Treasury Laws Amendment (Tax Reform No. 2) Bill 2026

Senator CHANDLER (Tasmania) (09:45): Every government says that it supports small business, but the real test is whether the policies of that government give business the confidence to invest. That is the test that we in the coalition have applied to the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. I want to be very clear: the coalition will be supporting this bill.

But those opposite shouldn't be smiling too broadly, because the evidence before the Senate economics committee inquiry into this bill, in which I participated, was very clear: while Australian small businesses welcome the measures in this bill, many believe that they do not go far enough, and that, particularly given the broader impact of this government's budget, more support is required for our business sector.

If you speak to small businesses today—we heard from many of them during the committee inquiry, and I speak to many in my home state of Tasmania—the overwhelming feeling at the moment is not one of confidence; it is caution, it is uncertainty, and, increasingly, it is a concern from businesses that survival is becoming more and more difficult. Business owners are asking themselves simple questions: can I afford to invest?

Can I afford to hire? Can I afford to grow? The answer depends, largely, on whether government policy settings make those decisions easier or harder.

The coalition supports this bill because it contains measures that improve cash flow, encourage investment and provide some certainty to businesses around the investment environment that they find themselves in. But we also believe that this bill can and should be stronger. Anyone who has run a small business knows that success is rarely a straight line.

Markets change, costs rise, demand fluctuates and challenges emerge. That doesn't mean a business has failed; it just means a business is operating in the real world. That is why the coalition supports the loss carry-back provisions in schedule 1 of this bill.

These measures recognise that one difficult year shouldn't wipe away years of hard work, investment and success. They improve cash flow when businesses need it most, and they are a sensible reform that the coalition is pleased to support. Every government, like I say, says it wants businesses to invest and to grow.

The question is whether government policies are actually encouraging them to do so, because when businesses invest, they grow. When businesses grow, they create jobs and employ more Australians. When more Australians are in work, communities prosper.

That is why the most significant part of this bill is the instant asset write-off, which will support many Australian businesses to make more certain decisions around investing in assets for their business. The certainty around making the instant asset write-off permanent is welcome; indeed, we heard that through the Senate committee inquiry. Small businesses shouldn't be in a position where they're having to wait until every May, when we come into this place and hand down a federal budget, to find out whether a sensible investment incentive like the instant asset write-off will be extended for another year.

Business owners need to plan ahead. They need confidence. They need certainty, and making the instant asset write-off permanent will provide them with that confidence and that certainty year on year.

While we in the coalition believe that making the write-off permanent is the right decision, we also believe that the government has set the threshold for the instant asset write-off far too low. The committee heard consistent evidence during the Senate inquiry that the $20,000 threshold no longer reflects the real cost of productive business assets in today's economy.

COSBOA, ACCI, CPA Australia and HIA all raised concerns about the adequacy of that threshold. Like I say, while the coalition has long supported a higher threshold, the government has chosen to proceed with a $20,000 limit, and I think that reflects a misunderstanding of how much business costs have changed. $20,000 doesn't get you anywhere near as far as it used to, and the types of assets that we want businesses to be investing in to increase their productivity often exceed that $20,000 limit.

Like I say, business costs have changed, and investment incentives need to reflect that. They should encourage businesses to invest and to grow and to create jobs. The government says that it wants businesses to be in a position to invest, and the coalition agrees with that, but the evidence before the committee was very clear: a higher threshold would make a real difference to business investment, particularly to small-business investment in relation to that instant asset write-off.

$20,000 simply doesn't buy what it did 10 years ago. Ask any tradie pricing a new work vehicle or a manufacturer upgrading their machinery, a construction business investing in equipment or any small business seeking to modernise through technology. The kinds of assets that genuinely improve productivity often cost well above the government's proposed threshold of $20,000.

If the government's objective is to drive investment and productivity, that threshold should reflect the real-world cost of productive assets in 2026 not the cost of what those assets might have been a decade ago. The question isn't whether $20,000 helps. I'm not here saying that it doesn't.

