Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Mr NG (Menzies) (19:12): I thank the member for Wentworth for her considered and measured contribution. I rise today to speak on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the related Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. At the heart of these bills are two key principles: that workers should not carry the undue burden of the tax system and that everyone should be rewarded for their hard work and aspiration by having the opportunity to buy their own home.
These go to the very Australian value and the very Labor value of a fair go for all. My dad migrated from Singapore to Australia in his 20s with nothing. He's worked as a licensed aircraft maintenance engineer, first for Ansett Australia and then for Virgin Australia, for over 40 years now.
He's supposed to be retired, but he still takes the occasional shift. My mum was the first in her family to go to university. When we were growing up, she was a hospital worker.
She'd go to her shifts in her bright blue uniform with bright blue mascara and a big perm. It was the eighties! While working, she studied a law degree, bringing me to lectures when I was a baby, and she became a lawyer.
My parents worked hard and sacrificed and bought their first home in Doncaster East in the electorate that I'm now proud to represent. They built a life and gave me and my sister opportunities that they never had, and for that we are very grateful. That story is not unique to my family.
It is the story of my community of Menzies. It's the story of hardworking people in Doncaster, Box Hill, Warrandyte and Templestowe and the other suburbs that it's my honour to represent here in this place. These are communities built by people who believed that if you worked hard and played by the rules the system would give you a fair shot.
But something has changed. The young people I speak to across Menzies are working just as hard as my parents did and as their parents did, yet many of them have said to me they don't believe they'll ever own their own home. We've stood up a youth advisory committee, and we speak to people at schools.
We knock on people's doors. And young people will overwhelmingly say, with a kind of resigned laugh, 'I don't think I'll ever own my own home.' Many people of my generation and of younger generations have never been able to achieve that dream. House prices have gone from four times the average income to eight times that.
Homeownership among Australians aged 25 to 34 has fallen by seven percentage points. The system has made it easier for people to buy their fifth investment property than their first home. That is not the Australia of a fair go for all, and it is not the Australia that the Labor government is prepared to accept.
This budget we took on the challenge of restoring something that should never have been lost: the basic principle that if you work hard and if you aspire to own your own home, everybody can have the opportunity. That ambition should be rewarded. The next generation should have the same opportunities as the ones that came before.
And that's why we're enacting the most significant tax reform in a quarter of a century. It is pro-worker, pro-aspiration and pro-investment. These bills implement four key parts of the government's 2026-27 budget tax reforms: first, a $1,000 instant tax deduction for work related expenses, effective from this financial year; second, the working Australians tax offset, a new $250 annual tax cut for over 13 million workers from July 2027; third, reforms to capital gains tax, replacing the 50 per cent discount with cost base indexation and a 30 per cent minimum tax; and, fourth, limits on negative gearing of residential properties to new builds.
Together, these reforms will reduce the tax burden for over 13 million workers, support 75,000 more Australians into homeownership over the next decade, deliver $3.5 billion in new business tax measures and cut compliance costs by $540 million a year. By 2028 the average Australian worker will be over $2,800 better off. I'll start with the $1,000 instant tax deduction.
From 1 July 2026, workers will be able to claim a $1,000 instant deduction on work related expenses without needing to keep receipts. The member for Warringah was talking about simplifying the tax system, and that does exactly that for people who are on low and middle incomes. Think about what this means for a nurse at Box Hill Hospital keeping track of uniform costs or a tradie in Warrandyte holding onto fuel receipts.
There's no paperwork. From 2026-27 around 6.2 million workers are expected to benefit from this measure, with an average tax saving of $205. More than half of those workers will be women.
More than three-quarters will earn under $100,000 a year. This, as I said, is simplifying the tax system. It saves time and it puts money back in the pockets of working Australians.
The ATO estimates this measure will save $380 million in compliance costs every year, so it's an efficiency measure. Schedule 3 of the bill introduces the working Australians tax offset, a $250 annual tax cut for every Australian who earns income from work, starting from the 2027-28 financial year. That's permanent structural improvement to the tax system.
It will benefit 13.3 million Australians. Millennials and gen Z are expected to make up around two- thirds of the beneficiaries. The offset increases the effective tax-free threshold for workers by $1,785 to $19,985, or up to $24,985 for those also eligible for the low-income tax offset.
Combined with our previous rounds of tax cuts and the instant tax deduction, the average Australian worker will be over $2,800 better off by 2028. This is a government that is consistently, year after year, putting money back into the pockets of working Australians. We've cut taxes five times in five different ways.
Schedules 1 and 2 of the reforms go to the heart of why so many Australians feel locked out. House prices have risen 400 per cent over the last two decades. Just 44 per cent of Australians aged 25 to 34 now own a home.
The current settings have actively fuelled inequality. The 50 per cent capital gains tax discount introduced by Howard and Costello in 1999, together with negative gearing, dramatically incentivised investment in established housing. Combined with unconstrained negative gearing, it created a system that rewards property investors at the expense of first home buyers.
So, from 1 July 2027, negative gearing for residential properties will be limited to new builds, because we want to encourage housing supply. We know that that is a big part of the picture of housing affordability, and that is our focus. But these measures are also an important part of ensuring that people can afford to buy their first home.
Losses on existing investment properties purchased after budget night will only be deductible against residential property income. Very importantly, those who already hold investment properties and have signed contracts will be fully grandfathered. We know that people have planned for their retirements with their investment properties, and that's something that we'll be honouring.
Existing arrangements do not change. From 1 July 2027, the 50 per cent capital gains tax discount will be replaced by cost base indexation so investors pay tax only on real gains above inflation, bringing the capital gains tax discount back to its original purpose. Key protections remain.
Age pension and income support recipients are exempt from the minimum tax. The four existing small-business CGT concessions are fully retained. Investors in new builds can choose either the 50 per cent capital gains tax discount or the new indexation arrangements.
Treasury estimates these reforms will support, as I said, 75,000 additional first home buyers. This legislation, as I said, is built on a simple principle: a tax system should work in the interests of hardworking Australians, not just those who have already accrued wealth. Those opposite have pledged to repeal this entire package.
Let me be clear about what this means. It means keeping distortions that have priced a generation out of the housing market. It means protecting a system that delivered 400 per cent growth in housing unaffordability.
That's not a plan; that's a promise to protect a broken status quo. My dad came here with nothing. My mum worked hard.
They didn't have intergenerational wealth, but they were able to buy their first home. That should be possible for all Australians, including the young people in my community today. This government is making sure that that remains the case, and I commend this bill to the House.