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

Ms JARRETT (Brisbane) (20:49): For too long, Australia's tax system has more generously rewarded wealth than work. For too long a nurse working nights, a teacher buying classroom supplies, a tradie leaving home before dawn or a retail worker struggling with rising rents have paid a greater share of their income in tax than people making large gains from property and passive investments.

That's simply not fair. Right now, it's also simply too tough to get into the housing market—ask Angus and Nick from my electorate. It's so different to when I grew up.

Dad was the only wage earner, yet he and mum could afford to buy a house for us kids—eight kids and a few foster kids. It was a small worker's cottage, but it was my security and my home. It was where I painted walls when mum and dad were out, where we shared the yard with the dogs Benji and Tina and even played cricket with a few neighbours, breaking a few windows in the process.

But the Albanese government is making some big changes. We've delivered tax cuts for all working Australians and we're now taking steps towards building a fairer economy, one where hard work is rewarded and where the dream of homeownership is not permanently pushed out of reach for our younger generation. Every Australian taxpayer will pay less, with the greatest proportional benefits flowing to low- and middle-income earners.

By reducing tax rates in the lowest brackets, Labor has recognised a simple truth: when ordinary Australians are doing it tough, governments should help put more money into their back pockets. The working Australians tax offset, one item in this bill, will provide a permanent tax offset for up to $250 every year for over 13 million Australians from the 2027-28 financial year.

This bill also delivers on our commitment to introduce a $1,000 instant tax deduction from the 2026-27 year. Workers can still claim other non-work related deductions such as charitable donations or super contributions, union and professional association membership fees et cetera. This is designed to help make the tax system simpler for millions of workers.

This is responsible tax relief targeted at working people. It represents the most meaningful permanent increase to effective tax-free threshold since Labor last increased it more than a decade ago. Around 6.2 million people will benefit, with the average worker receiving an extra $205 at tax time.

More than a quarter of those who will benefit will be under the age of 30 and more than half of them will be women. This Labor government is now cutting income tax five times in three different ways. We've already delivered tax cuts to every single Australian taxpayer by bringing rates down and pushing thresholds up.

Another tax cut will commence on 1 July, in just a few weeks, and another on 1 July next year. Together with the new tax relief in this bill, the average Australian worker will receive a combined benefit of up to $2,800 in 2028. This isn't small bickies.

It's almost $3,000—over a month of the average rent in Brisbane. In my first speech to this House, I spoke of one of the biggest challenges facing leaders right now being intergenerational inequality, especially in housing. Every one of us in this chamber should be motivated to provide at least the same opportunities and aspirations to the younger generations as we had, to deliver fairness and the dream of owning your own home.

That's what these bills are about. I talk to so many people across the Brisbane community: parents, students, young professionals and many more, and all want to see a better future for themselves, the next generation. But what I also hear is, 'We are working hard, it's tough to get ahead, and the system is not working for us.' And they're right.

The status quo is not working, especially regarding the big Australian dream to own your own home. Australia cannot solve the cost-of-living crisis or the housing crisis without addressing the way our tax system has deliberately encouraged investment to flow into existing assets rather than towards productive economic activity. For decades, generous capital gains tax concessions have distorted wealth creation and investment.

We've heard it in this House. The current system allows investors to receive a 50 per cent discount on capital gains regardless of whether those gains come from genuine economic growth or are simply arising because asset prices have risen due to inflation. Labor's reforms seek to restore the original principle: tax real gains, not inflationary gains.

Under the model, capital gains will be adjusted for inflation, rather than adopting a blanket discount. This is not radical. This is common sense.

If a worker pays taxes on their wages earned through effort and productivity, why should someone else who is making a financial gain from appreciating assets receive a larger tax preference? Labor's reforms are about balance. They are about ensuring that the tax system serves the entire nation, not just those fortunate enough to already own multiple investment assets.

The proposed changes to capital gains tax and negative gearing are also, though, about housing affordability. Right now it's too hard for many Australians to get into the housing market and get ahead. As I said, I hear this daily from young people, mums, dads and grandparents.

House prices have risen by 400 per cent over the last two decades or so. They've gone from four to eight times people's income over the past 20 years, and ownership is down by seven per cent for young people. In Brisbane alone, the median house price has risen by $173,500 in 12 months.

That's almost three times the average Queenslander's take-home pay. So it's no surprise that just 44 per cent of Australians aged 25 to 34 own a home of their own. Our reforms are designed to help level the playing field for first home buyers and encourage investment flows to where it's most productive, including new housing supply.

There are so many stories of young people lining up to buy their first home only to be pushed out by investors that have a tax advantage on their side. Where's the fairness in that? Labor is seeking to redirect investment towards new housing construction rather than speculative bidding wars over existing homes.

