Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Ms MILLER-FROST (Boothby) (21:39): These tax reform bills—the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026—are about reasserting Australian values and the Australian dream—an Australian dream that was conceivable for our parents and grandparents and which is now almost impossibly out of reach for our children and grandchildren.
It isn't just a question of equity; it's about resetting standards and rebuilding foundations so all Australians have the opportunity to achieve the best of what this wonderful country promises if they work hard enough and dream big enough. It's about restoring a fair go. I am the beneficiary of a fair go, a promise that was offered to my family and me all those years ago when we migrated to Australia as part of the wave of ten-pound Poms seeking better opportunity and a better life.
We were economic migrants. I am the product of tradespeople and factory workers. My grandfather worked in the Holden factory in Elizabeth, north of Adelaide.
My father was an electrical draughtsman for Simpson-Pope, a whitegoods manufacturer. By the fact of their own sheer hard work, they were able to buy a home and raise a family in the comfort of that home. Of course, when we migrated to Australia in 1968, the average cost of a house was about 2½ to four times the average wage, statistics that my children and grandchildren and their generations can only dream of.
That I am able to stand here before you today is testament to the boundless opportunities that this country can afford for all Australians. To deny young Australians today—our children and grandchildren—these opportunities would not only be unfair; it would be un-Australian and giving up on the Australian dream. The Albanese Labor government is committed to giving every Australian, young and old, a fair go.
This budget is about giving every Australian a fair go—a fair go at homeownership and a fair go at working hard, earning a fair wage and getting ahead. These bills seek to restore the Australian dream, to make it an unquestioned truth that an Australian who works hard will be able to get ahead no matter where they start—the children of factory workers or the children of professionals.
It should be available to us all. There are four major planks in this tranche of the tax reform package: the working Australians tax offset for over 13 million working Australians; an instant $1,000 tax deduction; reforms to CGT, capital gains tax, to return the cost base indexation with a 30 per cent minimum tax; and reforms to limit negative gearing to new builds.
These measures will make our tax system fairer, simpler and stronger and will benefit, in particular, low- and middle-income earners. This will benefit young Australians looking to get a leg-up in the housing market; it will continue our support for investment and innovation; it will provide for tax relief and tax reforms that actually work for Australians and businesses and not against them; and, because of the Albanese Labor government's responsible economic management, it will mean an improved budget bottom line that is sustainable into the future.
This budget will make the biggest changes to capital gains tax and negative gearing in decades, because the reality is that massive changes are needed to reform an entrenched tax structure that has disadvantaged everyday Australians looking to get their foot in the door of buying their own home. The Albanese Labor government is prepared to take up the challenge because it is an urgent and pressing challenge.
In 1999, when the Howard government made the catastrophic changes to negative gearing and capital gains tax—changes that turned housing from being a home, a fundamental part of the Australian dream, to being an investment vehicle and that drove investors away from shares and other productive investments that build the country and into established housing, beginning the upward spiral of housing prices—the average house cost around three to four times the average wage, a tiny increase from the cost 30 years earlier in 1968, when my family arrived and bought a house.
In 2026, less than 30 years on, it is now 10 to 16 times the average wage. The increase in house prices has massively outstripped the increase in wages. The average age of a first home buyer late last century was somewhere in their mid-20s.
Today, the average age of a first homebuyer is in their mid-30s because it takes so much longer to save a deposit, and the downstream effect is that they're also likely, therefore, to delay starting a family and settling down. A major cause of this asymmetry is the capital gains tax rule that Howard introduced in 1999. Howard's 50 per cent discount on CGT was intended to boost investment in shares.
Instead, investors gravitated away from shares and towards low-risk, high-yield established properties. What this means is that more than $80 million of investment lending has been directed towards established homes. Investors have monopolised the established housing market, outcompeting first home buyers because of their taxpayer subsidies—that's subsidies that you and I, Mr Speaker, are subsidising—all of which has been further compounded by dramatic declines in new house builds.
Before 1999, Australians paid the difference between the purchase price and selling price of their asset, adjusted for inflation. Now we are returning to cost base indexation for CGT, which will be paid on real gains with a 30 per cent minimum tax rate, the marginal tax rate that most Australians pay on their income, because it's unfair and morally unsustainable that Australians should be paying more on their labour income, their wages, than investors pay on income generated from other assets.
Why would we tax wages earned by workers, the people we want to continue to build our country, more harshly than other forms of income? How is that fair? How is that the Australian dream?
These changes will also prevent investors from delaying their capital gain to when they can exploit a low marginal tax rate. Under these new arrangements, all Australians will be obligated to pay their fair share when they make a capital gain. Exemptions will apply to those on means tested income support, including those on JobSeeker and age pensions.
