Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026

Mr NEUMANN (Blair) (16:36): I rise to speak on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the income tax bill. We've just heard a diatribe of a half-a-trillion worth of unfunded commitments, which disqualifies the 'blue horizon'. I wonder whether he's ever looked at the result of the last election, the one before that or any polls since then—uncosted policies delivering much bigger deficits, higher debt and higher inflation.

Of course, they're voting against the tax cuts that Australians will receive after what happens on Thursday. I'm pleased to support this real reform from a reforming Labor government. Through this legislation, the Albanese Labor government are delivering a new $250 tax cut for every worker because help with the cost of living is our No. 1 priority.

Combined with our previous personal tax cuts, it means $2,800, on average, back in the pockets of Australians from 2027-28. We're helping more Australians realise their dream of homeownership and supporting investments in innovation through a significant tax reform package, the most significant one we've seen in a quarter of a century. This package is pro aspiration, it is pro jobs, it is pro worker and it is pro homeownership.

It's about helping workers, first home buyers and businesses like those in my community so that more people can earn more, keep more of what they earn, get in the housing market and get ahead. I wonder why the tories over there, the Liberal and National parties, never want working-class people to get ahead. Every single time they've got an opportunity to vote for a bill that provides support for working people, they oppose it.

Before 1985 in this country we had no general taxation on capital gains. The Hawke and Keating government introduced a CGT to ensure arrangements couldn't be made to convert income into tax-free capital gains. It was prospective.

Taxation was of course linked to inflation indexation. Contrary to what those opposite say, the biggest taxing government in the history of the Commonwealth of Australia was the Howard coalition government, and the biggest spending government was the Morrison coalition government. It goes against the narrative of those opposite—the reality of what happened.

Since the Howard government introduced the 50 per cent CGT discount for people who hold their assets for more than 12 months, it has been increasingly difficult for people to get into the housing market—if you're a young Australian trying to buy your first home. We've had 27 years of evidence and experience to know the Howard government got it wrong. John Howard and Peter Costello made a mistake in distorting investment and distorting the economy.

We know that hundreds of thousands of working Australians don't know what it's like to live in their own home, because the conservative parties in this country never cease to kick down. They always want to help those on the up who are rich and powerful and wealthy, and they never want to support working and middle Australians. They do not believe that working-class people, fundamentally, should aspire to the dream of homeownership.

Our government's listened, and we're acting on it. We cannot wait any longer. We have to build on what we've done in the past four years.

I would have more respect for those opposite if they had ever voted for one housing bill in our Homes for Australia plan— $47 billion to increase the supply of housing. But those opposite, the Liberal and National parties, couldn't be bothered to have a housing minister for most of their tenure—nearly 10 years on the treasury bench. On that front, we know supply is the main game.

Those opposite fundamentally do not believe the Commonwealth government has a role in housing. They fundamentally do not believe it. If they had believed it, in that period of nearly 10 years they would have done something about it.

Only hundreds of homes were built by them in those nearly 10 years—hundreds, not hundreds of thousands like we're supporting currently. We know supply is the main game, as I say, but taxation is critical as well in terms of intergenerational equity, investment reorientation and equity between the efforts of labour and the efforts of capital and how they're taxed.

Budget Paper No. 1, at page 142, makes it pretty clear, and I would encourage those opposite to have a bit of a look at the budget papers, not just look at the talking points. The budget papers make it very clear that people on average real incomes of about $800,000 per year during their peak earning years 'benefited from tax concessions worth more than $700,000 over their working life from a combination of the capital gains tax discount, negative gearing and discretionary trusts'.

Budget Paper No. 1 says: In many cases, these concessions mean that higher earning Australians can pay less tax than those with lower means, substantially undermining the progressivity of the tax system. The progressive nature of our tax system is jeopardised by this. It goes on: Without reform, the forgone revenue will continue to grow as the population ages, increasing pressure on the Budget to fund services Australians rely on and limiting the Government's ability to sustainably return bracket creep to Australian workers.

I'd encourage those opposite to read that budget paper, because it's crystal clear, then, that we need to do something about this. This legislation is going to help 75,000 Australians, mainly young, realise the dream of homeownership over the next decade. There are new rounds of tax cuts for 13 million Australians, and we are making tax time simpler.

And we are raising $40 billion over 10 years. This legislation is about cutting personal income taxes again and again and making it easier to buy a home, as well as better aligning the tax treatment of income from work with income from assets. These bills deliver a number of things.

One of these is a new working Australians tax offset, a WATO, to provide a permanent annual tax offset of up to $250 to every working Australian. The WATO will automatically reduce workers' tax liabilities on their income earned from working in the 2027-28 income year. The bills will introduce a $1,000 instant tax deduction from 2026-27 to allow workers to deduct up to $1,000 off their income tax without the frustration of receipt keeping, which I know really annoys people as they work.

The bills replace the 50 per cent capital gains tax discount with a new discount based on inflation for gains accrued from 1 July 2027. Investors in new builds will have a choice between the 50 per cent discount and the new arrangements. The bills will introduce a minimum tax rate of 30 per cent on real capital gains accrued from 1 July 2027.

Recipients of certain income support, such as age pensions and JobSeeker, will be exempt from the minimum tax if those payments are received in the year in which the capital gains are realised. Those opposite never mention that. Finally, this legislation will limit negative gearing for residential properties to new builds from the 2027-28 income year.

