MATTERS OF URGENCY

Senator DARMANIN (Victoria—Deputy Government Whip in the Senate) (16:24): I find Senator Bragg's contribution on this issue somewhat curious. He has what is really an obsession with industry super funds—Cbus in particular—when they're working on delivering decent and fair retirement outcomes for all Australians, and I think it is getting in the way of Senator Bragg being able to have a look at what's really in front of us in terms of these tax reforms.

While Senator Bragg has been feeling quite eager to comment on some of those matters and these reforms here in the Senate chamber, he certainly didn't take up the full opportunity to do so during the important inquiry last week, having not attended at least half of it. Senator Bragg was notably absent for much of the detailed scrutiny undertaken by the Senate Economics Legislation Committee during the inquiry and the meetings in the lead-up.

It's always easier to complain at the fringes than actually engage with the evidence, but, unsurprisingly, the evidence does really matter. The first thing the evidence tells us is that Senator Bragg's motion rests on a false premise, because here's the thing: what is before the Senate is not a new tax. What the government is proposing is a reform to the capital gains tax discount, and that distinction matters.

For 26 years, Australia has provided a 50 per cent discount on capital gains for assets held for more than 12 months. That concession has become increasingly expensive, increasingly poorly targeted and increasingly difficult to justify. As I mentioned just earlier today, the Parliamentary Budget Office estimates that more than $38 billion in revenue has been forgone through capital gains tax concessions since 2010.

Evidence before the inquiry last week estimated the annual revenue cost of existing concessions has been more than $21 billion. Governments must act and respond to impacts on the Australian people, not stand still and wring our hands because it might be too hard to undertake important reform, because Australians deserve better. We are talking about whether taxpayers should continue to subsidise one of the most generous discounts in the tax system, regardless of whether that concession is delivering public benefit.

The evidence before the inquiry was overwhelming. Who is really benefiting? Evidence presented to the committee showed that 82 per cent of the benefits of the capital gains tax discount flow to the top 10 per cent of income earners.

Three-quarters flow to the top five per cent. Nearly 60 per cent flow to the top one per cent. That is not a concession primarily helping ordinary working Australians; it is a concession overwhelmingly benefiting those who already hold substantial assets, and it comes at a substantial cost.

Billions of dollars in revenue are forgone every year through these arrangements. The alternative being put by Senator Bragg is to preserve billions of dollars in tax concessions flowing overwhelmingly to the wealthiest Australians while opposing tax relief for 13 million working Australians. Labor makes no apology for supporting working people over tax concessions for the already wealthy.

At a time when younger Australians are finding it harder than ever to purchase a home, when wealth inequality is growing and when income from work is often taxed more heavily than income derived from appreciating assets, it is entirely reasonable for governments to ask whether these settings remain fit for purpose. That is exactly what these reforms do. They retain recognition of inflation through indexation, they retain important small-business concessions and they retain incentives for genuine product investment.

But they also recognise a simple principle: that a fair tax system should not provide the largest benefits to those who need them least. Senator Bragg claims Australians are being misled. What is misleading is how Senator Bragg and the rest of those opposite arguing against these reforms have characterised them.

Cherrypicking aspects of the reform and manipulating the data just spreads concern and anxiety, which is just incorrect. What is before the Senate is an ambitious reform agenda, and Labor makes no apology for that. We are proud to be putting forward reforms that take on structural inequities in the system—reforms that ask whether longstanding concessions are still delivering in the national interest.

It should not mean preserving tax concessions that overwhelmingly benefit those who are already at the top of the income and wealth distribution. These reforms are about fairness, they are about integrity, and they are about ensuring that the Australian tax system delivers for working Australians.