Labor’s tax overhaul to pass with Greens’ support – and NDIS delays
Updated ,first published
Labour’s tax overhaul will pass parliament this week with Greens support after the crossover party agreed to vote for the legislation in exchange for a two-month delay and a longer investigation into the government’s NDIS changes.
Albania’s government gambled its political capital last month with a federal budget tax package that included a $250 income tax offset and an immediate $1,000 deduction for workers, as well as limits on negative gearing and a new method for calculating capital gains tax deductions.
He has avoided a backlash from the Coalition and small businesses since his surprise tax announcement in the May 12 budget, and voters have also marked the government for broken promises in opinion polls.
But with the bills to be voted on this Thursday, Labor will meet its target of getting the tax changes through Parliament by June 30 and then try to weather the political storm.
The Greens on Tuesday secured a last-minute change to the law that will narrow the loophole on how investment properties are purchased through self-managed super funds. They also persuaded Labor to remove the then-treasurer’s broad ministerial powers from the legislation.
In response to widespread backlash, the government has also expanded exemptions for small businesses with turnover of up to $10 million and proposed an “innovative business tax concession” for start-ups.
But Finance Minister Jim Chalmers’ proposed tax package would otherwise become law by the end of next week. It aims to tax income from asset sales more similarly to income earned from wages, by removing the 50 per cent CGT discount and taxing “real gains” from investments at at least 30 per cent.
The change, which will end the exemption secured by the Greens that allows self-managed super funds to borrow money to buy investments, is not a major concession from the government; It affects approximately 1 percent of mortgage loans.
An interim report into the financial services sector in 2014 by former CBA boss David Murray recommended ending the loophole due to concerns it could increase instability in the banking sector. Action was never taken.
Greens leader Larissa Waters said the party was still unhappy with changes aimed at property investors being grandfathered in.
“We are pleased the government has listened to some of the concerns raised by the Greens and experts throughout the inquiry process, but Labor has again ignored young people and renters,” he said.
“Ending these tax breaks today instead of grandfathering them would help renters own their own homes.”
In return for the Greens’ support for the tax, the government agreed to extend the parliamentary inquiry into the overhaul of the National Disability Insurance Scheme for up to eight weeks.
Waters said the Greens had successfully pushed back the start date of the NDIS changes and would now use the two-month delay to campaign for the NDIS overhaul to be scrapped.
“The Greens will not support the NDIS bill. We will vote against it and do everything we can to delay it and stop it completely,” Waters said.
The Senate inquiry was due to deliver its report into the NDIS changes last week after just three days of hearings.
The new laws will allow the government to cut future NDIS spending by $38 billion over the next four years and remove more than 240,000 people from the scheme.
Instead, the inquiry will submit a report on August 14, and the laws will not be debated again in Parliament until then.
The Coalition has already said it plans to introduce a bipartisan approach to NDIS legislation, meaning it is likely to pass. But with the $56 billion plan growing at 11 percent a year, any delay would cost the budget the biggest hit.
The federal government’s tax and NDIS changes, the centerpieces of last month’s federal budget, have been attributed to horse-trading over the past few weeks.
The Greens, who hold the balance of power in the Senate, were largely happy to help Labor pass tax reforms but lashed out at the NDIS changes. Meanwhile, the Coalition has offered support for the overhaul of the NDIS but not the tax bills.
While the Greens and the Coalition could come together to expand investigations into both tax changes and NDIS laws, the left-wing party has opted to negotiate with the government.
Natassia Chrysanthos is a Federal Political Correspondent. He has previously reported on immigration, health, social issues and the NDIS from Parliament House in Canberra.Connect with: X or email.
Shane Wright is senior economic correspondent for The Sydney Morning Herald and The Age.Connect with: X or email.
