Treasurer Jim Chalmers is pushing capital gains tax reform, with Prime Minister Anthony Albanese backing the move, in a direct challenge to 30 years of inertia on tax reform. The proposal marks a break from a political habit in Canberra that has left major changes untouched for decades.
It is being searched now because the government is not talking about another round of tinkering. It is reopening one of the most sensitive parts of the tax system at a time when Labor Government Cgt Changes has become shorthand for a broader push by Chalmers to prove sensible economic reform can still be done.
Chalmers is not entering unfamiliar territory. In the 1980s, Paul Keating led major economic reforms and floated the Australian dollar despite forecasts of impending doom. He introduced National Competition Policy in 1995, and in October 1996 more than 100 representative groups gathered at the National Press Club in Canberra for a national tax reform summit. The GST was later proposed and ultimately implemented by the Howard-Costello government.
That history matters because the reaction to tax reform has barely changed. The current outcry over capital gains tax changes is being cast as sad and predictable, fuelled by vested interests that have long treated genuine reform as a threat. Governments have repeatedly backed away from the fight because serious proposals are met with warnings of economic disaster before they are even fully explained.
That is the friction Chalmers and Albanese are now choosing to confront. By backing capital gains tax reform, they are signalling that the cost of staying still may now be greater than the cost of provoking resistance. What remains unclear is how far the government will go, and whether it is prepared to turn the argument into legislation after so many years in which bold tax changes were discussed, then left on the table.
