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

Ms McKENZIE (Flinders) (16:51): It was early March 1983 that I remember having my very first political reflection. I was sitting on the floor at home, half listening to the chatter on the television as my mum intently watched the 1983 election results rolling in. I was 10 and in grade 6, much like the kids up there with the Parliamentary Education Office watching us today.

That night, Bob Hawke was elected Prime Minister. My mum loved Hawkie. A lifetime Liberal voter, she loved his larrikin style, his call-it-as-he-thinks bluntness, his carousing, his former drinking, his brilliance and his wit.

She'd read Blanche's book about him the year before. So I couldn't really understand why Mum looked so worried that night, and I asked if she was okay. She looked at me nervously and said, 'Yeah, I'm okay, but this will make it harder for me to send you to school.' I panicked a bit.

You see, my school wasn't just a good school; it was my second parent. It was the place that didn't forget to pick me up, the place that always turned up to the school fair and made it to all the sporting carnivals. I would have loved it if mum could have been at the fair, if Mum could have come to the sporting carnival.

I would have loved it if she'd been able to remember to pick me up, like, just once—ever. But Mum was usually somewhere else, working her guts out—not to be rich but to be purposeful and to make sure she could keep sending me to a good school. Mum had purpose and Mum had grit.

And when, as a surly teenager a few years later, I complained about my indecision about what to do in life, I said, 'But Mum, what job can you really say has objective worth, purpose beyond the self, and leaves a lasting benefit for others?' Mum quietly replied, 'I save lives'—Mum, one; Zoe, zero. But that 1983 election night taught me all I needed to know about the relationship between hard work, sacrifice, deferred gratification—and taxation.

At that time, Mum was paying the top marginal tax rate of 60c in the dollar. To be fair, Prime Minister Keating went on to drop that rate to 49c in 1985. But, in what you might now recognise as a Peter-for-Paul move, he introduced the capital gains tax at the same time.

At the time, the Labor government thought about making that new capital gains tax retrospective, but when it was finally implemented, after much public outcry, it was on a prospective basis. That change was sufficiently hard-hitting to smash Mum's weekend passion and her second job running a small nursery in the Dandenong Hills, where she would spend all weekend, her hands in the dirt, growing daffodils in the luscious red ground and huge orchids in a nearby glasshouse.

She would cuddle the flowers on Sundays and sell them to flower shops on Mondays before she started her hospital rounds visiting all her patients. But CGT crushed Mum's second job and the dream that gave her so much joy, because, for Mum, plants and flowers, soil and growth made up for the patients with lung cancer she couldn't always save. So on budget night this year I sat here and remembered 1983 and what it might mean for the thousands—indeed the hundreds of thousands, if not millions—of Australians who were learning what this budget was going to do to their hope, their aspiration, their passion, their planning, their sacrifice, their deferred gratification, their pride and their sense of purpose.

In handing down his budget on 12 May, the Treasurer engaged in his usual barrage of 'Liberal light' language: responsible economic management, aspiration and opportunity. He's always talking about a resilient economy. It doesn't feel very resilient today.

Even today, in question time, my colleagues will remember that he actually said that private sector investment in our economy is booming. He actually said that. But, behind the smooth-talking treasurer, the truth was there for all Australians to see and, now, feel: when Labor runs out of money, they come after yours.

And come after yours, by golly, they are—$77 billion worth of pursuit from your hard work and, most egregiously, from the pockets of the people of the Mornington Peninsula who I represent here. The Mornington Peninsula is made up of a lot of people just like my mum. They work their backsides off.

They might build a business. We've got more than 16,000 small businesses in Flinders. They save for their retirement.

They might invest in a single investment property, and, by golly, they take responsibility for their own health care. Their reward from this Labor 'true believer' budget is more tax, a whole lot more tax—$77 billion more worth of tax. This budget hits Flinders harder than most electorates in Australia because of who we are.

We are small-business owners. We are tradies. We are self-funded retirees.

We are among the millions of Australians who have spent decades working, saving and planning for their future and who are determined not to be a burden on the public purse. This budget punishes all of them. Let's start with Labor's changes to capital gains tax.

Labor can call it reform, but Australians know it for exactly what it is: an impost on aspiration. It is a tax impost that will hit hard in my electorate. Australians who hold an asset for more than 12 months currently receive a 50 per cent capital gains tax discount—a change to the original version of the CGT of Paul Keating, the Treasurer's idol.

The discount of 50 per cent was introduced by John Howard and Peter Costello in 1999. Today, Labor wants to fundamentally change that. The consequences for my electorate will be particularly severe.

According to data and analysis by the ATO, Treasury and the ABS, Flinders ranks 12th out of all 150 electorates for the value of the capital gains tax discount currently received by residents. The average CGT discount benefit per taxpayer in Flinders is $3,148. Collectively, residents of my electorate receive almost $305 million in CGT discount benefits every year.

Flinders is also an older electorate, with a median age of 48 years compared with 38 years across Victoria—a full decade's difference—meaning my constituents are closer to the age at which they will retire and hand their businesses over to the next generation of owners. At this stage, their succession plans and their retirement plans are real, and my constituents are counting on them.

This budget throws all that planning and sacrifice into the wind. Flinders also has a lower occupancy of premises. At the last census, 30 per cent of our dwellings were recorded as unoccupied—nearly three times the Victorian average.

Many of these are holiday homes and have been held by families for generations. Many will have accumulated substantial capital gains over time. Some will even have been acquired before Labor's introduction of CGT in 1985.

Under Labor's changes, when those properties are eventually sold, families will face dramatically larger tax bills than they were expecting, not because they suddenly became cashed up overnight but because Labor has decided that decades of saving and sacrifice deserve to be taxed more heavily. Then there are our tradies and our small businesses. Flinders has significantly more tradespeople and owner-operators than any other Victorian electorate.

