Anthony Albanese will take controversial changes to negative gearing and capital gains tax to parliament on Thursday, putting the government’s housing and tax agenda on the line as Labor tries to lock in its plan before July. The draft laws will also carry Labor’s promise of a $1,000 standard tax deduction and the $250 working Australians tax offset.
The prime minister wants the core elements through parliament by early July, a tight timetable that leaves little room for the kind of internal argument now building inside Labor. MPs expect Tuesday’s caucus meeting to turn heated over the capital gains tax changes, and some in the party are already uneasy that the budget message has drifted away from intergenerational fairness in the housing market.
Albanese said on Monday that he would present the changes to parliament on Thursday and pointed to ongoing consultation with tech firms and business groups. He also said the government would deal with rule changes to tax treatment for trusts later in the year. On the question of how the reforms are handled, he cast the process as standard government practice. “That’s the normal way that tax policy has been implemented for a long period of time,” he said.
The centrepiece of the plan is a move to replace the 50% capital gains tax discount with an inflation-based model, a shift the government has struggled to explain cleanly to voters. Labor hopes the pitch will land as a housing reform, not a tax raid, but one MP said giving exemptions to some businesses in their first few years of operation would take some heat off the proposal. Albanese has also flagged possible carve-outs for businesses beyond the startup sector.
That push comes with political risk. Albanese challenged opposition leader Angus Taylor to back the plan, but Taylor has already pledged to repeal the changes if the Coalition wins the next election. Albanese also would not say whether a Senate inquiry into the changes would be needed, leaving the government exposed to the same upper-house arithmetic that has stalled past reforms.
The Greens are likely to decide the legislation’s fate, and their response has been blunt. Larissa Waters dismissed the changes as “tinkering around the edges,” a sign that Labor may have to bargain harder than it wants if it wants the package to survive. The government’s own messaging has leaned hard on housing, with Clare O’Neil saying the budget is aimed at reshaping housing opportunities and that the core issue for most Australians is the struggle to own a home.
O’Neil said, “The main issue that most Australians face in their lives is trying to realise the aspiration to own their own home,” and added, “Let’s remember here that the budget is about trying to reshape the housing opportunities for Australians and the people that we are thinking about are the millions of people around our country who are struggling right now.” The budget measures are also designed to reach 4 million low-income earners and welfare recipients through the tax deduction and offset already flagged by Labor, but that detail has not quieted the backlash from investors and startup founders who say the proposed tax changes would hit them hardest.
For Albanese, Thursday is the first real test of whether Labor can sell a tax overhaul as housing relief rather than a fight with investors, and whether it can do that while keeping the party together long enough to pass it.
