their negative gearing tax exemptions in certain circumstances. I think that's what the senator said. Those certain circumstances she's talking about are people dying. That's the certain circumstance that Labor is talking about. They're talking about divorce. That is the certain circumstance that they're referring to. If someone dies and they have a wife or a husband, the legislation that Labor put in meant they would lose a tax exemption that would be grandfathered in. That is the certain circumstance that we are here today to fix.

Divorce. That's another certain circumstance, as Labor puts it, that we are here to deal with. We all warned you that your legislation would essentially be increasing taxes on people getting divorced. We all knew this, and you did it anyway. Let us think about that. They drafted the legislation, they introduced the legislation, they defended the legislation, and then despite being told what they were about to do—what everyone knew they were going to do—they passed it anyway. And it wasn't passed in an orderly process. They passed it like we're doing to this legislation today. A motion was moved in the Senate to limit debate, to limit scrutiny and to rush it through. It's probably because they would hope that people didn't pick up on their mistakes. How else can you treat their actions? People rush things through and limit debate because they want to limit scrutiny because they want to get away with making mistakes or sneaking things through. Again, we're doing it again today.

This legislation that we're actually dealing with, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026—the fix for the widow tax wasn't initially in this legislation. That was added in, and I suspect they've picked this bill because they desperately needed a Treasury laws amendment on which to attach this fix. They had to find a solution. They knew they'd screwed up. So they've picked this one and said, 'We'll shoot that up the list and rush that through too.' Then, as part of the process for fixing the mistakes they caused by rushing everything through and trying to hide scrutiny, they've done a guillotine with many more bills attached to it, which are all going to be dealt with without debate and without scrutiny. One has to wonder: Why are we doing it again? Why are we doing it like this? Why are we shutting down debate and blocking scrutiny? As we have seen with this legislation and with the widow tax, when you do this, Labor makes mistakes. In their rush to grab your taxes—their desperation—they literally legislated a version of a death tax. That is what they have done. Today, we are here trying to fix it.

Let's look closely at this. The legislation they put in meant that, when somebody had a relationship change—a partner dies tragically or they get divorced—exemptions that exist for everyone else on their property would be eliminated because they were going to count that as the property changing hands. This is not some obscure circumstance that could not have been anticipated. We know that because, I'll say it again, we all warned you that it was going to happen. People pass away, properties pass between spouses, marriages end, assets are transferred, and yet the Labor Party, writing the laws of the Commonwealth, managed to create a situation where the death of a husband or wife left the surviving spouse with a tax bill. It's something so horrendous that only this Labor government could have thought that was a good idea and could have sat down, written the bill, debated the bill, defended the bill and then voted on the bill. They voted for their widow tax. The undertaker does their job, and then Jim Chalmers started his. That was the plan. Now we are here, back in parliament, trying to put that band-aid over the bullet wound that Labor shot into the economy.

This tells us almost everything that we need to know about the Albanese Labor government's economic competence. They start with the ideology. They start with the plan to grab those taxes so they can spend them on their preferred ideological goals, regardless of who pays it. They just need the money in the budget. Then you rush the legislation, you hide the scrutiny, and then, if someone manages to pick up on the mistake or the trick that you've played, you'll go: 'We can deal with those consequences later, and we'll continue to gaslight the Australian people. Perhaps we won't talk about the fact we legislated a death tax or a divorce tax. We'll just refer to people dying or getting divorced as a "certain circumstance".' It's just typical Labor spin. Imagine trying to diminish a person passing away, one of the most horrible things that can occur in someone's life, when their partner dies, and then just trying to claim that it's a 'certain circumstance'—geez!

Then we've got the further consequences just beyond that. Beyond a relationship, you have the consequences to the economy at large. When Labor does this, the consequences are very severe. It creates a huge amount of uncertainty. When Labor is forced to amend or recall defective economic policy, it's the Australian public who pays. Its businesses. It's individuals. Anthony Albanese and Jim Chalmers have been running this country into the ground for years. They're running out of people to blame their mistakes on. Soon, they'll have to look in the mirror and realise that the only people they should be blaming are themselves.

Let's just reflect again on the sheer level of incompetence required to produce the result that we are here fixing today—passing legislation that failed to take into account the fact that people die and properties pass to spouses, failed to take into account the fact that marriages end, and assets get transferred. These are not bizarre hypotheticals or 'certain circumstances', as Labor might like to refer to them. Yet Labor has passed its laws, defended its laws, and now here we are, back again, rushing to fix them. This is what happens when political objectives come first and competent legislation and competent process come second. This is what happens when the Albanese Labor government treats Australian money as their own personal piggy bank, where they are desperate to do whatever it takes for them to grab an ever-increasing chunk of it. It is not your money. It is the Australian people's money. The disregard that you have for the hard work that the Australian people do to earn that money—with your failure of due care and your failure of process—is quite shameful. Just look at how hard those opposite defended the indefensible, and they constantly do it.

