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

Senator SCARR (Queensland) (18:42): It's an absolute privilege and an honour to follow my dear colleague and friend Senator Bragg, who, I think, in that speech, which traversed many areas, wandered across the Australian policy landscape like an explorer. He made a number of fundamental salient points, which I think we should all reflect upon in the course of this debate.

I'd also like to thank Senator Bragg for the contribution he's making to policy development within the coalition. I think he's doing an outstanding job. As Senator Bragg said, we have to start this debate on the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 with the fundamental fact that this budget represents a broken promise.

The Labor government went to the people at the last election and promised on no less than 50 occasions that they were not going to change the rate of capital gains tax, they weren't going to impact negative gearing arrangements and they weren't going to engage in the very conduct and make the very changes which they're seeking to implement through this bill.

That's the starting point—that the Australian people were misled. They were told one thing by the Labor government before the election, and now we're seeing the Labor government do a complete backflip and do the opposite. That hurts all political parties in our system because it undermines the integrity of our democratic system.

When a party goes to the people at an election on the basis of a particular platform and a particular policy suite, the Australian people have a right to expect that, whichever party it is, that party will be true to its word. That didn't happen at the last election, and that will be an albatross around the necks of Prime Minister Albanese and this Labor government as we move towards the next federal election.

In terms of the policy issues itself, on quite a few occasions in this place, I've quoted from a monumental work called Basic Economics by Thomas Sowell, who's a wonderful economist. He deals with this issue of capital gains tax. It is basic economics.

In relation to capital gains tax, page 448 of Thomas Sowell's book Basic Economics says: …when the federal tax rate on capital gains— this is in the context of the United States— was lowered in the United States from 28 percent to 20 percent in 1997, it was assumed that revenues from the capital gains tax would fall below the $54 billion collected under the … rates in 1996 and the $209 billion that had been projected to be collected over the next four years, before the tax rate was cut.

Instead, tax revenues … rose after the capital gains tax rate was cut and $372 billion were collected in capital gains taxes over the next four years, nearly twice what was projected … Sowell goes on to say that people adjusted their behaviour to a more favourable outlook for investments by increasing their investments so that the new 20 per cent tax rate on the returns from these increased investments amounted to more total revenue than that produced by the old 28 per cent tax rate on a total amount of investment that was not as large.

What do we learn from that? We learn that there's a difference between tax rates and the revenue collected under taxes, and in the United States when the capital gains tax was decreased there was actually more revenue raised under the decreased capital gains tax rates. In the converse, investors, founders and entrepreneurs don't just sit still when you increase taxes.

Capital moves. It moves across borders. It moves to jurisdictions which have lower tax.

That is the reality of the world we live in. The federal Labor government will find with these tax changes—I've got no doubt about this—the founders of future unicorns such as Seek Ltd and Canva will move offshore. They will move offshore to more investment friendly jurisdictions.

Why would you commence a startup journey in Australia when you can go to Singapore and pay zero per cent capital gains tax? Why? People have options.

Investors have options. Capital is mobile. Workers are less mobile, so the people who will suffer from this are the workers themselves because their opportunities to move offshore are more limited than those who own capital.

That's what we're going to find. People are simply going to move offshore. They're not going to stay here and pay those elevated amounts of capital gains.

That's the reality. I want to now talk about an industry which I'm passionate about, and that's the mining industry. For 12 years before I came into this place, I worked as general counsel of a mid-tier copper and gold company.

But that mid-tier copper and gold company, which built two mines in a little country called Laos, lifted thousands of people out of poverty and did it to the highest standards of health and safety, environmental compliance and social licence. That company started as an exploration company in Australia. It listed on the ASX.

There were thousands of retail shareholders who invested in that small exploration company and gave it the capital to engage in exploration in Australia and offshore. They did that on the basis that, one day, if that executive team were to be successful and make a discovery that would lead to a mine, to commercialisation, even if they had to bring in further investment—those retail shareholders and other owners of capital invested in that exploration company on the basis that one day they would make a capital gain.

That's why they invested in that exploration company. And that's the story across the whole of Australia. The opening statement the Association of Mining and Exploration Companies gave to the Senate economics legislation committee underlines the importance of the tax regime to the future of mining exploration in this country.

