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

Ms STEGGALL (Warringah) (09:51): I want to start out by shouting out some school students we have here watching. It's always exciting to see them here, because the decisions we make in this place very much impact the prospects and opportunities they will have in their life as they grow up. And while many young people too often think they're not interested in politics, I always remind them: if you're not at the table, you're on the menu.

Decisions will be made that impact your life, and whether you like politics or not, it is in your life. We make the decisions and the laws that, ultimately, will shape their opportunities, and that is very relevant for the debate we have today in relation to these bills to give effect to the government's budget. Some aspects I support, but for some I am really deeply frustrated that we are in the situation we're in.

Australia needs serious tax reform. We need a system that is fairer and more efficient, that rewards work, that improves housing affordability, and that also supports productivity and ensures the burden of fiscal repair is shared fairly. But good reform is not just about the policy objective; it is also about the process, about how you get there and how you bring the community along, the consultation that you engage in with communities, with business, with all the sectors.

Unfortunately, the process the government has followed here in this instance is just not good enough. This is a substantial bill. It contains really important and significant reforms, some very much needed, but it also bundles together several very different measures, and measures that do not have social and social licence or support at this stage.

Some have broad community support and clear policy rationales; others are complex, contentious and far-reaching, and the government still cannot articulate exactly what will be the unintended consequences, what will be the scale or the reach of these measures, who will be caught by them, where the carve-out will be, or what the definitions of who this applies to will be.

The government is asking this parliament to pass major economic reform without providing the modelling, the evidence, the consultation needed to understand its full impact, or the clear information about how small business will be defined, what carve-outs are going to be negotiated or who will be impacted in the end. That is not how you make significant tax reform that lasts or that has social licence and consensus.

That's why it is so incredibly frustrating when I look at the debate in relation to this reform. I know major tax reform requires transparency and scrutiny. It requires courage and it requires bringing the community along.

Instead, what the government has chosen to do is package housing reform, cost-of-living measures, capital gains tax changes, trust taxation and small-business impacts into one omnibus bill. From many members of government, we're hearing that the justifications for this are fairness and affordability of property. But this bill goes way beyond that, and the public isn't buying it.

They're not accepting that this is just about making property and homeownership more achievable. That's why the course the government has chosen to take in relation to this is so incredibly frustrating. In particular, as members in this place, we can't really do our job of scrutinising this legislation properly.

The time for the debate in relation to this bill has been inadequate. The consultation and the refusal to have it properly investigated at committee are all major issues. There are some parts I very much support and welcome.

Prior to the last election I went to my community supporting winding back capital gains when it came to property and investors. There was a strong case there. I was frustrated when the government and in fact the Prime Minister made repeated promises it wouldn't touch it, because ultimately these are areas that need changing.

We have to pull the demand-side levers as well as the supply levers when it comes to property pricing. Again, it just goes to show the political manoeuvring and the disappointment; you're bundling together all the various aspects of this legislation and these reforms on a vague promise: 'She'll be right. We will work out the details later; just trust us.' That's just not good enough for the majority of the Australian people.

And it's not good enough for me, because I take seriously my responsibility to the people of Warringah to ensure that the legislation has the detail and that I have the details before me when I make a decision to support legislation or not. So let's unpack what is in this legislation and why it's so frustrating, because there are clear groups that are frustrating.

As I said, the detail we have so far is not good enough for me, but it's also not good enough for the majority of the people from Warringah who have contacted my office. There are clear groups of people really frustrated and disappointed with the government. They want change to capital gains tax in relation to property investors.

They want affordability, so first home owners can have a fair shot and not compete with investors. But they also want to have an opportunity for aspiration. They want an opportunity, after they have worked their day job, been paid their wages and contributed.

If they are going to take risks, invest, try and raise our productivity and build a buffer through investment, shares, a small business or a startup, they want to know that those risks that they are prepared to take can be rewarded. Essentially what the government is saying is: 'We will put everyone on an equal par. It doesn't matter if you're just prepared to shop for a job or take risks and not be paid for years as you invest into an opportunity; you will all be treated the same way.' That is not how we grow productivity.

That is not how we encourage investment. It is not how we are going to make the best of Australia going forward. In relation to what the bill actually does, it has the four key elements of the government's tax reform package.

Schedule 1, which is the most contentious, makes significant changes to capital gains tax arrangements. It replaces the existing 50 per cent capital gains tax discount with a return to cost-base indexation and introduces a 30 per cent minimum tax rate on real capital gains from 1 July 2027. I have serious concerns about the breadth of schedule 1, and I'll return to that.

But I have to say up front that the whole indexation model is confusing. The public does not understand it, and you are not taking the community on board with you on that. Schedule 2 limits negative gearing for residential property investments to new builds.

This reform, I would argue, has broad community support. Under the current system, investors can deduct losses from property investments against their income while later benefiting from discounted capital gains. That combination has helped push prices up, and it made it harder for first home buyers to compete against property investors.

Although, people who bought properties before May 2026 will keep the existing rules. It's been really clear with the community that they can essentially bank those profits, the gains they have made. It is simply setting a line in the sand to say that, moving forward, the opportunity for property investment will be and those advantages will be around new builds, which will then help boost supply.

These are good things. This part of the bill is targeted, as it applies to residential property. It maintains incentives for new housing supply, and, importantly, existing investment decisions are protected through those transitional arrangements.

In simple terms, this does not abolish negative gearing entirely, it just redirects it away from established homes towards new housing supply. Schedule 3 introduces the working Australians tax offset, providing $250 for working Australian taxpayers. At a time when households are under enormous cost-of-living pressure, any additional support is welcome, but let's be honest: $250 a year, in a year's time, will not make a meaningful difference to many households facing rising mortgage repayments, rents, insurance, groceries, energy and healthcare costs right now.