Let's look at Labor's housing policy. They keep talking about how they're spending more and more money, they keep announcing funds and schemes, and yet prices keep going up. Let's look at the broader consequences of the big tax grab in their budget. Let's look at what they said in their budget. The Albanese Labor government told Australians that the effect of these rushed changes they are putting through, which included the widow tax, would be that rents would not increase by more than $2 a week. They said that in their budget. Yet what do we see? NAB modelling came out and warned that rents could rise by 20 to 30 per cent under this legislation. Immediately, the Albanese government rushed out trying to discredit them but, unfortunately, we have seen real estate bodies come out and say, 'No, it's very likely.' We actually can see in Jim Chalmers's own electorate, Rankin, that some properties are already increasing rents by close to 30 per cent. One example I saw was a $240 increase in rent—after you said in your budget that the effects on rent would be less than $2 a week. If you were wrong about the widow tax, I think you're also wrong about this. I think the effects we're going to see on rent from your rushed tax grab will be terrible.

Labor's budget also said that its tax changes—this tax grab that included the widow tax—would actually not drop the price of housing. In your budget, you said that housing prices would continue to grow, just at a slower rate, and yet what have we seen? Prices are dropping across the country. Labor are now arguing the merits of the price drop as opposed to arguing the fact that their budget was wrong. The budget said that house prices would continue to grow, just at a slower rate, but we are seeing the price of housing go down. So the question is: did you know that was going to be the effect? Did you know that was going to happen? Did you mislead the Australian people, or did you get it wrong, just like you got the widow tax wrong? How soon will it be before we are back in this place having to fix those mistakes as well? You said that rents would be going up by $2 a week. They're going up more. You said that the price of housing wouldn't go down. It's going down. You said that you weren't doing a widow tax, but you did one. We are here having to fix your mistakes and, unfortunately for the Australian people, I think we're going to be here often, having to fix these mistakes for a very long time.

While Labor are fiddling with tax settings and announcing housing deals, you continue to add extraordinary population demand to the housing market. If people think back in time, prior to the first Albanese government, you actually promised to cut immigration. You actually said immigration would be lower, yet you delivered, I think, the record for net immigration in Australian history. Then, when you start to slowly wind that back from its record peak—though it's still extremely high—you ask for credit, 'Give us credit for reducing net migration,' from, I think, over 500,000 people a year to something close to net 350,000 as you try to get towards net 250,000. Again, if we're talking about mistakes, if we're talking about misleading budget figures, nothing has been more wrong than your continued failure to predict immigration figures. Every single budget, you have completely blown past your immigration targets. Your failure to manage some of these economic laws is only rivalled by your failure to manage our immigration system.

Then we have to come back and fix it, and then, in the process of fixing it, you move a guillotine, you rush things through and you have a compounding effect—bad legislation, a rushed process and mistakes fixed with more legislation in a rushed way. We're not going to have appropriate time to go through and do a proper committee stage on half of these things. We'll do our best. But that's not your intention. Your intention is to take away our time. Your intention is to rush things through. It's hard to say what mistakes are going to be laid within the further tranches of legislation that are coming this week, but I'm sure they'll be there, and I'm sure it won't be long before we're all back here in this place arguing again about how to fix the mistakes you have made. I think the Australian people deserve significantly better than this. They also deserve the truth. We're not here dealing with certain circumstances; we are here dealing with the fact that you legislated a tax on widows and legislated a tax on divorces. It's not good enough.

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

Every government says that it supports small business, but the real test is whether the policies of that government give business the confidence to invest. That is the test that we in the coalition have applied to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026.

I want to be very clear: the coalition will be supporting this bill. But those opposite shouldn't be smiling too broadly, because the evidence before the Senate economics committee inquiry into this bill, in which I participated, was very clear: while Australian small businesses welcome the measures in this bill, many believe that they do not go far enough, and that, particularly given the broader impact of this government's budget, more support is required for our business sector. If you speak to small businesses today—we heard from many of them during the committee inquiry, and I speak to many in my home state of Tasmania—the overwhelming feeling at the moment is not one of confidence; it is caution, it is uncertainty, and, increasingly, it is a concern from businesses that survival is becoming more and more difficult. Business owners are asking themselves simple questions: can I afford to invest? Can I afford to hire? Can I afford to grow? The answer depends, largely, on whether government policy settings make those decisions easier or harder.

