Ninety per cent of young Australians will be better off under the Albanese government’s tax proposals, the Treasury claims, as Labor moves to pass its reforms into law.
The government introduced the tax changes to parliament on Thursday before a heated question time in which the opposition leader, Angus Taylor, called Anthony Albanese an “arrogant prick”, while separately the Nationals demanded the government call an early election.
Earlier on Thursday, Treasury secretary Jenny Wilkinson shared the previously unreleased modelling at an Australian Business Economists lunch in Sydney.
Wilkinson said the combined effect of the automatic $1,000 tax deduction, $250 “working Australians tax offset” (Wato) and the capital gains tax and negative gearing reforms would benefit most young people.
“The cumulative impact of the reforms is assessed as benefiting around 90% of young people, before impacts in the housing market are taken into account,” she said.
Had the changes been made decades ago, those under 30 today would be in a better financial position, she said.
“Around 90% of Australians would have been better off by age 30 had the proposed changes been in place from 2000, with the benefits of the Wato and instant deduction outweighing the impact of the savings tax changes,” Wilkinson said.
The modelling considered all Australians in terms of their total income over their lifetime. Those in the top 10% of lifetime earnings would, by the time they turned 30, have been worse off under the new reforms than the old system, the modelling shows.
Reserve Bank research on Thursday found people younger than 40 made up 35% of property investors in 2000. That fell to about 20% by 2023. Investors over the age of 60 soared, accounting for just 12% in 2000 but 28% by 2023.
About one in 10 Australians under the age of 35 own shares, tax office data shows.
Critics of the government’s reforms have said some people with significant share market investments may be left paying more tax, including young people.
Wilkinson acknowledged the concern but said those investors would still enjoy their post-tax profits.
“This reflects the unavoidable trade-offs involved in system-wide reform,” she said.
Wilkinson also said there was no conclusive evidence supporting claims the new settings could worsen productivity and pushed back at calls to limit the reforms to housing, excluding asset classes.
“OECD research suggests there is not clear evidence to support favourable treatment of capital gains to promote investment, beyond compensating for inflation,” she said.
“Applying the new arrangements to income across all assets is important from a tax-design perspective to avoid introducing a significant new distortion into the tax system.”
There is internal tension and disagreement inside Labor over whether to provide CGT carveouts to small or early-stage businesses, after a major backlash from employers and entrepreneurs over how the changes will affect business.
While the treasurer, Jim Chalmers, seems inclined to not substantially alter his budget proposal, other Labor MPs are growing increasingly agitated to see a paring back of the CGT changes to reduce their effect on businesses.
The government’s CGT changes will be scrutinised by a short Senate inquiry, to report by 22 June. Labor seems determined to pass the first of its budget bills into law before parliament rises for its winter break in early July.
In an interview with the ABC, Albanese said consultation continued with business groups and did not rule out making changes, but noted there were already many tax concessions and benefits available to small businesses.
“We get people will put forward ideas, but the fundamentals will stay there, the integrity of the system will stay there, and what we don’t want to do is to shut down some loopholes and create others,” he said.
The Nationals leader, Matt Canavan, demanded Albanese call an election to seek a mandate on its proposed tax changes – despite polling suggesting the Nationals would be almost entirely wiped out were an election held today.
A recent poll by Redbridge Group and Accent Research found the Coalition could be reduced from 43 lower house seats to 12 if a poll was held today, with One Nation surging to 53 seats, and Labor remaining in government on 76. The Nationals could be entirely wiped off the map in the lower house, that poll suggests.
In a tense day in federal parliament, Coalition MPs accused Labor of lying about tax.
Taylor tried – and failed – to suspend parliamentary question time in a bid to start a debate against Labor’s plan. Taylor also sledged Albanese as an “arrogant prick”, in a comment confirmed by Taylor’s office and Labor sources.
Asked about the comments on the ABC later, Albanese declined to repeat Taylor’s comment but said “swearing across the chamber isn’t appropriate”.