Schedule 4 introduces a $1,000 instant tax deduction for work related expenses. This is a practical measure that will simplify tax time for some Australians, but, again, let's be clear: if you're already claiming deductions greater than $1,000, it's business as usual and the situation hasn't changed. This instant tax deduction allows eligible taxpayers to claim up to $1,000 of work related expenses without itemising and substantiating every claim, so, yes, this will reduce complexity.

It's welcome. Workers with straightforward deductions should not have to navigate unnecessary administration, but, again, this has been packaged as some phenomenal cost-of-living relief, when, for many people, it will have little or no financial impact because this will all be in 12 months time. More importantly, this bill provides no meaningful relief for those in our communities doing it the toughest.

ACOSS has highlighted that more than four million people on the lowest incomes, including people receiving JobSeeker, pensioners and single parents without paid work, will not benefit from these tax measures. JobSeeker remains around $409 per week—less than half the minimum wage—while housing, food and essential costs continue to rise. I've raised this with the Treasurer.

The irony is that we are in the second year of the second term of a Labor government. The government has only raised JobSeeker once, in 2023. It was a minimal change with a promise of more to come, and, yet, here we are, three years later, with nothing in this budget for the most vulnerable.

This is not just a welfare issue. It's a dignity issue and it's also a workforce participation issue. When people cannot afford to secure housing, transport, health care or basic necessities, it becomes harder, not easier, to get back into employment.

A strong economy is one where everyone has the opportunity to participate. This bill does not meet that test. The most significant part of this bill is schedule 1, which makes broad changes to capital gains tax arrangements.

Currently, individuals, trusts and partnerships usually receive a 50 per cent capital gains tax discount if they hold an asset for more than 12 months. With this change, the discount would be replaced with a minimum 30 per cent tax rate indexed to inflation. The family home remains exempt from these changes, and so will new builds.

I want to be very clear: I support reforming capital gains tax settings when it comes to investment property. For too long, Australia's housing system has been distorted by tax settings that favour those who already own assets over those trying to buy their first home. In Warringah, I hear about it every day.

Young people who grew up locally are wondering whether they will ever be able to afford to live in the community they call home. Parents and grandparents tell me they have benefited from rising property values, but they are deeply concerned about what this means for their children and grandchildren. Many people who have done well from the current system recognise it is no longer delivering fairness.

The combination of negative gearing and capital gains tax concessions has encouraged investment in existing housing rather than the new supply Australia desperately needs. Housing should ultimately be about creating a home, not simply a vehicle for investment or tax advantage. I commend the government for being willing to tackle an area of reform that has been politically difficult for decades, but what you've done is bundle this with other issues that you don't have social licence for.

Schedule 1 goes much further than just property, and that's where it falls apart. Schedule 1 extends these changes across shares, managed funds, ETFs, business equity, trusts and other capital assets. I've heard from young professionals, small-business owners, startups, founders and families who feel completely blindsided by these changes.

One constituent told me she and her partner have done everything they were told to do. They've studied. They've worked hard.

They've got big HECS debts. They've built careers. They've borrowed responsibility within their means.

They have good incomes. But, between high housing costs, bills and everyday expenses, they still feel like they are barely getting ahead. That is their aspiration, which the government is whacking with this bill.

They're not wealthy investors living off passive income; they're working Australians trying to build some financial security, a buffer. For many young Australians who cannot get into the property market, investing in shares, ETFs or startups has become one of the few pathways available to them to build that nest egg, that economic buffer. The government says this is about intergenerational fairness.

Well, intergenerational fairness is not achieved by making housing slightly fairer while reducing other pathways for young Australians to save, invest, build businesses and create financial security. We must be careful that, in trying to fix one unfairness, we're not creating another. If the target is speculative investment in existing housing, then target that.

Do not drag productive investment, modest savings, employee equity and startup capital into the same net without clear evidence and information and modelling around unintended consequences. That is the central problem with this bill. Small and medium businesses in Warringah have raised similar concerns.

Shares, startups and business equity are not the same as passive property investment. For many entrepreneurs, early employees and investors, capital gains are the reward for taking risk, building a business, accepting lower wages and backing innovation. There can be years of no dividend from an investment, and the government now, by saying that it should all be treated in a flat way, is not recognising the risk and the years of delay that go into being an entrepreneur.

These are not multinational corporations with large balance sheets. They are often local employers and family businesses who have spent decades building something. COSBOA have raised their concern around the definition of 'small business', and I hear from the government that there are negotiations.

But, again, here we are being asked to vote on legislation when we don't know where it's actually going to land, who is going to be carved out or where the definition of 'small business' will be. There are so many issues, and then we have the impact on trusts. Some 370,000 small and family businesses operate through trusts, yet we don't have clear visibility.

There is not enough time to raise all the concerns with this bill, but I move the amendment as circulated in my name so that more investigation into this legislation can occur: That all words after "but" be omitted with a view to substituting the following words: "notes that: (1) the Government's capital gains tax reforms should be limited to investment property; (2) proposed changes affecting business assets, shares, exchange traded funds and trusts should be referred to a parliamentary committee for proper scrutiny before proceeding; (3) an inquiry should examine the potential unintended consequences of the proposed changes, including impacts on small business, young investors, productivity, risk-taking and household financial resilience; and (4) the Government should consider targeted exemptions or thresholds for modest share investors, so younger Australians are not penalised for using shares and exchange traded funds to build financial security outside the property market".

The DEPUTY SPEAKER ( Ms Scrymgour ): Is the amendment seconded? Dr Scamps: I second the amendment and reserve my right to speak.