Treasury Laws Amendment (Tax Reform No. 1) Bill 2026, Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026
Senator BRAGG (New South Wales) (18:27): There's a little thing called a democratic mandate, which is supposed to be a system where people put forward their ideas before an election and people can either vote for or against those ideas. In the UK, they call it a 'manifesto' and here we would call it a 'platform'. Now here in this country, the Prime Minister said that there would be no changes to these tax arrangements, and he was at great pains on occasion to say there would be no changes to the CGT or to the negative gearing arrangements if he was to be re-elected.
Now, of course he has broken that promise and he will now have to wear that broken promise like a crown of thorns. This is not really a productive use of my time this evening in the Senate, because everyone knows that these commitments were made and they were breached. But it is important to note we are all custodians of a system where the Australian people are allowed to decide who they want to run the show and what policies they should be pursuing.
Now, that is something that the Prime Minister will have to consider over the coming years, and, no doubt, his colleagues will also closely consider these matters. I suspect we won't need to prosecute them too much more. This other old theory is a difference of opinion on tax policy.
Now, in the Liberal Party, in the coalition, we have a view that the government has no money of its own. If the government wants to get money, it needs to raise the money from the citizenry and from the businesses in order to spend it on public good. We've always had a view that it's a reasonable proposition that taxes should be raised as efficiently as possible and public services should be provided as efficiently as possible.
But I go back to this point around the theory. On this side, we're firm in our belief that taxation is effectively legalised theft. We're taking something from the citizens, and we are going to spend it on something for the greater good.
On the other side, you hear things like 'tax handouts'. We heard before from the Greens that there are handouts when people are paying less tax. This shows you the mentality of the other side of this chamber.
They believe that the tax money belongs to the government. We believe that the tax money belongs to the people. That is a clear difference of opinion across the board.
Senator Scarr: A core value. Senator BRAGG: A core value—thank you, Senator Scarr. The other great theory is: what is a reform?
I would have thought that a reform of the tax system would be something that moves the whole show forward, moves the nation forward, with perhaps a more efficient way of doing things, a better way of doing things or maybe a way that will attract more stuff, and we get more stuff as a result. Senator Scarr: Increased productivity. Senator BRAGG: Exactly right.
In this case, it is clear that the other side thinks that a tax reform is when you just raise more money. If you look at the budget, you'll find that $77 billion of new taxes will be raised. That's tax raised.
Taxing is not reform, unless you constitute a significant regeneration of the scheme, as we saw when Howard did the GST, when we had the capital gains tax changes in the eighties or when we had the business tax reforms. Those are reforms. Raising taxes isn't reform.
I think this shows how bad the debate has been in this country for decades that this guy thinks he can hold out this policy as reform and get away with it. I've said before that I very much regret that we haven't had more contests and more debate on tax reform. The fact that Allegra Spender has done the only tax policy in years, and it was a terrible plan, shows how badly this country is going, because no-one else can even be bothered getting out of bed and doing a tax plan.
The fact that some of these policies that Ms Spender has been peddling have been cherrypicked also shows the danger of big thinking, but I do want to encourage all colleagues to always put forward ideas, particularly if they are genuinely reforms. But what we've ended up with is the highest pay-as-you-go system and the highest capital gains system, so nothing's actually been improved.
All we've got is the downside. Nothing's better, and the 77 billion bucks just disappears into Canberra's coffers to be redistributed somewhere else—God knows where. I guarantee you one thing, Deputy President: that $77 billion is not going to help the budget bottom line, because we're still stuck with $1 trillion of debt and deficits as far as the eye can see.
In terms of the theoretical part of this contribution, I make the point that, yes, the democratic mandate has been breached and, yes, the principle that the Labor Party believe in, that taxes belong to the government, has been ticked off. The fact that they're holding out these tax hikes as reforms brings home the trifecta. You've got the democratic mandate breached, you've got confirmation that they believe that all the people's money belongs to the government, and you've got the big lie that this is some sort of fantastic reform where all the unicorns come and live.
You've got to think to yourself, 'Well, why would a rational person and a clever political machine come up with this idea?' I've thought about this a lot. You can say what you like about the Labor Party. They're terrible at governing.
They're the champions of maladministration, as evidenced by the budget papers. But they're very good at politics and spin. You've got to give it to them.
They sit down there, and they think about how they can spin, spin, spin and then occupy the treasury bench forever and ever and never actually do anything. It reminds me of some state governments in the past, actually. But the point is that this is just another gimmick.
So far, we've had three gimmicks in their housing policies. They have the Housing Australia Future Fund, which has been going for 2½ years, which has got 10 billion bucks and built a handful of houses. Then we had the five per cent deposits which can go to anyone, and it pushed up prices and made things harder not better for young people, and now we've got this big lie that apparently fiddling around with the taxes is going to solve the housing crisis.
No-one honestly believes that the housing crisis is going to be fixed as a result of high taxes and also a 30 per cent tax on everything else. No-one believes that. But, when you hear the housing minister carry on with this garbage that she carries on with that, apparently, John Howard and Peter Costello are responsible for the housing crisis because of a tweak to the tax code 25 years ago, it insults the intelligence of the electorate.
