Gas export levy is out, tax reform is in

By Hannah Ferguson

The sentiment in Canberra today was similar no matter who you spoke to - this year’s Federal Budget is the biggest in a long time. While the Government may position that as the result of significant tax reform and productivity measures they are taking on in the midst of global instability, others would argue that their failure to act on the growing movement for a gas export tax will likely speak louder than many of their media appearances in the days to come.

Returning to the budget lock-up for the second year, it’s easy to understand why so many in the mainstream media are angry at our inclusion. We’re escorted into press conferences to watch silently as the same group of journalists fight to ask our nation’s leaders the same questions that confirm their pre-determined narratives, and we observe the Treasurer and Finance Minister select a handful of voices to hear from within this pack. It might not be a profound point, but it’s worth remembering exactly why and how we end up stuck with the same overdone taglines. It’s also why we miss the real implications of Labor’s cuts that impact our most vulnerable.

image: SBS

Labor’s ‘broken promises’ on tax reform take centre stage, meanwhile almost $38 billion in cuts to the National Disability Insurance Scheme are ignored. While new media is undermined, Cheek’s Editor Kalila Welch is the only person I heard today directly question Chalmers on Labor’s refusal to implement a 25% tax on gas exports and the gutting of the scheme which supports some of the most vulnerable Australians.

As usual, parts of the media will bulldoze the dialogue and narrow in on the ‘winners and losers’ categorisations that do nothing to constructively look at the offer in front of us - and do everything to divide. Positioning a wealthy property investor as a ‘loser’ against a single mum putting 40% of her wage towards rent is like arguing that a hungry great white shark could ever be the victim of a seal that just escaped it’s pursuit. These binary narratives are tired - especially when this is actually an incredibly complex package to grapple with.

The Government’s rhetoric around this budget is clear: resilience amidst instability, productivity to prosper, ‘rebalancing the scales’ through tax reform. This afternoon, Kalila and I heard firsthand from Chalmers that this was ‘a budget for first home buyers, workers, small businesses’. Labor knows they didn’t adequately address housing at the last federal election, they know young people are a strong voter cohort that are angry, and Labor also understand that polling for these policies is popular (even among many wealthy investors) - despite the noise the media drives into the public square. The Albanese Government is a conservative one, and they have made an educated decision. This is a well-calculated risk. They are vocalising this as a way to combat One Nation’s rise and sound like they are responding to our noise. This budget won’t effectively stifle it.

This was a budget with housing positives, where minimal questions will be asked about the cuts to essential services. When it comes to cost of living relief, Labor’s ‘biggest measure’ according to Chalmers is a $250 tax offset that every working Australian will receive. As the Greens immediately pointed out, this ‘equates to $4.81 a week and people won’t see a cent of this until 2028’.

We knew the key reforms of this budget would be changes to the capital gains tax (CGT) discount, negative gearing and trusts. The hat-trick that has enabled a tax system that benefits high earners and locks first-home-buyers out of housing with soaring prices. According to the ATO, around 2.2 million Australians own at least one investment property - of which around 61% are negatively geared. According to a 2024 report by the Parliamentary Budget Office, around three quarters (73%) of the benefits from CGT discount and negative gearing go to the top 10% of income earners. Treasury estimates that in the 2022-23 financial year, the capital gains tax discount cost the budget nearly $23.46 billion in foregone revenue, while negative gearing benefits cost $3.9 billion.

In this context, Labor finally taking on this reform is positive. Today’s announcement confirms that from 1 July 2027, negative gearing will only be available for new builds. However, the policy will be fully grandfathered, meaning that those who were negatively gearing their investments prior to tonight’s announcement will continue with the old policy.

The 50% capital gains tax discount (CGT) will be altered, returning to a model of indexation based on inflation with a 30% minimum tax rate. Notably, these changes will apply not just to property but to other assets like shares that are held for at least one year by individuals, partnerships and trusts. This is a complex policy to comprehend, but under this partially grandfathered model - capital gains on an existing asset will fall under the old policy, and gains made after the 1 July 2027 will be treated under the new model - when realised.

This is one step towards stopping the rich from seeing property as a business model for further wealth building. It is clear that the Albanese Government sees grandfathering as a mechanism to keep a powerful voter base onside while indicating to younger generations that they want to earn their vote. They want to distract from their rejection of the most populist campaign in recent Australian memory to get a fair return on our resources.

There are a few smaller announcements that deserve our attention. While the Women’s Budget Statement was barely there, a smaller package of more than $180 million to prevent financial abuse within the child support system is welcome reform to an area that sees the tax system utilised as a weapon by parents evading compliance and using these payments as an intimidation and surveillance tool.

If you’ve been watching closely, there weren’t many surprises. For weeks, key ministers have been utilising the media as a sounding board for different announcements that we are finally seeing the detail on today.

While we have a lot more to say in the coming days, one of the key takeaways from today’s budget isn’t in the numbers at all, but in many commentators and journalists like us leaving the lock-up to find that the Albanese Government has buried their response to the Murphy Report by dropping it on one of the biggest news days of the year. To say this was an act done in bad faith would be kind.

We’re being breadcrumbed, and while I want to acknowledge the positive in today’s announcement - we must continue to demand more.