Arrangements will remain unchanged for all existing investments made before 7.30 pm on 12 May 2026. The changes are prospective. Capital gains on existing investments that accrue prior to 1 July 2027 will retain access to the 50 per cent discount while capital gains which accrue from that date—from 1 July 2027—will be subject to the new inflation based discount and the minimum tax.

This will ensure everyone pays their fair share of tax. Capital gains tax is paid on the same rate of taxation as an individual pays in the year of its realisation. If you were to listen to those opposite, you'd think that everyone's paying the 47c in the dollar.

It's completely untrue. Most people will pay 30c in the dollar in tax. That's the reality, and that's why the 30c in the dollar is mentioned again and again in relation to what we're doing in this budget and these bills.

The new revenue raised will return to workers and businesses in the near term and, together with substantial expenditure savings, will improve the budget's sustainability over the medium term. Despite what those opposite say, the budget bottom line is better by $45 billion over the forward estimates prior to MYEFO, and the deficit in 2026-27 is actually $7.8 billion less than we inherited when we came to power in May 2022.

So, despite what they say—I read the commentary before—the reality in the budget papers actually shows that we are better off, and the government's saving money through what it's doing. The WATO and instant tax deduction build on already legislated tax cuts. On Thursday, those opposite will have an opportunity to vote to give people tax cuts.

Last term, they voted against tax cuts. They went to an election saying they were going to reverse them. Now, they say they're going to reverse them if they win next time.

That blue horizon seems to be a long way off. For the party that say they're all in favour of tax cuts, their actions in this House—in this place—and in the Senate don't indicate they're actually in favour of tax cuts. The combined benefit for someone in my electorate as a result of what we're doing is $2,816, and 80,000 taxpayers in my electorate of Blair will benefit from this cost-of-living tax relief.

This is the first step in a significant transformation of the tax system, and it really improves it. We know from Treasury modelling that most young people, around 90 per cent, will benefit from the combined effect of these tax reforms before impacts on the housing market are taken into account. This shows that, had the changes been made decades before, those under 30 years of age would be much better off financially.

We're going to really support younger people in particular and people getting into their first homes. What's more, the modelling indicates that people with significant share investments won't pay substantially more tax and will be able to make healthy post-tax profits. That's what the modelling shows.

In terms of the broader impacts, OECD research suggests there's no clear evidence these reforms will reduce investment and productivity in the economy. The prophets of doom over there seem very keen on saying that somehow capital gains tax will increase massively. According to Treasury analysis, a modest increase in capital gains tax will be 19.3 per cent to 21.4 per cent over 10 years.

This is good news, and it means that the market—I think—will start to moderate. From what I've seen of the auctions on the weekend and the news we're seeing, more first home buyers are in the market. That evidence on the weekend is very encouraging.

Those prophets of doom opposite really are saying that our tax reforms will crash the housing market, but that's not the evidence so far, and I doubt that's what will happen. We've maintained, in our budget papers and our commitment, the small-business CGT concessions. Small businesses with an aggregate turnover between $2 million and/or net assets less than $6 million will still be eligible for substantial discounts on capital gains tax, notwithstanding the introduction of a minimum 30 per cent rate on real gains.

The main residence is still CGT exempt. The existing 60 per cent CGT discount for eligible affordable housing is still there. Some of the clearance rates I referred to before show that tax changes are not the only factors that people think about when considering participating in auctions.

Broader economic conditions are also at play. Frankly, we're making it easier—in this bill and the accompanying bill—for first home buyers in my community to get a crack at those auctions. That's a good thing, and that's what reform is all about.

In terms of the sequencing of reforms, these bills are the first tranche of legislation to implement the government's tax reform. Legislating significant reforms in tranches is a standard approach, and past reforms such as CGT, GST and other major changes have similarly been implemented in tranches. We seem to have endless numbers of tax law amendment bills, or TLABs, in this place.

Tax law reform seems to be an endless thing that occupies the Treasury, this House and the Senate. The government is consulting with stakeholders in the areas of trusts—their nature and operation—and the treatment of capital gains tax for small and start-up businesses. Where appropriate, those details will be provided, following consultation, in legislation.

These changes build on our existing home reform to help level the playing field for homeowners. They've come about, very much, because of the Treasurer's national reform roundtable in August last year. There was a strong consensus on the need for intergenerational equity, especially in the tax system.

I held my own Blair Economic Reform Roundtable with representatives from local businesses, unions, government agencies, community groups and experts. Housing and property tax reforms, along with faster environmental approvals for housing projects, were some of the big takeaways from that discussion. I know this is important.

I want to say this as I finish. I got an email from someone which, I think, sums it up very well. Howard from Ipswich said: Thank you for the CGT, negative nearing and trusts changes in this year's budget.

My wife and I bought our first home in— Ipswich— … last year, after years and years of watching the housing crisis worsen and knowing that our younger siblings and friends are being progressively locked out of home ownership. This budget has earnt so much goodwill from us. Every year previously that the housing crisis worsened, every year that housing values grew faster than our savings did, we became more jaded and more angry towards … major parties.

This budget is the first sign for us in a long, long time that the government actually cares about fixing the problem. Please don't sell us out … Howard, we will not sell you out. We will continue to support you and others who want to get into first homeownership.