The Albanese Labor government's reforms to capital gains tax will smooth out the distortion in the tax system that has allowed house price increases to massively outpace wages. The changes will also apply to all asset types, whereas previously the privileging of one asset type over another resulted in another wrinkle in the tax system. These changes will mean a redirection of investment spread across all asset classes, like units and shares, not just existing properties.
Investors who have a stake in new builds can choose the tax arrangement that is more favourable to them: the 50 per cent discount or the new cost base indexation with 30 per cent minimum tax. These tax reform bills will also limit negative gearing to new builds. Again, investors are overwhelmingly attracted to established properties because they're able to claim generous deductions for losses with negative gearing from day one.
That's at the expense of the taxpayer, who is obligated to step in and reimburse the loss. And it's not been an uncommon scenario today—or at least a few weeks ago, before the budget—that everyday Australians at auctions would find themselves competing against investors who could outbid them. Because the investors have had the capital and money to spare, because they could invest in something, they could pay more than its value knowing they would make a loss—thanks to the taxpayer.
We want people to invest in things that will actually build income, not make a loss. This simply isn't fair. We are hearing from first home buyers that already, since the budget, they're able to buy a property at a fair price—now only competing with other first home buyers and not having to compete with investors, who can pay inflated taxpayer subsidised prices.
Under these new arrangements, if investors currently have a property negatively geared, the previous tax arrangements under which they made their investment will continue to apply. I know this grandparenting is controversial in some quarters, but the rationale is that people who made valid investment decisions under the old regime shouldn't have the goalposts moved on them.
In the future, negative gearing for new investments will only be available for new builds, supporting an increase to the housing supply, something that this country desperately needs. The Howard-era changes apparently intended to achieve this but failed miserably. The old capital gains tax and negative gearing models have allowed investors to disproportionately buy established housing relative to other assets while leaving everyday Australians looking to get into the housing market by the wayside.
This government's reforms, broadly supported by independent economists, will spur investment in new builds while minimising the tax incentive that has favoured established property. All together, we predict that these reforms will increase housing supply by 30,000 over the next decade and get 75,000 more homeowners into the housing market. The reforms are about levelling the playing field, and they're about giving every Australian a fair go.
These bills will also facilitate another round of Labor tax cuts, allowing Australians to get ahead to make the most of the fair go with their own hard-earned wages. We want Australians to earn more and keep more of what they earn. Australian workers should not be disadvantaged by their wages income relative to income generated from other sources, such as investments.
We have a shortage of workers in this country. Every business I speak to tells me how desperate they are for skilled labour and how they could expand and grow if only they could find more workers. So we want to incentivise workers to work and to earn more.
It's the Albanese Labor government that is intent on ensuring that Australians keep more of what they earn. Working Australians will receive a tax offset of up to $250 on their income, helping over 13 million hardworking Australians, including approximately six million women. This will effectively see the tax-free threshold increase for workers by $1,785 to $19,985 or, for workers eligible for the low-income tax offset, $24,985.
There will also be a $1,000 instant tax deduction. Rather than claiming on work related expenses, Australians can now choose to claim an instant tax deduction directly on their income without having to keep receipts. Over six million workers—notably, low- and middle-income workers—will benefit from this deduction, with an average saving of around $205.
Next month, 14 million Australians will get a tax cut of up to $268, and this will benefit around one million taxpayers in my home state of South Australia. Speaker, I know you've been following along very closely, and you would have noted that I started by talking about four planks, and now I've now introduced a fifth. The fifth is in fact the new tax cut next month, which of course was locked in under the government's previous term.
The next one is 1 July next year. Then we have tax changes to make housing more affordable, a $250 workers tax offset and a $1,000 instant tax deduction. All in all, the average worker will benefit by nearly $3,000.
These tax cuts are about giving all Australians a fair go, and that includes young Australians, who are overwhelmingly but not exclusively the aspiring first home buyers. Sixty per cent of the recipients in next month's tax cuts are the over eight million gen Z and millennials, the workers we need to build our shared future. Ninety per cent of young Australians will be better off because of these tax cuts.
The Albanese Labor government is in the business of giving all Australians a fair go. We're in the business of ensuring that Australians who work hard are able to get ahead—an essential value, the Australian dream. We're in the business of making the Australian dream a reality again—a reality that was generously afforded to my family and me as migrants to this country all those decades ago.
We came here for a better life. We bought into the Australian dream: a home of our own; public education; public health; good, secure, well-paid work; and a fair go. At the heart of the Australian dream is the opportunity for all Australians to afford their own home—a home in which to feel safe and secure, a home in which to create memories, a home in which to raise a family.
The government's changes to capital gains tax, negative gearing and the suite of tax cuts will mean that a fair go will no longer be the mirage of times gone past. It will be reality again—something to aspire to, something real and tangible to work towards—because Australia, if nothing else, is defined by the fair go, and who are we as a country if we're no longer able to meet that promise.
I commend the bills to the House. The SPEAKER: The question is that the amendment be agreed to. I give the call to the honourable member for Groom.