Anyone hoping that the Albanese Government will cave in on its proposed capital gains tax (CGT) discount and negative gearing changes better lower their expectations, with Labor and the Greens in horse-trading mode, which is not a good omen for those hit hard by the Budget. And what is being traded is a softer slug on the NDIS reforms for a saloon passage for Treasurer Jim Chalmers’ taxchanges.
For those crying out for non-left, common sense decisions from our political masters, what the AFR’s Phil Coorey reveals today does not make great reading.
In case you missed it, the Labor-controlled House of Representatives passed the Budget legislation in a heartbeat — a 94 seat majority in a 150-seat House will do that! So, it has to be the Senate that will determine what sensible or dumb changes will be imposed on the 2026-27 Budget.
For those who don’t commit their memory to the make-up of the current Senate, here are the senator numbers:
- Labor 30
- Liberal 21
- Nationals 6
- Greens 10
- One Nation 4 senators, and
- Independents 2.
That means in a Senate of 76 senators Labor plus the Greens add up to 40, which makes a sensible person regret the old Thomas Jefferson observation that “The government you elect, is the government you deserve.”
So, what is the AFR’s man in Parliament House, Phil Coorey revealing: to back the tax changes?
Try these:
- Labor will give the Greens a longer inquiry into the proposed $37.8 billion cuts to the NDIS.
- But the Greens have to drop a long probe into the tax changes that have rattled property investors, business owners, who have faced a bigger CGT, and even young investors/home deposit builders, who will also lose out from a harsher CGT, when they sell their shares.
- The Government wants the Greens on board to vote through the changes by July 2 before Parliament goes on its winter break.
- The Greens support the tax proposals but want changes to the NDIS reforms, and they are worried that the Treasurer would be able to, as Coorey reports, be able “to make significant changes to the tax measures after the legislation passed.”
- The Coalition is arguing that as these tax changes do not start until 1 July 2027, there is no need to rush these so-called reforms through, which seems like a reasonable argument.
Coorey explained an aspect of the Budget that many have missed.
“Treasury Secretary Jenny Wilkinson defended Chalmers granting himself eight regulatory powers to make future rules on negative gearing and capital gains outside of the primary legislation,” he reported. “She told a Senate estimates hearing the areas the regulations were dealing with required further consultation before finalising. The regulations could be disallowed by parliament, via a future vote in the Senate, meaning there would be limits on the powers.”
That might be true but if the Treasurer has the Senate in his or her pocket, like Chalmers today, then these discretionary powers make the country’s top taxer very powerful.
This revelation begs the question, what do these discretionary powers pertain to? In fact, they are connected to two good aspects of these Budget changes!
From my reading, the Treasurer could redefine what new dwellings get the 50% CGT discount and the right to use negative gearing. Also, some taxpayers might be made exempt from the minimum 30% tax on real capital gains.
And Coorey says there could be “additional dwellings, business activities and entity classes that will be exempt from the ban on negative gearing,” which seems like a lot of discretion to leave in the hands of a Treasurer who might hold unusual views on how the modern capitalist economy should work.
The more I read about the wider implications of Treasurer Chalmers’ Budget, the more I know many of these curveball issues need to be fully understood by the Parliament before they vote on the changes.
We all know the Greens are committed to left-wing concerns such as climate change and social fairness, but they need to show with this Budget they are a sensible political party that will insist on a responsible inquiry to both the big tax and NDIS changes.
They can’t be seduced by a Treasurer who seems to think he knows best. To be fair, he might, but it does need to be tested by his peers, who we voted for.
It’s called democracy, Jim.
