Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Ms CLAYDON (Newcastle—Deputy Speaker) (17:06): I rise to speak in very strong support for the original bill that is before this House, the Treasury Laws Amendment (Tax Reform No. 1) Bill of 2026. Whilst not surprised, I'm really disappointed to learn that the opposition members will oppose these measures. But, then again, there's probably not a single, solid reform piece of work that's required a lot of heavy lifting in this country that the opposition hasn't opposed, whether it was Medicare, superannuation, establishing free TAFE in more recent years, a national Maritime Strategic Fleet or minimum wage increases.
These are all significant reforms undertaken by Labor governments, who are always prepared to stand up and do the heavy lifting, when those opposite want to go, 'Stop; the status quo is good enough,' we say, 'There's always room for improvement.' When the people in Australia hear the words 'tax reform', it's probably fair to say that they're not generally thinking about the intricacies of legislation or technical settings here.
They want something much simpler. They ask themselves: 'Will this make life fairer? Will this help people who work hard?
Will it give Australians a better chance to get ahead?' And that's what this bill is all about. It's about tax cuts for working Australians, it's about making tax time simpler, and it's about helping more people buy their first home. And it's about making our tax system fairer so that work income is treated the same as asset income and the Australian dream of homeownership is not just being pushed further and further out to reach.
The first thing this bill does is cut taxes for workers and introduce a new working Australians tax offset of up to $250 a year. Unlike a tax deduction, which lowers your taxable income, an offset directly reduces the amount of tax you owe. If you're eligible, you will receive the full $250 value to either reduce your tax bill or increase your tax refund.
It applies to Australians who earn income through their jobs or as sole traders. According to Treasury, about 97 per cent of working Australians will receive the full $250 tax offset, and that means more money back for people who earn wages, salaries and income from their work. It is for Australians who earn their income through work, whether they are nurses, teachers, firies, retail workers, the aged-care workers or small-business owners.
That is on top of the tax cuts Labor has already delivered. Taken together, our tax cuts mean the average working Australian will receive around $2,800 back in their pocket. Trust me—the Australian people are going to welcome that.
This bill also introduces a $1,000 instant tax deduction for workers—no receipts required. It's a recognition of genuine work expenses that many people put their hands in their own pockets to fill right now. If you need more than $1,000 you are going to need to provide receipts and proof, but we recognise that this $1,000 instant tax deduction for workers will be a great relief and free up a lot of resources within the ATO.
At the moment, many workers have to keep receipts for their uniforms, for equipment they buy, for countless small work-related expenses. It's a real headache for a lot of workers. They don't bother claiming for things that they are perfectly entitled to claim for, either because they haven't kept the receipt or because they don't want to spend their time trying to work all that out at tax time.
We know that, and this bill makes that a whole lot simpler. From the 2026-27 financial year, eligible workers will be able to claim an instant deduction of up to $1,000 for work related expenses without having to go through the receipt-by-receipt process. As I said, it doesn't mean that people who have more than $1,000 in expenses lose out.
They can still claim more than $1,000 if they have the records to support it. I think most Australian people will think that is a genuinely good reform measure. It doesn't stop people from claiming other tax deductions, of course, like donations to charitable organisations, union fees, professional association fees, income protection insurance or superannuation contributions.
It's a practical reform that makes tax time simpler for working Australians, and that's a good thing. Then there's housing. This is the part of the bill that many people in my community care deeply about, because housing is not an abstract policy debate.
It's about security. It's about stability. For many women, it's about safety.
It's about whether Australians believe that if they work hard, and save hard, they can buy a home of their own. For generations, Australians believed that that dream was achievable, and today too many people feel it is slipping away. Young people should not be told that the only way to get into the housing market is to have wealthy parents.
People in their 30s and 40s should not feel like they have failed because the market has moved faster than wages ever could. First home buyers should not be turning up to auction after auction—those terrible stories you hear all the time—only to be outbid by investors who have a sneaky little silent partner with them at those auctions called every single Australian taxpayer.
They have tax advantages that those first home buyers do not have. That is the reality that too many Australians are facing, and for too long those housing settings have favoured investors purchasing existing homes over first home buyers trying desperately to enter the market. For too long, governments have looked at the problem and decided reform was too hard.
Not this government. The reality is, too many Australians are doing everything right and still find homeownership completely out of their reach. This bill starts to address that.
It reforms negative gearing so that, from 1 July 2027, negative gearing for new residential property investment is focused on new builds. If tax concessions are going to support property investment, they should help add to the housing supply in this nation. They should help build more homes.
They should not simply encourage investors to compete with first home buyers for the same established homes that already exist. Existing investors are protected. Properties already held before budget night are not affected in the same way.
Going forward, the system will be better targeted. That is fair. It is fair to existing investors who made decisions under the current rules.
It's fair to the first home buyers who deserve a better chance. This bill also reforms the capital gains tax. It replaces the 50 per cent capital gains tax discount with a system that indexes the cost base for inflation, so tax applies to real gains and not inflation.
And that's an important principle. People should not be taxed on inflation. But, at the same time, our tax system should not give a better deal to wealth from assets than it gives to income earned from work.
This is about getting the balance right. It's about recognising that income earned through work matters. It's about ensuring that our tax system does not continue to reward settings that are locking too many Australians out of homeownership.
While some commentators have criticised this reform, I know that it is not the view of everyone in my community. I know that because constituents are reaching out to me directly to tell me what these changes could mean for them. One constituent wrote to me just this weekend.
He said he is 34, lives in Hamilton, has a great job and has significant savings, but property investors continue to outbid him at auctions. He said this budget is the first he has seen that seriously offers him a chance to ever own his own home. And that is what this reform is about; it's about people who are doing the right thing and simply want a fair chance.
Another constituent wrote to me to say they never thought they would see a government finally address the impact of negative gearing on access to homeownership for younger generations and for older Australians who had not yet purchased a property. They wrote: I am so excited and proud to be Australian. Yes, reform is hard.
Yes, there will be scare campaigns. Yes, there will be people who defend the current system because the current system works very well for them. But leadership is not about protecting every part of the status quo.
Leadership is about seeing what is wrong and having the courage to fix it. One constituent put it well when they wrote to me after the budget: Some months ago, there was widespread appreciation of the need to address generational inequity. That conviction is still there, I'm sure.
If not now, when can you make a start on reform? 'If not now, when?' Well, I agree, and this government is totally in agreeance with you, and we say: the time to act is now. We act in a serious, responsible and practical way to address these gross inequities. I know there are many folk wishing to speak to this bill tonight—and I can understand why, because this bill is part of a much bigger budget story that is great news in terms of tackling some of those very, very stubborn issues in Australia where reform is desperately required.
It's what Labor governments are elected to do. We're there to make life fairer, to back working people, and to make sure aspiration and opportunity belong to every Australian, not just those who already have wealth behind them. This bill cuts taxes for workers.
It simplifies tax time. It helps first home buyers. It makes our tax system fairer.
And it takes an important step towards restoring the Australian dream of homeownership and providing a fair go. I commend the bill, unamended, to the House.