The contest continues over the future of Australia's tax system following last week's Federal Budget. The Coalition has flagged its own bold policies on tax and housing, while the Treasurer is working to sell a trio of changes affecting negative gearing, capital gains and trusts. Two new opinion polls suggest his federal budget has been poorly received by voters - but Jim Chalmers has declared the long-term gains from controversial housing tax changes are worth the short-term political pain.
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TRANSCRIPT:
Treasurer Jim Chalmers is working hard to sell his fifth federal budget.
"And we'll be in four cities in four days talking about a budget which is all about helping people through this global oil shock, at the same time as we take some difficult decisions to reform our economy for the future."
That sales pitch is focused on a trio of tax reforms – to negative gearing, capital gains, and trusts – but the government has also been keen to show it’s still working on the supply side of the housing crisis.
"We are especially proud of the deal that we are announcing today on housing for Queenslanders. This deal means an extra 50,000 homes for Queenslanders, it means 20,000 plus for first home buyers in this state as well."
Meanwhile the Prime Minister has appeared in Adelaide to spruik a development linked the government's Housing Australia Future Fund.
"So the changes that we put forward in the budget last Tuesday simply do this: if you have a negatively geared home, you can still continue. There are no changes in those arrangements. You can help to invest in an asset for yourself and your future wealth, but if you want to you want to invest in the future, it needs to be a new home, so that, as well as building up your assets and your wealth in future, you're building up the assets and wealth of the nation."
Labor's insistence that it's taking the right approach to tax reform comes as th e latest Newspoll reveals 52 per cent of respondents believed they would be worse off, and have ranked this as the worst budget for the economy since 1993.
A Resolve poll meanwhile has put Angus Taylor ahead of Anthony Albanese as preferred Prime Minister for the first time, a sentiment the Liberal leader was keen to amplify.
"This budget was an absolute stinker, and the Australian people agree that it was a stinker. I was out over the weekend and I heard it again and again."
The Coalition has also raised concerns tightening the taxation of capital gains could disadvantage young people investing in shares to try and save for their first home deposit.
But it was changes introducing a minimum 30 per cent tax rate on some types of trusts that has dominated much of the discussion at the start of the week.
Jane Hume is the Deputy Liberal Leader.
"This government doesn't trust Australians, doesn't trust Australians to do the right thing, and that's why they're coming after trusts, after your family business, they're coming after your family trust, and they're doing that because they think you're avoiding, but let's be honest, this is simply a death tax by stealth."
The minimum 30 per cent tax rate will apply to discretionary testamentary trusts from July 2028 - with the government arguing some wealthier families have used the structure to avoid tax.
Discretionary trusts allow the trustee to direct income or capital to family members with a lower marginal tax rate.
The treasurer says fixed testamentary trusts - often used in wills - are exempt from the changes.
"There are appropriate exemptions. Deceased estates, for example, are exempt. Existing discretionary testamentary trusts are exempt. Fixed trusts are exempt as well, and because that recognises that there are some legitimate purposes now, when it comes to some of the conjecture that we've seen in recent days, we need to remember, as we said yesterday, there's no tax on inheritances or inherited assets in the budget."
The Coalition has promised to repeal the government's tax changes, and announced new measures in response to the budget.
Chief among them is a plan to end bracket creep by indexing income tax to inflation.
"And what we are proposing with the Tax Back Guarantee is for a $70,000 earner, they would get a, someone on a $70,000 income, they would keep $250 in the first year, $500 in the second, $750 the third thousand after that, and so on. Why? Because the government won't be able to take more of your money each year through income taxes. That's the Tax Back Guarantee."
One area where the Coalition will look for savings is through prospectively preventing permanent residents from accessing a list of 17 welfare programs, including the NDIS.
On the question of intergenerational access to housing, the Coalition's plan involves slashing migration, but they won't give an exact number until closer to the election.
"What we've said is that we will link net overseas migration, a cap on net overseas migration, to housing completions. That's what we've said, and each year the Housing Minister - and our plan is for Andrew Bragg to be our Housing Minister - each year he will announce how many houses have been completed, and that will be used to set a cap on the number of migrants coming to the country. Now, the principle of this is very simple, and it's very clear: if you don't have the houses, you can't have the people."
The approach has been criticised by the government, economists, multicultural groups, and the Greens, whose support could prove vital for the government to pass its housing proposals.
Housing spokesperson Barbara Pocock says the Greens are still considering their position.
"We're yet to see the legislation on the capital gains discount and negative gearing, and they are a baby step in the right direction. Unfortunately, they preserve benefits for very wealthy property investors, and there are a range of things that could have been done which would have limited that locking in of a benefit that's going mostly to baby boomers, and really disadvantaging very young people. There are measures there that we heard evidence on this morning, and we'll be considering those, and we'll certainly be taking a very careful look at the legislation."
