Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Mr BURNELL (Spence) (17:58): Tax reform is rarely simple and it is rarely easy. Every change to the tax system creates debate because taxation sits at the centre of so many decisions Australians make: where they invest, whether they buy a home or start a business, and how much of their hard-earned income they keep. Yet, one thing has been increasingly clear over recent decades: the status quo is not working as it should.
Too many young Australians are locked out of homeownership. Too many workers feel like they are carrying a growing burden while watching wealth accumulate elsewhere. Too many Australians look at the tax system and wonder whether it still reflects the economy we live in today.
That is why the reforms in the 2026-27 budget matter. They're not an isolated measure designed to fix a single problem. Together, they represent the most significant package of tax reforms undertaken in more than a quarter of a century—a package designed to make the economy work for more Australians rather than the fortunate few.
At its heart, this legislation is built around a simple proposition: Who should our tax system work for? Should it continue rewarding distortions that have built up over decades, or should it support workers, encourage productive investment and help young Australians build a secure future? This government has made its choice.
It is a reform agenda built around fairness, aspiration and effort. Most importantly, it acknowledges that economic policy should serve the many Australians who get up every morning, go to work, pay their taxes and simply want the chance to get ahead. Across Australia, people are working harder than ever, and I see that every day in my community in the north.
Yet many feel that the rewards of economic growth have become increasingly difficult to access. Young Australians are spending longer saving for a deposit, families are feeling pressure from rising costs, and businesses are looking for greater certainty to invest and expand. At the same time, unnecessary complexity continues to make our tax system harder to navigate than it needs to be.
This budget responds directly to those challenges. More than 13 million workers will receive tax relief, businesses and startups will benefit from measures worth $3.5 billion, and compliance costs across the economy will fall by approximately $540 million every year, whilst more homes will be delivered for more Australians. These are not isolated changes operating in different directions.
Together they form a coherent package designed to make the tax system simpler, fairer and more effective. What makes these tax reforms particularly important is that they build upon the government's broader record of responsible economic management. Australians rightly expect governments to confront difficult challenges rather than leave them for someone else to solve.
Responsible management of the nation's finances remains essential if we are to build a stronger and more sustainable economy. Continued investment in health care, education and the services that communities rely upon every day is a fundamental obligation of government. Revenue raised through reforms is being returned to workers and businesses, while supporting stronger budget sustainability over time.
Future generations should not inherit structural problems simply because governments lack the courage to address them. Too often in politics, there is an incentive to postpone difficult decisions. A challenge emerges, everyone agrees it exists, everyone acknowledges it's becoming worse, yet meaningful action is delayed because the problem appears politically difficult.
That is not the approach being taken here. This legislation accepts our responsibility to act now rather than leaving these issues for younger Australians to solve later. Housing affordability provides perhaps the clearest example.
For many Australians, homeownership remains the single most important pathway to financial security. It has long been part of the Australian dream. A stable home creates opportunities for families, provides security in retirement and allows people to build wealth and participate fully in the economy.
Yet, for too many younger Australians, that dream has become increasingly difficult to achieve. The current tax settings have contributed to outcomes that favour speculation in the existing housing stock over the creation of new supply. As prices have risen faster than wages, many first home buyers have found themselves locked out of the market altogether.
That is why schedules 1 and 2 of this legislation are so important. The reforms to negative gearing and capital gains tax are designed to improve housing affordability, while ensuring investment continues to play an important role in the economy. Beginning from 1 July 2027, negative gearing arrangements for residential property purchased after budget night will be limited to new builds.
Why is this? It's straightforward: Australia needs more homes. More supply is essential if we are serious about improving affordability.
Directing investment towards new construction helps increase the number of properties available to Australians, while supporting jobs throughout the construction sector. Importantly, existing arrangements are being grandfathered. Australians who currently own investment properties or utilise negative gearing will not—I repeat, will not—be forced to change their existing arrangements.
Certainty remains in place for current investors. Future investment, however, will be encouraged towards building additional housing stock. The goal is not to penalise people who have made decisions under existing rules; the goal is to ensure that future tax incentives support outcomes that strengthen housing supply and improve affordability.
Modelling indicates that these reforms will help around 75,000 additional Australians become homeowners over the next decade. For thousands of young families, that represents the difference between continuing to rent and finally purchasing a home of their own. Alongside these changes sits an equally important reform to capital gains tax.
For gains accrued after 1 July 2027, the current 50 per cent discount will be replaced with cost-based indexation alongside a 30 per cent minimum tax. While discussions around capital gains tax can quickly become technical, the principle behind the reform is remarkably simple: investors should pay tax on real gains and they should not be taxed on inflation. Returning to indexation restores that principle.
The current arrangements created distortions that influence investment decisions and encourage capital to flow towards particular assets for tax reasons rather than economic reasons. Correcting those distortions helps ensure that investment flows towards opportunities that generate genuine economic value, which creates a positive environment for innovation and long-term economic growth.
Another important feature of the reforms is the broad application across asset classes. A piecemeal approach would simply create new distortions elsewhere. Investors should make decisions based on economic fundamentals rather than artificial advantages embedded within the tax system.
Maintaining consistency across assets supports a more balanced and efficient market. Some investors will pay less tax under these arrangements. Others may pay more.
Our objective is not to increase or decrease tax for its own sake. Our objective is to ensure that inflation is treated appropriately and investment decisions reflect genuine returns. Property investors who purchase new builds will continue to have flexibility when they eventually sell their asset.
They will be able to choose between the existing 50 per cent discount and the new indexation arrangements with the minimum tax. That flexibility recognises the role new housing supply plays within the broader economy. Small businesses also remain protected under these reforms, as existing small business capital gains tax concessions continue unchanged.
For many eligible businesses, those concessions can significantly reduce or eliminate capital gains tax obligations when assets are sold. Entrepreneurship remains vital to Australia's economic future. That is why the government is also continuing consultation regarding the application of these reforms to startups and businesses with low or zero cost bases.
Good policy requires consultation, and complex economic issues deserve careful consideration. Legislating major reform in stages is not unusual. Many of Australia's most significant economic reforms have been implemented through multiple legislative tranches.
This budget establishes the core framework while allowing detailed consultation to continue where appropriate. When viewed collectively, the reforms contained within this legislation reveal a broader vision for Australia's economy. Workers should keep more of what they earn.
Investment should be directed towards productive outcomes. Housing policy should help more Australians achieve homeownership. Businesses should face less red tape.
The tax system should be easier to understand. Future generations should inherit stronger foundations than those we inherited ourselves. Those objectives are not radical.
They are sensible. They are practical. Most importantly, they reflect the values held by millions of Australians.
The budget before the House strengthens opportunity while maintaining responsibility. It supports aspiration without abandoning fairness. It promotes investment while reducing distortions.
It delivers relief today while building a more sustainable future. For those reasons, I support the budget.