‘Shame’, yells opposition as Budget bill passes first hurdle
Labor's landmark capital gains tax (CGT) and negative gearing overhaul has cleared the House of Representatives, setting up a high-stakes Senate battle ahead of the July recess.
The Albanese government's budget bill to reform CGT and curb negative gearing on established residential properties passed the House of Representatives on Thursday by 94 votes to 48.
Opposition members called out "shame" as the result was declared, after the Coalition unsuccessfully attempted amendments before the vote.
Labor is now pushing hard to secure Senate passage before parliament rises for its winter recess on 2 July.
Negotiations are ongoing with the Greens and the Coalition, both of which are pushing for a longer Senate inquiry into the measures than the two days the government has allocated for the week of 16 June.
With the Coalition firmly opposed to the Budget bill, Labor's path through the Senate runs through the Greens. The minor party's support is considered likely, given its longstanding push for wealth tax reform.
However, the Greens are using the Senate inquiry process to push for even stronger reforms, including the removal of grandfathering provisions on existing investment properties.
Trust in Labor falls
The political and public backlash to Labor's tax overhaul has been sharp.
Opposition Leader Angus Taylor condemned the measures as "toxic taxes" in fiery parliamentary debate earlier this week, when he confirmed that the Coalition would attempt to block the legislation.
Taylor went as far as calling Prime Minister Anthony Albanese "an arrogant p***k" for not taking the policies to the previous election.
If the bill passes the Senate, the existing 50% CGT discount will be replaced with cost-base indexation and a minimum 30% tax on net capital gains from July 2027.
Negative gearing will be restricted to new builds, while losses on established properties will only be applied to rental income or gains from residential property, rather than against broader income such as salary and wages.
Properties held before the 12 May Budget announcement will be exempt from the negative gearing changes, while the CGT reforms will only apply to gains that accrue after 1 July 2027.
Treasurer Jim Chalmers acknowledged in a post-budget interview with the ABC that the government had changed its position on negative gearing and capital gains tax despite pre-election commitments to the contrary, saying the government had "come to a different view about some really important policy areas”.
Public sentiment has tracked the political discord. Freshwater Strategy polling conducted shortly after the budget announcement found that 45% of respondents said the proposed changes had decreased their trust in the government.
The Council of Small Business Organisations Australia (COSBOA), meanwhile, has warned that the proposed reforms risk undermining the entrepreneurial foundations of the Australian economy, with mortgage brokers among those raising concerns.