One of the things that I would advise the government about is people have more information now than they've ever had. People have access to a lot of information, and people know that that's not right, because people can also work out there's two sides to a market. There's supply, and there's demand, and what's happened over the last few years is supply has collapsed and demand has increased.
Even just this last four years of the Labor Party's term in office, we've had two million people increase in population, and we've only had about 600,000 houses built. Clearly, there's a mismatch there which has added to the problem. At the end of the day, the supply piece is where it's at in housing, and people know this.
I think the days of politicians going around bribing the electorate with give outs and handouts and whatever else you want to call it—bribes and grants and other things and 'here's some free money for you—are coming to an end, and that's good, because all these demand-side measures in the main have been damaging. If you go and talk to a builder, they'll tell you that those grants are subsumed by builders and developers into the price, and so prices have gone up while supply has gone down.
People know that this tax gimmick is another housing gimmick and that it won't solve the problem, and we won't see the housing system fixed until we supply about a quarter of a million houses a year. That's the reality. What actually is the bottom line here in terms of this housing issue, given this is ostensibly about housing?
I think it is going to be about making home building more economic. Building costs are too high. Productivity is negative in the building sector, and we have not had any real attempt to grapple with the things that the Commonwealth government does control, like this National Construction Code which actually could be cut down to a very small document, and you could actually be allowed to build a cheap house in Australia, if that were your wish.
The fact that we gold plate all these houses and that we have the difficulty with getting the labour and that we have the CFMEU and all the other different productivity issues has made a perfect storm where it's very hard to make a buck out of home building. So people look at it and say, 'Actually, I'm not going to do that.' The underlying issues—the Labor Party have stuffed the housing system.
They have stuffed it up because they haven't been prepared to address any of these labour or productivity issues. They haven't been prepared to look at the nexus between migration and housing, and all their all their housing supply policies have been a disaster. They're going to miss all their housing targets, and their government fund has been an absolute sinkhole of government funds.
Having failed on all those fronts, they thought, 'We'll have this new tax thing and maybe that will help,' but that is only going to make a bad situation worse, because who could believe that the government would have a deliberate design feature to reduce housing supply by 35,000? They say, with all their gimmickry and spin and rubbish, that 'oh no, that's not really a real number, because we're going to offset it with 6,000 in an infrastructure fund', but the number is there in the budget.
It's a number—35,000 fewer houses because of higher taxes. That's there. I think it's incredible, to think about this housing crisis, that any government would want to do anything to reduce housing supply.
We should be trying to get any building we can. We should be trying to build on top of other buildings. We should be trying to add buildings to existing titles.
We should be trying to allow people to build cheap houses and mini houses and motor houses and mobile houses and whatever. That's what we should be trying to do. We shouldn't be trying to gold-plate everything, pay off the CFMEU or do anything else, no matter what the government's motives are.
The reality is that we have no idea, really, about the impact of these bills. We had a sham two-day inquiry where the government used its numbers to close down any real avenues of proper analysis. We had more time hearing from St Vincent de Paul than we did from actual people who'd done the fair-dinkum analysis—people like Chris Brycki, the Francis Brothers and whatever; people who have actually pored over this and looked at the portfolio analysis and the impacts on the economy.
They were denied service—'We don't want to hear from you. We just want to hear from a few of our mates.' I'm sure we heard from the ACTU—I didn't make that decision about the hearings—and I'm sure that, when they came, they didn't declare their financial interests in a super fund which stands to significantly benefit from the arbitrage in this legislation. The super funds will only pay 10 per cent if they invest in something, but the poor old punter will pay 30 per cent, or the foreign investor will pay 15 per cent but the punter will pay 10 per cent.
And today we see more arbitrage. They're going to kick the SMSFs in the pants, but they're going to protect all their old mates—Wayne Swan and the 40 thieves and everyone else at CBUS and AustralianSuper and all their mates. The government at least is consistent on this front.
They are a government for vested interests. They only get out of bed every day to help out their mates. It just so happens this tax policy has been perfectly crafted to support all their friends in their great endeavours to invest in everything with a tax advantage that no person in this country can avail themselves of.
If a person invests in a basket of shares, under this disgraceful legislation they do not benefit to the same rate as a big super fund, in terms of the tax rate but also in terms of the way that losses are treated. The regulatory impact analysis was done on the basis of the recommendations of Senator McKim's committee report. There wasn't even a RIS into this bill, which has changed about five times.
It changed yesterday and it has changed again today. Even if you wanted to do a RIS, you wouldn't know what you were actually looking at. So we have no idea of the long-term damage this will do to the economy.
We do know that a 30 per cent CGT is punitive and bad for our economy. It makes us one of the most highly taxed economies on the planet. But, at the end of the day, the idea that more taxes on housing are going to be good is insane, and I flag that we will move amendments in relation to some of these superannuation matters so as to ensure that all super funds have the same tax benefit, rather than just picking out a few to get a kick in the pants from these government vested-interest people.
The DEPUTY PRESIDENT: Can I just confirm that you are foreshadowing a second reading amendment, Senator Bragg? Senator Bragg: Yes, that's true. The DEPUTY PRESIDENT: Thank you very much.