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

Senator DAVID POCOCK (Australian Capital Territory—Independent ACT Whip) (18:03): I rise 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 and to foreshadow the amendments that I will be moving. I'd like to start by thanking my crossbench colleagues, the witnesses who fronted the committee under a very tight timeline and the many peak bodies, advisers and residents across the ACT who have engaged with my office on these reforms.

Parts of this bill are very welcome and long overdue. Winding back overly generous property tax concessions is something that I have campaigned for across two elections now. The crossbench and housing advocates have argued for years that we need to treat housing more as a human right, as something that we want and need to be accessible and affordable in communities across this great country, not as an investment class, as an asset or as a wealth creation tool.

On that, the government have my support and I welcome their move to do this. But supporting the goal is not the same as accepting a bill that is rushed, incomplete and, in important places, gets the detail wrong. Here is the clearest proof of that.

In the last few days before this committee had even reported, the government has backed down on two of the biggest problems with this bill. On Thursday, it introduced a new 50 per cent capital gains discount for innovative businesses, including founders and employee share scheme holders. Canberra is the startup capital of the country.

We have more startups per capita than any other jurisdiction, and we cannot afford to be driving innovation offshore, particularly in a country that seems to favour multinational corporations when it comes to our government procurement system. I hear from so many startups who say: 'I don't want another grant. I just want to be able to sell to the government, and I don't understand why I need to sell to the UK government or the US government or the Canadians before the Australian government will buy my product or service.' That goes for Defence too.

We see them rushing to the primes, offloading billions of dollars to primes when we have innovative Australian companies that, in many instances, are world leading and selling to other militaries across the world. The government also announced it would scrap the minimum tax on testamentary trusts, and it conceded ground on the sweeping ministerial powers buried in this legislation.

I welcome those changes. They are moves in the right direction, but think about what they tell us. The government is rewriting major parts of this bill on the run, days before the committee even reports after a two-day inquiry.

These were not minor details. They went to the heart of how startups, employees and families would be taxed. If the process had been done properly, we would not be finding this out from a press conference 48 hours before the Senate report lands.

Take the inquiry timeframe. The Institute of Public Accountants told the committee that two days to deliberate was grossly inadequate, given how long these changes will last. The Business Council told the Senate the timeframe was inadequate on any reasonable measure, and, while I disagree with them on many of the things that they've said about parts of this bill, I agree with them on that.

When the accountants and the business community both tell you to slow down and then the government itself has to scramble to fix the bill, that should tell us something as a Senate. I welcome bold reform. Clearly, Australians have had enough with the status quo.

It's not working for so many people across this country. But I urge that it be done right, with genuine consultation, exposure draft legislation and an adequate Senate Committee inquiry. My first amendment I'll be putting forward is a simple one.

It splits the bill. It leaves the WATO, the changes to negative gearing, the instant asset write-off for small business and the standard deduction for work related expenses and sends the hardest part, the CGT changes, back to the Senate committee for proper scrutiny. Our tax system should ask more of those with the most and ease the load on those doing it tough.

That is exactly why the details here matter. A reform aimed at the wealthy, at those seeking to minimise their tax obligations, should not accidentally fall on the wrong people. That's the risk with how this has been designed.

The people most exposed to these changes are not the property speculators this reform is meant to target. They are the early employees of a small startup who took shares instead of a proper wage, the founders who have poured years into a business that might still fail and the researchers trying to build something here in Australia rather than overseas. On Friday, I was at the ANU talking with a incredible startup that's spinning out of the ANU with genuinely world leading tech, and they talked about the challenge of raising capital here in Australia.

They were potentially looking to Europe to be able to develop their idea. We have to retain more of that talent here in Australia and grow those startups here in this country. When their work eventually pays off, it can show up as a single large gain in one year and be taxed as though they were wealthy all along, when, most of that time, they were anything but.

I welcome that the government has recognised this and moved to protect founders and employee shareholders. This is the right instinct, but the way it has been done leaves a real problem. The carve-out depends on a definition of innovative business that nobody can yet pin down.

Companies will qualify based on whether they are genuinely innovative, judged on things like growth potential and scalability. Here is the fair question: who decides, and how do they decide that? A rule this vague does not give people confidence; it gives them a guessing game.

It advantages those who can afford expensive advice to argue their way inside the lines, and I don't think that is fair. The people this carve-out is meant to help should not be left wondering whether it covers them. There's a real problem of uncertainty here.

We've heard consistently that uncertainty is already holding back the kind of investment that creates jobs and builds things here in Australia. A carve-out with an undefined boundary does not fix that. In some ways, it makes it worse, because people can't plan around a rule that hasn't been written.

So good ventures stall, and the jobs that would have come with them do not arrive. I've heard significant concern from startups here in the ACT. My amendments seek certainty, not just intent.

I'll move to make sure that the protections for genuine employee equity and early-stage founders is clearly defined in the legislation and built on existing frameworks, like the early-stage innovation company rules. There were a number of startups through the inquiry process that urged the government to rather focus there and ensure that that framework is working and not leave it to a vague test and future instrument.

I'll also move a series of further amendments drawn straight from the evidence provided to the Senate. The government has said that it will pull back some of the broad ministerial powers in this bill. That is a good thing, but 'where no longer needed' is not good enough.

The definition of a new residential dwelling and the core settings that decide who is taxed and how belong in primary legislation, where parliament can see them, can scrutinise them and then can vote on them. Every property peak has asked for this certainty, and my amendment puts it beyond doubt. I'll also move an amendment to protect grandfathered concessions that the government has announced where ownership passes through death or divorce so that families are not penalised by events outside of their control, if those are the rules that we're going by.

On testamentary trusts, I welcome the government's announcement that the minimum tax will be scrapped, but I note that this change is to come in separate legislation later in the year. It is a promise not yet law. My amendment would put the exemption beyond doubt now, in this legislation.

Bringing in income averaging, again, built up over many years, as not being taxed as if it all landed in a single year, pushing someone into higher tax bracket than they ever really earned, is another amendment that I'll be moving. I'll be moving an amendment to put a low-income threshold so a young rentvestor, student or part-time worker does not end up paying a higher effective rate than someone far wealthier.

A 30 per cent minimum tax makes no sense for someone whose actual income sits well below that. Pensioners are rightly protected under this bill. Low-income workers should also not be left behind.

On housing, I'm calling for the things that matter most to the Australians watching this debate, ensuring the benefits to the budget from these reforms are reinvested back into new social and affordable homes. ACOSS reminded us that this country already spends more on property investor tax breaks than on social housing, homelessness services and rent assistance combined.

We have a chance to change that, and we should take that chance as a Senate. Finally, on small business, it is an important move to make the instant asset write-off permanent. I think this should have been done well before now, but I certainly welcome it.

I'll be moving to increase the thresholds for small businesses qualifying for the small business CGT exemption to all four types of exemption. The government has said that it will do this for one, which really doesn't make sense and I think adds complexity. As COSBOA rightly points out, these thresholds haven't moved in almost two decades.

So this is the opportunity to actually update them for 2026 and into the future. The amendments I put forward are not opposing reform; I support reform. They are about finishing the job properly, backing the people who build things with rules they can actually rely on, giving certainty to the people who invest and making sure the revenue we raise reaches the Australians who need a home.

I urge the Senate to support these amendments and again thank the crossbench for pushing many of the things that have been in this bill, from changes to CGT and negative gearing on property to things like making the instant asset write-off permanent. I note we've actually had some votes on that in the past, and the major parties have not been willing to support them.

So I think this is a really important step forward.