Treasurer Jim Chalmers has staunchly defended the government's contentious tax changes, insisting a break from previous election promises was necessary to fix what he calls a 'broken' housing and tax system.
Chalmers, under fire for the political fallout, said the government was prepared to pay a price in popularity to deliver real reform. 'We've taken a political hit for that, we expected that, but more important to us is the substance of what we're doing rather than the politics of what we're doing,' he told reporters.
Recent polls show the Albanese government has taken a hit since handing down the budget last week. A Freshwater Strategy survey released on Sunday found 83 per cent of voters believe Labor has broken some form of election promise.
Chalmers said the changes were crucial to improving housing affordability, and dismissed claims they made a mistake. 'The status quo at the intersection of the housing market and the tax system is broken, and we're fixing it,' he said.
The reforms centre on winding back capital gains tax concessions and curbing negative gearing, long criticised for fuelling investor demand and pushing up house prices. Labor is also aiming to reduce tax perks that favour property over other assets, while tightening the rules on discretionary trusts with a new 30 per cent minimum tax on distributions.
Chalmers argued the old rules had skewed the market for decades, benefiting investors at the expense of first-home buyers. 'What we're doing is introducing a fairer, more neutral treatment of different kinds of assets in the capital gains tax regime, taking out that distortion which has locked too many young Australians out of housing,' he said.
Exemptions will remain for certain trust types, including disability trusts, deceased estates, and existing testamentary discretionary trusts. Chalmers said the tax changes are designed to create greater fairness between the way income from work and investments is taxed.
'This is about better aligning the taxes paid by people who work with people who make their money in other legitimate ways,' he said, adding exemptions were crafted to protect legitimate cases. The Treasurer also dismissed concerns about younger investors, particularly those relying on shares rather than property.
He said the previous regime had long favoured property owners. 'Over a 20-year period, shares have actually been undercompensated in the existing capital gains tax regime, while housing has been overcompensated,' he said.
Even as backlash grows and poll numbers fall, Chalmers held the line, insisting Labor would not back down. 'It would have been the easiest thing in the world to leave everything as it was,' he said. 'But we would rather do the right thing even if it's difficult.'
He said he understood the public's frustration but stressed that immediate reactions should be weighed against long-term outcomes. 'We're not doing this for the polls, we're doing this for people who've been locked out of housing for too long,' he said.
Labor's tax overhaul comes alongside billions of dollars in planned investment and tens of thousands of new homes—measures aimed at boosting supply and helping first-home buyers. 'There are no easy decisions left,' he said. 'These are difficult decisions, but they are the right decisions to get more Australians into homes.'
Prime Minister Anthony Albanese also defended the budget on Monday, saying it aimed to improve generational fairness. 'This budget is about giving young people a fair crack at home ownership, just like my generation did,' he told reporters in Adelaide. 'My Government was not prepared to sit back... we have taken action and it is positive action.'
The Coalition has slammed the policy shift, vowing to fight the changes in Parliament and branding them a 'betrayal of the trust' of voters at the last election, when Albanese and his frontbench repeatedly vowed not to touch capital gains tax or negative gearing. Shadow Treasurer Tim Wilson has launched a campaign called 'Not The Tax We Voted For', which is urging Australians affected by the changes to share their stories.
'Anthony Albanese has introduced new taxes in his government's bad faith budget, despite him saying over 50 times that he wasn't going to make changes to negative gearing, capital gains or trusts,' the campaign said. 'This is a fundamental betrayal of the trust that was given to the government at the last election.'