Certainly, the evidence that we heard in the committee heard was that it does. The question is whether $20,000 is good enough. A permanent write-off is good policy.

A permanent write off of $50,000, noting that that is coalition policy, would be even better. Just as importantly, good tax reform should provide certainty. Australians should be able to understand and navigate through the rules, plan for the future and have confidence that their tax system will operate fairly.

This is an issue that we traversed significantly when the first stage of these tax reforms, tax reform No. 1 bill, came through this Senate before the winter break. As we heard through the debate around that bill which has now come into law, unfortunately, certainty has not always been the case with this Labor government's broader tax agenda. A clear example of this has become known as the widows tax.

Australians have now spent more than 90 days waiting for Labor to fix a problem of its own making. Let's be very clear about what happened here. It took the government far longer, I suspect, than 90-plus days to create this problem.

After all, it was the Labor government that designed and developed the policy. When concerns were raised regarding this problem, Labor promptly dismissed them. Stakeholders were warning the government.

We were warning the government here in this chamber and outside. The consequences of this widows tax were identified before the legislation was even introduced. But the Labor government guillotined debate, particularly in relation to number the tax reform No. 1 bill—and we can argue the same thing is happening here today—and forced that bill through the parliament anyway.

Do you remember what happened next? Do you remember what happened when the tax reform No. 1 bill passed this chamber? Those opposite celebrated.

They applauded. They congratulated themselves on the passage of this legislation. I wonder whether they're going to be quite as enthusiastic here today when the vote to unwind part of that legislation passes this place.

I wonder whether those opposite will be quite as eager to celebrate the repeal of the widows tax as they were to celebrate its passage. The problem wasn't that the Labor government didn't know or understand the consequences of what they were doing. The problem was that the government, frankly, wouldn't listen to concerns that were being raised.

Now they have scrambled to fix the very problem that they spent months denying even existed, and not because they've suddenly discovered the problem. Let's be very frank about this. The reason that we are debating this legislation, as amended, here in this chamber today is not because the government suddenly woke up and realised that there was a problem.

It's because the problem became impossible to ignore due to the advocacy of many people in this place and many people outside this chamber as well. Let's be very clear. The people caught up in the mess of this seemingly inadvertent tax are widows.

They are people going through a divorce. They are people trying to leave violent relationships. They are Australians dealing with some of the toughest moments that life can throw at them.

This government spent weeks and weeks and weeks telling Australians that there wasn't a problem, while Australians were living with the consequences. They are now moving to fix what they were warned about from day one. That is welcome.

We welcome this fix. I'm sure those opposite will hail this as a success, but we call it something else. We call it a policy backdown.

I think there was every intention from this government that this tax should continue, and the only reason that it has made this fix here today is the attention that has been brought to it by many inside and outside this chamber. In concluding my remarks on this legislation, it was very clear through the Senate Economics Legislation Committee inquiry into this bill and through the broader advocacy of the small business community in this country since the budget was handed down in May that businesses aren't looking for special treatment.

All they want to see is common sense, certainty, a fair playing field when it comes to operating their business and policies that reflect the economic reality of what they are dealing with. That is why the coalition is supportive of the measures contained in this bill. The loss carry-back provisions are about resilience.

The instant asset write-off is about investment and certainty of investment. Both are a move in the right direction. But the evidence before the economics committee was very clear—Australian businesses are looking for something more.

They are looking for a broader agenda from government that encourages investment, rewards enterprise and supports productivity. This government needs to take that message seriously. The government also needs to take seriously the lessons of the widows tax debacle.

Listen to businesses, listen to stakeholders and listen to the warnings. Don't wait almost 100 days before fixing up your own mess. When governments stop listening, Australians end up paying the price.

Small businesses pay the price, families pay the price and confidence throughout the economy suffers. Australian families and Australian businesses deserve far better than that.