Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Mr LAXALE (Bennelong) (17:33): I rise today to speak on a budget that takes aim at one of the greatest economic and social challenges of our generation. I want to stand here in this place and say without hesitation that I want as many people as possible in Bennelong to have a chance at buying their first home, because that should be the baseline promise of a great Australian life.
The Australian dream was built on this deal. If you work hard, if you save your money and if you contribute to your community, then a home of your own should be within reach. It's what I was able to achieve, what my parents were able to achieve and what their parents before them as well achieved.
But, ever since John Howard and Peter Costello set our economy on a different path, that deal has been shattered for too many young people in Bennelong and across the country. An entire generation of Australians have been competing in a system that has been rigged against them. Whether they're looking for a home to own or just trying to find an affordable place to rent, young people in particular—this generation that has missed out—know that the system simply isn't working.
Not only have successive state and federal governments not built enough homes for the past 40 years but the entire system has been rigged against young people since that mistake was made in 1999. We see the consequences of that every single day. We see it in skyrocketing rents.
We see it in the heartbreaking rise in homelessness. We see it in the plummeting rates of homeownership. And we see it in the eyes of families in my electorate of Bennelong who are doing everything right but are still finding themselves locked out.
It's all there in the numbers. In 1999 the average cost of a first home in this country was between 5.5 and 5.7 times the average salary. That was achievable.
It required effort, but it was within the realm of reality. Fast-forward to today. The national median house value has skyrocketed to a staggering 15.1 times the average full-time salary.
Even a typical small unit, the traditional entry point for a young couple, now costs about 8.1 times that salary. Bringing it closer to home, in Bennelong—in Ryde, which is right in the middle of my electorate—in 1999 the median price of a detached house was $115,000. Today the median house price stands at an unbelievable $2.43 million.
How can we look the next generation in the eye and tell them, 'Just save harder,' when the goalposts haven't just been moved but have been launched into another stratosphere? My community had told me time and time again that the status quo isn't working and that this Labor government needed to do something to change it. That's why, at this budget, we've taken the difficult but necessary decision to fix the Howard and Costello mistake of 1999.
We're here to fix that error and to address the deep structural inequality in how different forms of income are taxed so that every working Australian can benefit. Those opposite, and plenty in the media, will say we aren't doing enough on supply. But, again, the facts speak for themselves.
This budget builds on what has already been the most ambitious housing agenda since World War II. Our Homes for Australia plan is now more than $47 billion, and we're incredibly proud of our achievements so far and the progress that is being made. The Housing Australia Future Fund is delivering more than 200 affordable and social units in Bennelong.
The five per cent first home deposit guarantee is unlocking more than 1,000 people in my electorate to buy their first home. Our Build to Rent reforms will see more than a thousand Build to Rent units coming into Bennelong alone, let alone across the country. And of course there is our agreement with the states and territories to build more homes through the National Housing Accord.
This budget goes further. We are putting an extra $2 billion into enabling infrastructure through the Local Infrastructure Fund, because you can't build homes without the basics. You need the footpath, the pipes and the power.
This $2 billion will unlock up to 65,000 new homes across the country, and we're cutting red tape to get it done. To access this fund, states and territories must take decisive action to speed up planning approvals. We're also looking after those at the very sharpest end of this crisis, not ignoring them anymore.
We're investing $59.4 million for states and territories to secure social housing for more than 4,000 eligible young people at risk of homelessness. And I commend the Special Envoy for Social Housing and Homelessness, the member for Macnamara, for all his work in this field. But while building supply is vital and while supply, supply, supply has been at the forefront of our housing agenda, it had become abundantly clear to me and to members of my community that more was required in order to level the playing field.
We had to look at the tax distortions that had been actively shutting people out from owning their first home. For decades, our tax system has rewarded investors for simply swapping existing properties back and forth, driving up prices without adding a single room to our housing stock. This policy mistake, made by John Howard and Peter Costello, was designed to get more people to invest in the share market.
Instead, it left existing housing stock as the most lucrative of investments, distorting the market and shutting out a generation from homeownership. To address this, we are limiting negative gearing for residential property investments to new builds only. This is something even the former treasurer of this country, Joe Hockey, supports, except that he said that on his way out.
He said that in his valedictory. This is a government that recognises that this policy position needs to change, and we've got the guts to change it. Negative gearing will remain fully available for newly built homes, for certain government supported housing programs and for existing investors under strict grandfathering rules.
If you want to invest in property, we want you to channel your investments into creating new supply because that's good for you and it's also good for the country. Encouraging the construction of new homes is an important policy position we need to get to. The second lever of change is, of course, changes to the capital gains tax.
When the modern CGT discount was introduced by the Howard government in 1999, it completely distorted the market. By offering this blunt blanket 50 per cent discount on nominal capital gains, it made speculating on property far more financially attractive than investing in other, productive assets. It created an intersection between the housing market and the tax system that slammed the door shut on a generation of young Australians.
Our goal here in these reforms is to neutralise these distortions and, importantly, not introduce new ones but bring a fairer, more neutral treatment for capital gains. First, we're introducing a new capital gains discount model based on indexation. Instead of that blunt 50 per cent discount on nominal gains, an asset's original cost base will be adjusted upward for inflation using CPI.
This is important because it means that you will only pay CGT on your real gains, not your nominal gains. In high-inflation environments, like the one we're in right now, this calculation may actually leave many investors with a lower capital gains taxable amount than before. In fact, if the asset growth is less than twice the rate of inflation, then the taxable amount is most likely to be less than under the current system.
Secondly, we're implementing a 30 per cent capital gains minimum tax rate. This baseline rate will apply to net capital gains after inflation is factored in. But, crucially, we've protected vulnerable Australians.
There are explicit exemptions for income support recipients, age pensioners and super funds. This important change is about levelling the playing field between those who earn their income primarily via wage and those who earn it via other legitimate means. It is a really important reform that has long been talked about.
Of course, there are smooth transitional arrangements, as any good government would do. For assets that are already owned, the 50 per cent discount will still apply for growth accrued up to 1 July 2027. From then on, any capital growth, if there is any, will apply under the new system.
To keep our focus squarely on supply, investors in eligible new builds will also retain the choice of having that 50 per cent capital gains discount on nominal gains or the new model. We know that there are many factors driving up prices in the Australian housing market, but we also know that the status quo cannot remain. This is what just shocks me about the response from the opposition, where they've openly said they're going to vote down this important bill, which includes tax cuts and helping people to get into their first home.
We know that the status quo isn't working. It's not working for productivity. It's not working to get more people into homes.
It's not working for working Australians, who bear the burden of the tax take of the Commonwealth. These reforms will give 75,000 first home buyers their entry into owning their own home and will help reverse a decade of decline in homeownership rates. Other reforms will balance the burden currently on the back of Australian wage earners across the country.
This budget is about two things. It's about coming to terms with the errors of the past. It's about listening to young Australians and working with them to set up an Australia with a fairer future.
It takes political courage to fix the structural errors of the past. While others sit here to defend a broken status quo, my electorate has told me again and again that the status quo is broken and that things need to change. To me, this budget represents a positive line in the sand.
This is the change our economy needs, the change our budget needs. We're doing this at the right time for the right reasons, and I commend this bill to the House.