Former Australian Prime Minister Paul Keating has launched a blistering attack on the Coalition’s proposed changes to capital gains tax (CGT) for the startup sector, arguing the policy is fundamentally flawed and risks undermining innovation. In a speech delivered in Sydney, Keating singled out the Coalition’s plan to extend the CGT discount for assets held longer than 12 months, a move he claims primarily benefits property investors rather than budding entrepreneurs.
Keating’s Critique of Coalition Policy
Keating, who served as prime minister from 1991 to 1996, described the Coalition’s approach as “a relic of the past” that fails to address the unique challenges faced by tech startups. He argued that the current tax system already provides ample incentives for risk-taking, and further concessions would only inflate asset bubbles without spurring genuine economic growth. “The idea that tweaking capital gains tax will suddenly unleash a wave of innovation is nonsense,” he said. “What startups need is access to capital, skilled talent, and a regulatory environment that encourages experimentation—not another handout for property speculators.”
Praise for Canva and the Startup Ecosystem
In contrast, Keating heaped praise on Canva, the Australian graphic design platform that has become a global success story. He cited Canva as an example of what can be achieved when entrepreneurs are supported by a robust ecosystem, including access to venture capital and a culture of risk-taking. “Canva didn’t succeed because of a tax break; it succeeded because its founders had a vision, worked tirelessly, and built a product that the world wanted,” Keating remarked. He urged the government to focus on policies that foster such outcomes, rather than “tinkering at the edges” of the tax code.
Implications for the Startup Sector
The Coalition’s proposed CGT changes have divided opinion within the startup community. Some founders argue that a lower tax rate on exits would encourage more investment, while others, like Keating, contend that it would primarily benefit wealthy investors and exacerbate inequality. Keating’s intervention adds weight to the latter view, given his status as a former treasurer and prime minister who oversaw significant economic reforms in the 1980s and 1990s.
Keating also warned that the Coalition’s focus on tax cuts could distract from more pressing issues, such as improving the availability of venture capital and reducing red tape for small businesses. He called for a comprehensive review of innovation policy, involving input from entrepreneurs, investors, and academics.
Political Reactions
The Coalition has defended its proposal, arguing that it would boost investment in startups and create jobs. Treasurer Jim Chalmers, from the opposing Labor Party, has criticised the plan as a “giveaway to the rich” and has promised to introduce alternative measures if elected. Keating’s comments are likely to intensify the debate, with both sides seeking to position themselves as champions of innovation.
As the election campaign heats up, the future of Australia’s startup tax regime remains uncertain. What is clear is that Keating’s voice, though from the political past, continues to carry weight in discussions about the nation’s economic direction.