I want to quote from this opening statement: Today, mineral exploration and mining make a critical contribution to Australia's economy, directly employing over 314,000 people. Mineral exploration is Australia's original startup. Mineral exploration is Australia's original startup.

It drives discoveries that lead to new mines, jobs and economic growth. Its success relies on two critical components: men and women investing their own money and time to develop a mineral exploration company and project which is backed by mum-and-dad retail investors taking a punt on their success. That is foundational to an exploration mining company.

It goes on: Around one in 1,000 exploration projects becomes an operating mine … Around one in 1,000 exploration projects becomes an operating mine, so all of those mum-and-dad retail shareholders and investors—investing their money into buying shares, contributing to capital raisings undertaken by exploration companies—are making a risk based assessment and they're placing their faith that perhaps that exploration project is going to be one of those one in 1,000.

It's on that basis, on the basis of that capital risk, that the mining industry, and the oil and gas industries, in Australia have been driven. As AMEC says in its statement to the committee: … yet Australia's small ASX listed mineral exploration companies are responsible for around 75 per cent of Australia's economic discoveries. Just reflect on that: only one in 1,000 exploration projects are successful, but they constitute 75 per cent of Australia's economic discoveries, which lead to mines and greater wealth generation and employment.

What the Labor government is doing, through its new capital gains tax regime, is placing a huge disincentive, a huge barrier in the way of those exploration companies efforts to raise capital in this country. Those companies will look offshore. I've served as a senior executive in a mining company.

I know the discussions that occur around the boardroom table. Those companies don't have to be listed on the ASX. Those mining exploration companies can move offshore to Singapore, become listed in Singapore, where there is zero per cent capital gains tax.

Or they could be listed on the Toronto Stock Exchange, where the 50 per cent capital gains tax discount still applies. The Labor government is driving that investment offshore, and it will drive the wealth generation with it. The wealth generation will be driven offshore as well, and others will benefit from that.

One of the great things about the Australian market is we've developed this culture of mum-and-dad retail investors investing in junior exploration companies. Notwithstanding that success rate of one in 1,000, Australians have still been prepared to invest and support those exploration efforts. It's truly one of the great things about our capital markets.

It's one of our comparative advantages. And yet this capital gains tax increase will cruel the pitch for capital raisings undertaken by exploration companies. I want to continue to quote from the statement made by AMEC, who are at the front line of raising capital.

They say: In setting up and investing in these companies, the incentive is purely in the hopeful prospect of capital growth. And that's why, like the Tech and BioTech sector, these CGT changes would hit mineral exploration where it hurts most. … … … And if Mum and Dad retail investors desert mineral exploration, there will be no investment to replace it. Mineral explorers will be starved of capital, and Australia's mineral exploration effort will decrease rapidly.

That means less mineral discoveries, less mines, less jobs and less government revenue. This is a massive own goal committed by the Labor government in relation to our mining industry. Then we've got the dirty deal that was done with the Greens, which has just been announced.

It's a dirty deal done dirt cheap, in the words of the great AC/DC. What do AMEC say in relation to this dirty deal done dirt cheap, which the mining industry was excluded from? They say: The International Energy Agency says the world needs around 50 new lithium mines, 60 new nickel mines and 17 new cobalt mines to meet carbon emissions goals by 2030.

Excluding an industry that finds the mines of the future from carve-outs will hurt future discoveries and reduce productivity for Australia's most important economic driver. This is a kick in the guts for the entire mineral exploration industry and those who invest in it. These are the words of the mining and exploration industry, invested in by mum-and-dad retail investors, with a one-in-1,000 chance that one of those exploration projects leads to an economic discovery and produces the next mine.

Still those mum-and-dad retail investors are prepared to invest in the industry. But, with the increase of this capital gains tax under the Labor government, will they in the future? This is what the mining industry is saying in relation to these changes: This is a kick in the guts for the entire mineral exploration industry and those who invest in it.

When I came into this place, one of my objectives was to advocate for policies that would make it easier, not harder, for people to set up businesses in this country to create wealth and generate opportunity for all Australians. That was one of my goals when I came into this place. I'd seen the power of people investing in the company which I was employed by and how that investment in an exploration company had led to mining projects in one of the poorest countries in the world and lifted thousands of people out of poverty.

This Labor government budget will make that sort of investment less attractive and less likely to occur for the benefit of Australia's people.