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

Dr CHALMERS (Rankin—Treasurer) (11:44): Thank you to the honourable member for Warringah. The first and most obvious point is that there is still a capital gains tax discount under this legislation, just one that better reflects the real gains that people make. The reforms in this bill are about reducing distortions in the market that have been encouraging people to invest in established houses rather than in other assets like units or shares.

The current 50 per cent discount is arbitrary. It undercompensates some investors for inflation and overcompensates others. Since the Howard government introduced the 50 per cent CGT discount at the turn of the century, there's been a big decoupling between housing and incomes, as the honourable member has acknowledged on other occasions.

House prices have risen by more than 400 per cent since 1999, which is more than twice as fast as average full-time earnings. At the same time, the proportion of Australians who own shares has declined by almost 20 per cent. Our reforms will mean that investors in all asset classes will be accurately compensated for inflation in line with the original intent of the CGT regime, and our changes mean some people may pay less tax.

For example, on average, over the past 20 years, the indexation approach would have been broadly neutral or even a bit more generous for share investors. Only applying the CGT changes to property would replace one big distortion with another. Thanks to Howard and Costello, we've had a tax system that has been misallocating investment across our economy for a quarter of a century now.

That's why it's so important to apply these changes broadly—so that, in future, investment decisions are driven by economic outcomes rather than by what delivers the best tax outcome. It's part of a bill, as we said in response to the earlier amendments, which is all about cutting taxes for workers, making it easier for people to buy their first home and better aligning the tax treatment of labour and asset incomes.

For those reasons, we'll be supporting the bill unamended. The SPEAKER: The question is that the amendment moved by the honourable member for Warringah be agreed to.