The coalition supports this bill because it contains measures that improve cash flow, encourage investment and provide some certainty to businesses around the investment environment that they find themselves in. But we also believe that this bill can and should be stronger. Anyone who has run a small business knows that success is rarely a straight line. Markets change, costs rise, demand fluctuates and challenges emerge. That doesn't mean a business has failed; it just means a business is operating in the real world. That is why the coalition supports the loss carry-back provisions in schedule 1 of this bill. These measures recognise that one difficult year shouldn't wipe away years of hard work, investment and success. They improve cash flow when businesses need it most, and they are a sensible reform that the coalition is pleased to support.

Every government, like I say, says it wants businesses to invest and to grow. The question is whether government policies are actually encouraging them to do so, because when businesses invest, they grow. When businesses grow, they create jobs and employ more Australians. When more Australians are in work, communities prosper. That is why the most significant part of this bill is the instant asset write-off, which will support many Australian businesses to make more certain decisions around investing in assets for their business. The certainty around making the instant asset write-off permanent is welcome; indeed, we heard that through the Senate committee inquiry.

Small businesses shouldn't be in a position where they're having to wait until every May, when we come into this place and hand down a federal budget, to find out whether a sensible investment incentive like the instant asset write-off will be extended for another year. Business owners need to plan ahead. They need confidence. They need certainty, and making the instant asset write-off permanent will provide them with that confidence and that certainty year on year.

While we in the coalition believe that making the write-off permanent is the right decision, we also believe that the government has set the threshold for the instant asset write-off far too low. The committee heard consistent evidence during the Senate inquiry that the $20,000 threshold no longer reflects the real cost of productive business assets in today's economy. COSBOA, ACCI, CPA Australia and HIA all raised concerns about the adequacy of that threshold. Like I say, while the coalition has long supported a higher threshold, the government has chosen to proceed with a $20,000 limit, and I think that reflects a misunderstanding of how much business costs have changed. $20,000 doesn't get you anywhere near as far as it used to, and the types of assets that we want businesses to be investing in to increase their productivity often exceed that $20,000 limit. Like I say, business costs have changed, and investment incentives need to reflect that. They should encourage businesses to invest and to grow and to create jobs.

The government says that it wants businesses to be in a position to invest, and the coalition agrees with that, but the evidence before the committee was very clear: a higher threshold would make a real difference to business investment, particularly to small-business investment in relation to that instant asset write-off. $20,000 simply doesn't buy what it did 10 years ago. Ask any tradie pricing a new work vehicle or a manufacturer upgrading their machinery, a construction business investing in equipment or any small business seeking to modernise through technology. The kinds of assets that genuinely improve productivity often cost well above the government's proposed threshold of $20,000. If the government's objective is to drive investment and productivity, that threshold should reflect the real-world cost of productive assets in 2026 not the cost of what those assets might have been a decade ago. The question isn't whether $20,000 helps. I'm not here saying that it doesn't. Certainly, the evidence that we heard in the committee heard was that it does. The question is whether $20,000 is good enough. A permanent write-off is good policy. A permanent write off of $50,000, noting that that is coalition policy, would be even better.

Just as importantly, good tax reform should provide certainty. Australians should be able to understand and navigate through the rules, plan for the future and have confidence that their tax system will operate fairly. This is an issue that we traversed significantly when the first stage of these tax reforms, tax reform No. 1 bill, came through this Senate before the winter break. As we heard through the debate around that bill which has now come into law, unfortunately, certainty has not always been the case with this Labor government's broader tax agenda. A clear example of this has become known as the widows tax.

Australians have now spent more than 90 days waiting for Labor to fix a problem of its own making. Let's be very clear about what happened here. It took the government far longer, I suspect, than 90-plus days to create this problem. After all, it was the Labor government that designed and developed the policy. When concerns were raised regarding this problem, Labor promptly dismissed them. Stakeholders were warning the government. We were warning the government here in this chamber and outside. The consequences of this widows tax were identified before the legislation was even introduced. But the Labor government guillotined debate, particularly in relation to number the tax reform No. 1 bill—and we can argue the same thing is happening here today—and forced that bill through the parliament anyway. Do you remember what happened next? Do you remember what happened when the tax reform No. 1 bill passed this chamber? Those opposite celebrated. They applauded. They congratulated themselves on the passage of this legislation. I wonder whether they're going to be quite as enthusiastic here today when the vote to unwind part of that legislation passes this place. I wonder whether those opposite will be quite as eager to celebrate the repeal of the widows tax as they were to celebrate its passage.

