Former Australian Prime Minister Paul Keating has launched a scathing critique of the Albanese government’s latest federal budget, specifically targeting proposed changes to capital gains tax (CGT). In a rare public intervention, Keating warned that the adjustments risk undermining investment and long-term economic growth.
Keating’s Concerns Over CGT Reforms
Speaking to reporters in Sydney, Keating argued that the budget’s CGT measures would discourage asset sales and reduce market liquidity. He described the changes as “economically illiterate” and claimed they would particularly hurt small businesses and retirees who rely on investment income. The former Labor leader, who served as treasurer under Bob Hawke, emphasised that tax policy should encourage productive investment rather than penalise it.
Keating’s comments come amid growing internal party dissent over the budget, which also includes increased spending on housing and renewable energy. While the government defends the CGT changes as a measure to improve fairness and raise revenue for essential services, critics argue they could dampen economic activity.
Budget Details and Reaction
The budget, delivered by Treasurer Jim Chalmers, proposes to reduce the CGT discount for assets held longer than 12 months from 50% to 25%, and to tighten rules on negative gearing. The government estimates these changes will raise A$3.5 billion over four years, which will be redirected to health and education funding.
However, Keating’s intervention highlights a rift within Labor over economic policy. He accused the current leadership of lacking vision and failing to understand the drivers of growth. “This is not the Labor Party I led,” he said. “We should be incentivising risk-taking and entrepreneurship, not punishing it.”
Business groups have echoed Keating’s concerns, warning that the CGT changes could lead to a slowdown in property and share market transactions. The Australian Chamber of Commerce and Industry called for a review of the measures, urging the government to consider their impact on investment confidence.
In response, Treasurer Chalmers defended the budget, stating that the reforms are necessary to address inequality and ensure the tax system is fit for the future. “We are making tough choices to build a stronger, fairer economy,” he said. “These changes will help fund the services Australians rely on while ensuring the wealthy pay their fair share.”
The debate over CGT is expected to intensify as the government seeks to pass the legislation through parliament, with opposition parties already signalling their intent to block the changes.