Nearly 18 per cent of workers in Flinders are technicians and trades workers, compared with just 12.6 per cent across Victoria. My people are plumbers, electricians and builders. They get up before sunrise, they work hard through the week and, often on the weekends, they work on their own homes, renovations or extensions.

Labor's changes mean many of those Australians could pay twice as much tax when they eventually sell their businesses that they have worked their entire lives to create. This isn't fairness. It is a penalty for success, and it sends a very dangerous message: work hard, save hard, invest wisely, build something of value, and Labor will now snatch a bigger slice when you're done.

The economic consequences extend far beyond individual taxpayers. I recently spent some time with David Livingstone watching the Somerville Eagles play at their run-down pavilion. David is the chairperson of the Somerville Business Group, but he is also a former CPA who has spent more than 30 years helping local businesses navigate Australia's ever more complex tax system.

David told me what he has seen amongst our small-business community in Somerville—that our small business owners in Somie routinely work 60 to 80 hours a week with no overtime, no penalty rates, sometimes no holidays, no long-service leave and none of the protections that many employees take for granted. He said that many owners mortgage their own homes, take significant commercial risks and, of course, create jobs for others.

David asked a simple question: Where is the reward after many years of hard work if it is going to be taxed at the same level as wages income? Another constituent, Leo from Mornington, told me: Let me add my concern also as a self funded retiree … who have a small parcel of shares purchased under an employee share scheme when I was still working. I like to sell some shares each year to help with life's unexpected expenses, and so long as the sale value is less than twice the minimum taxable amount, I don't have to pay any tax.

I have several work colleagues with much larger parcels of shares that were part of their salary packages, and like me they expected to be able to supplement their self funded pensions tax free for many years to come. All of a sudden those plans will cost 30% off the sale. As well as the cruel and petty removal of the private health discount for over 65's, the blanket 30% CGT tax on low income retiree share trades, is a double whack at our cost of living.

Within this budget there is another measure that will hit Flinders harder than almost any electorate in Australia. Labor has decided to abolish the additional private health insurance rebate available to older Australians. Again, in my electorate of Flinders nearly one in three residents are aged over 65.

That's almost double the national average. There are more than 33,500 private health insurance holders aged over 65 in my electorate; that's the third-highest figure of any electorate. Some will pay up to $640 more every year just to maintain the cover they already have.

My constituents are in shock. Their private health insurance gives them a sense of safety as well as comfort. They will have choice and not be a burden on the state.

A few minutes ago, Jan Heraty wrote on my Facebook feed: We have had private health insurance since we arrived in Australia in 1968. Our monthly premiums are now $235.01 each. That is a lot to pay out of our pension, but we cannot afford to be without it, as our health is not the best.

We will have to wait and see what our premiums will be, and then decide if we have to go back on the public system. There are 1.4 million Australians right now having exactly this conversation. Private health insurance has supported more than 41,000 hospitalisations for older Australians in Flinders.

Every one of those hospitalisations treated through the private system is one fewer patient taking up a space in the public system. Yet Labor's response is to make private health insurance more expensive and to increase pressure on public hospitals that are already struggling—like the Rosebud Hospital, which state Labor has ignored for years. The people affected are not wealthy elites.

They are Australians who have worked, saved, paid taxes and planned responsibly—people who have done exactly what governments have encouraged them to do for decades. What makes this budget particularly frustrating is that these measures are entirely unnecessary. Australians were promised no new taxes.

The coalition has made its position very clear. We support tax relief for working Australians, we support the working Australians tax offset and we support genuine cost-of-living relief. But we do not support Labor's tax hikes on capital gains, negative gearing, housing trusts and small businesses.

We do not support the abolition of the additional rebate offered to seniors over 65 who have taken out private health insurance. We have moved amendments to remove Labor's capital gains tax and negative gearing changes entirely while allowing tax relief measures to proceed. In other words, Australians can and should have the tax cuts without the tax hikes.

Labor simply refuses to allow it. The coalition has also proposed a better long-term solution: a tax-back guarantee, a simple principle that says that Australians should not pay higher taxes simply because inflation pushes them into higher tax brackets. Under our proposal, income tax thresholds would be indexed to inflation.

Bracket creep would no longer silently increase tax burdens year after year, and Australians would receive automatic tax relief at the cost of living rises. For a typical worker, that means tax cuts of around $250 in the first year, $500 in the second year, $750 in the third year and around $1,000 in the fourth year. That is genuine tax reform, and, unlike Labor's approach, it doesn't require punishing investors, retirees, small businesses and future generations.

Ultimately, this budget reveals something deeper about Labor's philosophy. Labor sees investment as a revenue source. The coalition sees investment as the engine of economic growth.

Labor sees aspiration as something to tax. The coalition sees aspiration as something to encourage. And nowhere is the contrast more obvious than in Flinders, an electorate built by small-business owners, tradies and retirees who have saved and planned.

It was built by Australians who believe that hard work should be rewarded, not punished. The people of Flinders understand a simple truth: you cannot tax your way to prosperity. You cannot build economic growth by discouraging investment.

This budget asks Australians to believe otherwise, but the people of Flinders know that government should stand behind Australians who work hard and plan ahead, not treat them as a convenient source of additional revenue. And for those reasons, I oppose these measures. I oppose Labor's capital gains tax increases.

I oppose Labor's attack on older Australians' private health insurance. And I support the coalition's alternative: lower taxes, stronger incentives to invest, genuine cost-of-living relief and a fair go for Aussies trying to get ahead.