The problem wasn't that the Labor government didn't know or understand the consequences of what they were doing. The problem was that the government, frankly, wouldn't listen to concerns that were being raised. Now they have scrambled to fix the very problem that they spent months denying even existed, and not because they've suddenly discovered the problem. Let's be very frank about this. The reason that we are debating this legislation, as amended, here in this chamber today is not because the government suddenly woke up and realised that there was a problem. It's because the problem became impossible to ignore due to the advocacy of many people in this place and many people outside this chamber as well.

Let's be very clear. The people caught up in the mess of this seemingly inadvertent tax are widows. They are people going through a divorce. They are people trying to leave violent relationships. They are Australians dealing with some of the toughest moments that life can throw at them. This government spent weeks and weeks and weeks telling Australians that there wasn't a problem, while Australians were living with the consequences. They are now moving to fix what they were warned about from day one. That is welcome. We welcome this fix. I'm sure those opposite will hail this as a success, but we call it something else. We call it a policy backdown. I think there was every intention from this government that this tax should continue, and the only reason that it has made this fix here today is the attention that has been brought to it by many inside and outside this chamber.

In concluding my remarks on this legislation, it was very clear through the Senate Economics Legislation Committee inquiry into this bill and through the broader advocacy of the small business community in this country since the budget was handed down in May that businesses aren't looking for special treatment. All they want to see is common sense, certainty, a fair playing field when it comes to operating their business and policies that reflect the economic reality of what they are dealing with. That is why the coalition is supportive of the measures contained in this bill. The loss carry-back provisions are about resilience. The instant asset write-off is about investment and certainty of investment. Both are a move in the right direction. But the evidence before the economics committee was very clear—Australian businesses are looking for something more. They are looking for a broader agenda from government that encourages investment, rewards enterprise and supports productivity.

This government needs to take that message seriously. The government also needs to take seriously the lessons of the widows tax debacle. Listen to businesses, listen to stakeholders and listen to the warnings. Don't wait almost 100 days before fixing up your own mess. When governments stop listening, Australians end up paying the price. Small businesses pay the price, families pay the price and confidence throughout the economy suffers. Australian families and Australian businesses deserve far better than that.

Jonathon Duniam (Tasmania, Liberal Party, Manager of Opposition Business in the Senate) | Link to this | Hansard source

We are truly a hot ticket today with the amount of people that have come to observe debate in this place. As I rise to speak to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, I find myself asking whether what happened here was intentional or whether it was an oversight, especially when it comes to matters related to the so-called widows tax, which, thankfully, we have seen the government pivot on as a result of a sustained campaign by the opposition and, frankly, by the community around bad policy. This policy was punitive, this policy was in no way humane, and this policy, I'm fearful, was designed to hurt vulnerable Australians, all in the name of something this government is renowned for, and that is tax grabs. They were looking for money to prop up a budget that is beset by bad management and overexpenditure.

This is a government that has not been able to rein in its bloated expenditure and has not been able to find the discipline required to manage the books in this country. Instead of reducing expenditure, they find ways to take other people's money. This very cynical attempt at doing that was something they were caught out on, something that Australians noticed and that we, as an opposition, proudly railed against—with support from the crossbench. To that question: was this intentional or was it incompetence? Was it something they overlooked and was not intended? Either way, it is a very alarming set of events to have occurred for a government that is supposed to be in charge and doing the right thing by the people of Australia.

All of this is happening against the backdrop of an economic crisis in this country. We've already heard others talk in this debate to some of the issues faced by Australians as a result of this government's policies. While there is somewhat of a reprieve in parts of this bill—and we'll come to those details shortly—it is worth revisiting some of those things Australians are experiencing right now. Let's start with what's happening to Australian homeowners. Let's start by looking at what's happening to first home buyers. Let's start by considering what experts are telling us about the rental market in this country, and the response by this government. The denial that there is an issue when it comes to house prices—and, therefore, the value of the most secure and stable asset most Australians will ever own going through the floor—and pretending that there is no issue here, and that it's a correction and something to be celebrated, is alarming. As a result of government policy, people's No. 1 asset—in most cases, their homes—has seen a massive dip.

When we're seeing auction clearance rates plummet, when we're seeing the number of houses brought to market similarly plummet, when we are being told this by experts and banks like the NAB—backed in by real estate agencies and Australia's largest property management agency, Ray White—you get this concern outlined that rental prices are going to increase by 30 per cent. That is something Australian households cannot afford. When prices are going down, people are not going to be selling their assets if they don't have to; they're going to get less than they want for the asset they're seeking to sell. This is as a result of government policy. Was this the intention or not? I've heard government ministers having a bet each way—that they want to bring down house prices but then running away from that claim when confronted by members of the press gallery on whether what we are seeing is as a result of government policy. I assert that it is. I assert that the economic carnage we are seeing inflicted upon Australian households is precisely that.