By encouraging investment in new builds, these reforms can support housing supply while easing pressure on first home buyers. Critics may say that these reforms will punish success. They don't.

On this side of the House we do believe that success should be rewarded, that entrepreneurs should be rewarded, that small businesses should be rewarded, that people who take risks and create jobs should be rewarded. These changes still reward success, but not at a rate that far outstrips those who get a pay packet every week and not at the expense of rewarding productive investment.

The Barefoot Investor has offered some commentary on the reforms, saying, 'The system lets wealthy families with good accountants pay less tax than nurses and tradies.' To me, that just doesn't pass the pub test. Dr Tom Hird, an economist and founder of CEG Asia-Pacific, said in a recent article: Of course, business owners take risks. I did.

Businesses fail, clients disappear, employees have to be paid before owners are paid. But risk is not a magic word that justifies any level of tax concession. The question is not whether the tax system should have concessions for entrepreneurs that salaried employees don't receive.

I happen to think that it should. But does 12 to 20 per cent tax on $1 million strike the right balance? If you think 30 per cent is closer to the right balance then you should be applauding the government's budget Deputy Speaker, you would also have seen many posts going around the internet saying that with these changes the government is becoming a lazy partner in business.

But ask a simple question: compared with who? Compared with a nurse or an engineer, whose income is taxed before it even hits their bank account, or compared with their own employees, many of whom will pay more tax than the business owner? The truth is that people like Dr Tim Hird have done very well out of the current system.

As he said: We have played by the rules. But we should not confuse playing by the rules with the rules being economically sensible—let alone fair. This is sensible commentary from those who understand that these changes are fundamentally about fairness.

We are presenting the elements in these bills together not just because they're related, but because one part helps fund the other. Changes to capital gains and negative gearing will help pay for the tax cuts for all Australian workers. This is the first tranche of legislation.

There'll be more on specific implementation details in other parts of our tax-reform package. Legislating significant reforms in tranches is a standard approach, consistent with how other governments have undertaken tax reform, and it's appropriate to ensure core policy features that apply broadly to most taxpayers are in place first. As outlined in the budget, the government is consulting with stakeholders on the treatment of capital gains of small and start-up businesses, where indexation is applied to a low or zero cost base.

A modern economy grows when capital flows into businesses, innovation, manufacturing, renewable energy, technology and housing construction, not when tax settings overwhelmingly favour the accumulation of existing assets. These reforms are really about intergenerational fairness. Many Australians are working harder than ever, studying longer than previous generations and carry larger debts, yet they feel further away from the dream of owning their own home—further away than their parents ever did.

There's a reason for this. The current system is skewed against everyday workers: bankers, electricians, plumbers, cleaners, nurses, teachers and more. And what the government can do is to be brave—take brave steps to fix what is broken and make the system fairer.

By opposing these reforms, those opposite want to keep down younger Australians trying to get ahead. They will continue locking them out of the housing market. They're okay with a system that unfairly favours the wealthy over mums, dads, students and others who work hard every day just to make ends meet.

They show their true colours by voting against our cost-of-living measures, including our tax cuts. They have said, over and over, that they will vote against these reforms and that, if the reforms get passed by parliament, they will repeal them, should they end up in government. This is astounding, not just because of the increased cost to taxpayers but because their now shadow treasurer actually understands this.

He admitted in his book that the current CGT concessions are entrenching wealth and exacerbating intergenerational inequality, and the tax discounts on assets tend to favour well-off and established interests against those trying to get ahead. I want to say to young people across Australia and in the Brisbane electorate: We get that the system is broken. We could have done the easy thing, and just kept going on with the same old same old.

But we, this Labor government, want to support you, to give you the best opportunities in life—to give you a fair crack. That's the Australian way. And we will always fight for you.

A fair tax system is not one where everybody pays the same amount. A fair tax system is one where everyone contributes according to their capacity and where opportunity is not determined by whether your parents owned a property before the boom. It's one that rewards effort as much as wealth, and that's not the case now.

Labor's vision is straightforward: tax relief for working Australians, support for first home buyers, investment in housing supply and an economy that works not only for those who already have assets but those who are aspirational, who are still striving to build a future, because the strength of Australia has never come from the privileged few; it has always come from ordinary working people.

And that's who these reforms are designed to support. As leaders, we have a responsibility to ensure the next generation can live a life that they're proud of—that they can build a life they aspire to. But it requires us, as a government, to set the building blocks for opportunity—the same opportunities as, or better than, we had.

This budget lays down the foundations to deliver just that. It's about building aspiration. It's a budget about hope.

It's a budget providing an ability to build a safe and stable home and a community for people across my electorate and across Australia. I commend the bill to the House.