Back to the elements of this bill. Against that backdrop of economic carnage, of Australian communities being let down by this government, which has no capacity to manage our budget, no capacity to grow the economy, no capacity to rein in its expenditure—it is frankly gobsmacking. The widows tax, as Senator Chandler rightly pointed out, was a tax that would have penalised people who lost a partner—a widow or widower—and who, through the transfer of an asset, would have been pinged by Labor's approach to this tax. The exemptions previously available to this cohort of people no longer exist. This bill changes that.

This bill wasn't coming. We were told by government ministers that this was not an issue, that it was something we were running a scare campaign on. But the facts bear out. The biggest fact of all, the fact that the government have backflipped, demonstrates that this was an issue all along and that that denial, that pretence that this was not an issue, was completely false—and they knew it all along. The fact they were willing to consult on this and take as long as they did demonstrates that they knew there was an issue. But I guess we'll never get to the bottom of whether this government knew what it was doing or was completely incompetent and out at sea on this issue, penalising widows across the country or people who are going through that terrible life-changing event of a divorce or escaping domestic violence, penalising these people who are going through something they don't have a choice in—and attracting a higher rate of tax on the transfer of an asset because of the dissolution of a relationship. How is that a government with heart? How is that compassion? How is that anything that is good for the Australian community? It's not. It's a blatant tax grab. It was this government coming after your money hoping no-one would notice—hoping that no-one would see—that this was the intention of its policy. They hoped that, under the cover of a big budget, which had a lot of terrible measures in it, people wouldn't notice it. But, unfortunately for this government, it was spotted.

People across the country saw exactly what was going on here, and I am proud of my colleagues for having sustained a campaign to call on the government to wheel back this punitive set of taxes, to make the changes necessary and to restore some humanity to the budget for vulnerable communities in this country—people that, frankly, should not have had to experience this. Again, I have a question that remains outstanding and that is: did this government intend to do this or was it an oversight? Either way, shame on this government. I commend Angus Taylor, the Leader of the Opposition, for sustaining this campaign to bring about change, and I do therefore commend the bill to the Senate.

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

I thank senators who have contributed to the debate this morning. The Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 is a good bill to get done and have passing the Senate this week, and we're very pleased to have been able to facilitate the passage of this legislation. It is one of those rare moments when the Senate comes together and is able to deal with an issue like this—or a number of issues, actually, that are contained in this bill. As others have commented on through the debate this morning, this was a series of amendments that we were consulting on which were due to be reported on 21 August. It is unusual tax law reform and, as we said from the beginning of this process, we will be dealing with subsequent pieces of legislation in tranches—and that is exactly how Treasury has gone about this work.

But, with the agreement of the Senate to do something quickly, which is quite unlike the Senate in most instances, the government is very happy to have taken the opportunity presented to make sure that we can deal with this bill this session. I would like to thank not only those who have contributed in this debate but also the Treasurer and his team and the Treasury officials who ensured that the TLAB 2 bill arrived in this Senate on time and that we were able to deal not just with the amendment that people have focused on today but also other elements of the bill. That is a great outcome because this continues to progress the tax reforms that we included in our budget. I know there's a lot of concentration on one element, but there are also all of the other elements, including around the instant asset write-off, the loss carry-back and all of those measures that form part of a much bigger and much more ambitious tax reform agenda than any recent government has put forward. It is also a budget that seeks to balance a whole range of reforms, many of which haven't had much analysis post-budget. There has been a lot of focus, obviously, on capital gains tax and negative gearing—and I'm sure we'll continue to discuss trusts as well as the legislation around trusts progresses—but other elements of the tax reform measures haven't had the scrutiny that those elements have. In fact, we were very pleased that the Senate Economics Legislation Committee had already reported and provided some recommendations, one of which we were able to pick up from the coalition—recommendation 4—which was to amend to deal with the issue around transfer of ownership in certain situations, and that has been able to be dealt with in this bill.

I thank those who have contributed to this debate. I welcome the passage of this, and I know the Treasurer and the PM also welcome the passage of this bill. It's another step forward in delivering on comprehensive tax reform work that was included in the budget in May. There will be further legislation to come, and I can only dream and hope that it passes the Senate as smoothly as this bill is passing the Senate this morning. Perhaps we can deliver that, and I will be one very happy repping minister in this chamber.